The Importance of Knowing Your Break-Even Cost in Contracting

Before you can determine how much to sell a job for, you need to know exactly how much the project is going to cost you to complete. This is called your break-even cost. Only after you have calculated your break-even cost are you in a position to determine your bid price.

Profit is only possible if you know your break-even cost

Please allow me to tell you a little story about my own experience back when I was an electrical contractor.

I was the type of person that desperately wanted to win every single job that I bid on. Once I took off my “Estimator” hat and put on my “Sales” hat, I was determined to convince my customer that they would be crazy to award the job to anyone else. Even if my price was a bit too high, no problem. I would enter into negotiations that would make any diplomat proud.

It’s important for you to understand that my electrical contracting company used to do a lot of work for many of the big home builders back during the housing boom. I’m talking about communities consisting of hundreds of homes that would take a few years to build out. These were incredible contracts for my company to be awarded.

I was fortunate enough to be able to develop strong personal relationships with the contract managers for these builders. They were very important players in my universe. After all, they had the sole discretion to award these really lucrative contracts and, right or wrong, having a good personal and professional relationship played an important role.

Not to say that these guys were pushovers. Just the opposite. They were tough. They liked their jobs and wanted to keep them. Why wouldn’t they? They had a bunch of chumps like me that would wine and dine them while treating them with the utmost respect and deference.

Their job performance was based on their ability to keep construction contract costs down. So much so that there was a saying at the time that “If they’re a buyer, they’re a liar“.

While this may sound a bit harsh, the truth is that some of these guys took great delight in squeezing the lowest price out of their vendors. I don’t know how many times I heard the following: “Come on Bill, you’re killing me. Out of the three proposals that I’ve received, yours was the highest! If you want this job my friend, you’re gonna have to sharpen your pencil!”

I’m pretty sure that I was told this more than once even though I wasn’t anywhere close to being the highest bid. Don’t get me wrong, I truly appreciated the opportunities that I was given to negotiate my price in order to win jobs.

What I didn’t appreciate at the time was that my old estimating system didn’t give me confidence in my numbers. Truth be told, that’s one of the reasons that I created TurboBid. I needed a systematical method of identifying and accounting for ALL of my costs. The only thing I disliked more than losing jobs was losing money!

Please keep this in mind. When you’re estimating a job, it is of the utmost importance that you know exactly what the project is going to cost you to complete. If you sell a job for less than your break-even cost, you will lose money.

How do you determine your break-even cost?

Many contractors end up losing money on jobs because they fail to accurately identify their break-even cost. This has been the cause and reason for the demise of many contracting companies.

Business is no place for guessing.

Unfortunately, in our industry, many new companies don’t have the required knowledge needed to accurately calculate their direct and indirect costs.

Following are some examples of what should be included when calculating your break-even cost.

Material
  • The cost of material to be installed
  • Waste
  • Theft
  • Sales tax
Labor
  • Material installation time – How many man hours the job will take to complete
  • Direct labor cost – This is simply the number of hours that the project will take to complete, multiplied by each field employee’s hourly pay rate.
  • Burden cost – This is the additional costs that your company incurs on behalf of your field employees.
    • Payroll taxes
    • Workman’s compensation
    • Liability insurance
    • Health insurance
    • Paid time off
    • Paid holidays
    • Bonus’
  • Future pay rate increases – If you will incur a payroll rate increase during the project, you need to calculate the additional labor cost for the job
  • Skill Level Adjustment – If the job includes an employee with a lower skill level that reduces his productivity, you must account for the additional time that the job will take to complete.
  • Additional Labor
    • Material handling
    • Meetings
    • Paperwork
    • Job setup and breakdown
    • Sweeping
    • Drive time
    • All additional tasks that the crew will perform other than installing
  • Labor Hour Adjustments – Different types of work require labor hour adjustments. For example, you can’t use the same labor units to estimate commercial and residential projects.
Miscellaneous Expenses
  • Miscellaneous Direct Job Expenses
    • Permits
    • Inspection fees
    • Equipment rentals
    • Service mobilization fees
    • Trash
    • Anything and everything thing that you’ll spend money on to complete the project
  • Subcontracts
  • Tools and tool replenishment due to wear and tear
Overhead

Overhead consists of the costs that you incur to run your business.

  • Office staff
  • Vehicles
  • Advertising
  • Physical business location expenses – Lease, repairs, trash, maintenance, etc.
  • Financial – Accounting, loans, tax preparation, etc.
  • Insurance
  • IT, website, email, etc.
  • Legal fees
  • Office expenses – Ink toner, paper, postage, software, etc.
  • Owner salary
  • Tools
  • Training
  • Utilities

What are the benefits of knowing your break-even cost?

  • Before you can determine how much to sell a job for, you need to determine exactly how much the project is going to cost you. This is your break-even cost. Once you know your break-even cost, you can determine your bid price by adding the profit that you need to make on the job.
Are you missing the final piece to your success?
  • You’ll be in a position to negotiate your bid price without the risk of losing money. If it comes down to it, you’ll be able to tell your customer with conviction that as much as you want to do their job, if you lower your price any more, you will lose money. At that point, tell them in no uncertain terms that they need to be very careful about awarding the job to anyone that claims they can do it for less.
  • If you’re bid prices are consistently too high, and you are including a reasonable profit margin, chances are that you need to reduce your costs. By having a detailed break-down of your costs, you have the ability to look for areas that you can reduce costs. Overhead costs are usually a big surprise to most people and can usually be reduced.
  • If you have a high degree of confidence in your break-even cost, and you really need to win a certain job, in theory (as strange as it sounds) you could take a job for zero profit if…..
    • You have a project winding down and you need a new job for your key field employees.
    • Work is slow and you need cash flow to pay your company’s bills.
    • If you work with the tools, you are not just an owner. You are an employee. If you’re not out working with the tools, you’re not earning a paycheck as an employee.
    • You want to develop a relationship with a new customer that could lead into a lucrative long term relationship. I’ve been known to “buy jobs” in the past.

In conclusion, building a profitable business is really hard work. While you may be the world’s best electrician or plumber when working with the tools, becoming a business person is a whole different matter. If you want your business to prosper, you have to know your costs.

Best regards,

William Ruffner
Founder & CEO
TurboBid

Follow TurboBid via Twitter, Facebook, LinkedIn or YouTube. Contact TurboBid directly at Support@TurboBid.net

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Introducing TurboBid 5.1

We are incredibly excited to announce the release of our newest version, TurboBid 5.1. We here at TurboBid are always listening to our customers suggestions about ways that we can improve TurboBid to help their company, as well as vastly improve their estimating process. We’re extremely happy to announce that a lot of suggested features have been added in the newest major TurboBid 5.1 update. You seriously do not want to miss out on this update.

One of the biggest new additions is the ability to add items to the take-off tab, as well as assemblies. We have wanted to add this feature for years, and it’s finally happened. No longer do you have to deal with creating single item assemblies in order to add individual items to the take-off. Now, the full contents of your database are at your finger tips.

Although adding items to the take-off is a pretty HUGE deal, that’s not the only update that we’ve made. Below we’ve lined out the biggest changes we’ve made to TurboBid 5.1 (along with some really cool images and gifs to allow you to get a feel for just how awesome these new features are).

You can also view all of these changes, as well as details about every update, at our website by clicking here.

Without further ado, here are the new features in TurboBid 5.1:

Add Items to TurboBid’s Take-Off Tab

  • Items can now be added to the take-off spreadsheet.
  • Items in the take-off spreadsheet are highlighted in a light blue color for easy differentiation from assemblies.

  • Double clicking an item in the spreadsheet will open the Item’s Preview screen.
  • Pressing the Ctrl key and double clicking an item in the spreadsheet will open the Item’s Maintenance screen.
  • Renamed the Take-Off tab’s Select Assemblies button to Select Material.
  • The Select Material screen now includes one tab for adding Items and one tab for adding Assemblies.

Add Items and Assemblies to the Take-Off Tab’s spreadsheet directly from TurboCloud

  • Users can select a single Item, or multiple Items via Ctrl / Click, and select Add to Estimate from the right click menu.

  • The Items in the Image Grid View include a new Add to Estimate button.

  • Users can select a single Assembly, or multiple Assemblies via Ctrl / Click, and select Add to Estimate from the right click menu.

  • Users can right click on an item or assembly in the take-off spreadsheet and select Locate in Tree from the right click menu.

Add Items and Assemblies to the Take-Off Tab’s spreadsheet from “Load Template”

  • The Load Template feature in the Select Material screen has been revised to include Items and Assemblies in the same template.

Revised the Take-Off Tab’s Sort Order Procedure

  • Renamed the Take-Off tab’s Take-Off Sort Order button to Material Order.
  • The Material Order screen now allow users to easily drag/drop folders into the order they want them to appear in the take-off spreadsheet.
  • Item folders are highlighted in a light blue color for easy differentiation from assembly folders.
  • Each folder’s Parent folder name is also displayed so that you can easily see the difference between Flat Rate AssembliesStandard Assemblies, etc.
  • Includes a Reset button that resets the folders back to an alphabetical sort order.

The Assembly Preview screen now displays an image of every item in the assembly.

Misc.

  • Added the word Assembly to the end of every assembly’s Quantity Take-Off Description so that the various reports clearly differentiate between Items and Assemblies. TurboCloud’s Refresh and Update local Assemblies process will revise these assemblies in your local.

  • Added a new Exclude from Quantity Take-Off Reports checkbox to the bottom of the Item Maintenance screen.

  • All of the Material folders were removed from TurboCloud’s Master Assembly Database. TurboCloud’s Refresh and Synchronize local Assembly folders process will move these folders to a new Under Admin Review folder in your local. You can delete all of these from your local as long as they have not been added to an estimate.
  • Prior to running an update, as a safeguard, a backup copy of your database is automatically created.

  • The Item Maintenance screen has been slightly revised so that the entire screen is visible in smaller computer monitors.

I know, that’s a lot of new features huh?  The feedback we’ve already received has been amazing, and we hope you all enjoy TurboBid 5.1 just as much as we do. We here at TurboBid pride ourselves on being the best, most accurate, estimating software on the market. Every new feature, new update, or new development of TurboBid is done with the sole intention of helping our customers not only win more jobs, but win more profitable jobs.  That being said, we would love to hear of any ideas about new futures or improvements that you have. Remember, we started TurboBid because we wanted to help other contractors and we will always work towards being the perfect estimating system for you and your company.

Starting Your Own Electrical Contracting Business

Thinking of starting your own electrical contracting business?

I’ve found that one of the most rewarding aspects of owning an electrical estimating software company is that it has provided me an opportunity to get to know people that have made the life altering decision to start their own electrical contracting business.

The image depicts starting your own business
Starting your own contracting business?

I know from experience that running your own electrical contracting business is not for the faint of heart. It takes up a lot of your time and it can be a lot of hard work.  But it can also offer unimaginable satisfaction. There is a lot to be said for taking control of your own destiny, for having the power to make your own decisions, to make your own mistakes, and to have the opportunity to make a better life for you and your family.

What are some motivating factors?

The reasons that people have for making the decision to start their own electrical contracting business often follow a similar thread. One of the most common scenarios I hear is one where they had become extremely competent at performing their job duties while working for someone else. Their job duties ranged from working in the field as an electrician, whether as a Journeyman, Foreman, Superintendents, or those that were working in the front office. They said that as long as everything was rolling along smoothly, they were quite happy and content working for their employer. But the moment grief and aggravation became a common theme in their daily work, nagging whispers of “Why am I putting up with this grief and making money for this company when I know that I can start my own electrical contracting business?” began to awaken the entrepreneur within them.

Another common scenario for making the decision to start their own electrical contracting business is that their employer could not provide them with steady full-time employment. Depending on what segment of the electrical construction industry you work in, some employers struggle with being able to consistently provide their employees with 40-hour work weeks. Unless you’re single and living in your parent’s basement, most working adults need to work full 40-hour weeks.

The image depicts waiting in line for a job
Looking for a job? Go to the back of the line.

I was a union electrician and I know how bad it can be when the job you’re working on comes to an end. If the company your working for doesn’t have another job lined up, they might be forced to lay you off. In the case of union electricians, if you get laid off, you have to go down to your local International Brotherhood of Electrical Workers  office and sign “the book”. Depending on how many other laid-off electricians are in front of you, it can take a substantial amount of time before they are able to send you out to another job.

My motivating factors

The motivating factors behind my decision to start my own electrical contracting business was a little bit different than most. First, I didn’t hate my job. The truth is that I actually loved my job. Secondly, there was not an issue with having steady work. If work slowed down in the field, I was fortunate enough to have enough additional value from my years working in the office as an estimator, running jobs as a foreman, and later being in charge of foreman as a superintendent, my employer always found a spot for me.

My motivation was simply that I didn’t want to work for someone else. I wanted to take control of my future and start my own electrical contracting business. If you think about, why would anyone want to put their family’s future in the hands of someone else? Why would you willingly give someone the power to give you your last paycheck and say, “I’m sorry but we have to let you go”. Forget that. This is America and it’s still the greatest country on earth. It’s one of the few places where you have the ability to be whatever you want to be. If you’re not afraid to put in the hard work, and if you have enough faith in yourself, you can be as successful as you want to be.

Fortunately, I was able to build a very successful electrical contracting business. I won’t lie and say it was easy in the beginning because it wasn’t. It required a great deal of dedication and a whole lot of hours.

Some things to think about now

You should start planning everything that you’ll need to do to start your own electrical contracting business as soon as possible. I would advise that you start networking potential customers as soon as possible. There are many community organizations you can join that will give you the opportunity to develop relationships with builders and other potential customers in your area.

Start researching the various expenses that you’ll incur. Make a detailed list of expected overhead expenses as well as anticipated burden costs. Our TurboBid estimating software includes an overhead calculator as well as a burden calculator. Feel free to contact us and we’d be happy to show you in a free screen share what these expenses consist of. Don’t let these expenses freak you out. You’ll account for them in your estimate and recoup them in your bid price. Just make sure that you’re accurately accounting for them in your estimate.

I would also suggest that you try to get terms at your local supply store. If you can get Net 30 or Net 60 terms, it means that you will have 30 or 60 days before you have to pay your material invoice. This gives you the opportunity to use cash flow to pay your invoices. Remember the phrase “Cash is King”.

Vehicles can be a big expense. You don’t need to buy new. I would suggest that you get yourself a well-maintained used van, and if needed, a pull behind cargo trailer.

Remember that these vehicles are traveling billboards that you can use to advertise your electrical contracting business. Don’t skimp on the graphics. You want your graphics to make a statement about your company. With that being said,  always keep your vehicles clean and well maintained.

Your vehicles are not just a mode of transportation. They are a means in which to achieve efficiency. We used to set up the inside of the pull behind cargo trailers with shelves and keep a modest material inventory. Rather than tying up a van, we would drop the trailer where the crew was working so they would have the tools and material they needed to complete the job.

Conclusion

Starting your own electrical contracting business, or any contracting business, can be extremely rewarding. While it is a lot of hard work, I believe that the potential benefits are well worth the effort.

When speaking with our customers on this subject, most of them feel that in spite of the hard work that was required to start their business, they absolutely love being in charge of their own destiny and have absolutely no regrets.

There are still many more aspects to discuss on this subject. I will continue my thoughts in a future article.

Best regards,

William Ruffner
Founder & CEO
TurboBid

Follow TurboBid via Twitter, Facebook, LinkedIn or YouTube. Contact TurboBid directly at Support@TurboBid.net

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“You’re going to have to get estimating software.” – Mike Holt

For those of you that are not familiar with Mike Holt, he is a well-respected author and developer of software, books and video training programs for the electrical industry. Click here for more information.

TurboBid is the only estimating software that Mike recommends. He has worked closely with the folks at TurboBid to ensure that it follows the same terminology and principles that he teaches in his estimating course.

TurboBid’s founder, Bill Ruffner, was invited by Mike to come down to Florida and take part in filming his new estimating DVD. During filming, Mike made the following comment that made a lot of sense. The truth is that most guys that open their own shops are coming out of the field. While they might have been great electricians, running a successful contracting company takes a whole different skill set. You’re going to have to decide to become a business person.

Mike said “You need to make a decision. The reality is that if you’re going to be a business person, you’re going to have to get estimating software. You need to make the decision that, ‘I’m going to be a business person’. Once you’ve made that decision, that’s your goal. Then number two is, ‘What’s your plan? How are you going to get there? What are you going to have to do?'”

Following is a video excerpt from Mike’s Electrical Estimating Deluxe DVD Package.

 

 

The concepts that Mike goes over in his video are very important to the success of your company. Every day that passes by without taking action is a wasted opportunity. You owe it to yourself, your family and your business to take a few minutes out of your day to see for yourself how TurboBid can help you win more profitable jobs and improve your professional image.

Give us a call at (888) 417-2458 x102 or click here if you would like to schedule a specific time for us to call you so that we can have a brief chat or live demonstration.

Estimating for the Electrical Contractor

Success2Construction estimating software has evolved over the past 40 years. It first ran on large, costly mainframes and then moved to other technology platforms as they were developed, decreasing costs dramatically. Most of the larger electrical contractors have been using software for many years to help them save both time and money. They use the software to get every edge they can over their competition. These companies know that estimating affects every aspect of their business. They understand the value of using the right tool to get the job done.

So you have to wonder – Why are so many electrical contractors still not realizing the benefits of using a formal estimating process and software solution?

To understand this, you have to look at some of the attitudes that contribute to smaller contractors not implementing an estimating discipline. Here are the most common ones that I hear:

  • Estimating software is too expensive: The cost of TurboBid is a fraction of other leading estimating programs. In fact, when used properly, TurboBid is capable of an ROI measured in just a few weeks. If you think about it, if it helps you win just one profitable job, it has paid for itself. Or, just one avoided mistake on the right job would pay for the program.
  • The software I’ve looked at does not address my specific type of work: Everybody knows that you can’t use the same labor units to estimate commercial, residential and service work. TurboBid’s unique Type of Work feature automatically adjusts the material labor units to reflect the selected type of work.
  • I’m afraid of new technology: TurboBid is arranged in a user friendly format that guides you through the estimating process. We also make it easy to learn how to use the program through our large library of detailed video tutorials. There is also a live chat icon within TurboBid so live help is always just a click away.

Bill Ruffner, the founder and CEO of TurboBid, is an electrical contractor with over 24 years of experience. He knew using a computer to help estimate electrical jobs was the fastest and most accurate method. The problem was that he couldn’t find a software program that met the unique requirements of his contracting company. That’s when he decided to take the extraordinary step of creating his own estimating software program. After a few years of developement, TurboBid had turned out to be so good that Ruffner figured that there had to be other contractors that could also benefit from the program. In fact, TurboBid is recommended by industry expert Mike Holt who has designated TurboBid as the “Best Buy” of all major estimating software programs.

One contractor, Geof Gratny of GSS Electric, out of Kalispell, Montana, realized early on after starting his business that there was a strong need to do things correctly. Gratny says “I started my business two years ago. I have been wiring for over 30 years so I knew the industry from an employee’s perspective. Facing the challenges of being a contractor left me with much to learn. I realized that if I was going to succeed, I had to really understand what was involved in the estimating process.“

Gratny states. “In a visit to MikeHolt.com, I discovered TurboBid. Being the perfectionist that I am, and wanting to keep startup costs low, I found TurboBid to be a very attractive program. Other programs that I researched were two to six times the cost of TurboBid.” Gratny knew several small electrical contractors that had purchased these other programs. “I was appalled to learn that they didn’t use the software anymore because of its complexity and lack of support from the company. They told me that the software was overkill for the type of work they do and the learning curve just wasn’t worth it.“

TurboBid employs a unique wizard format that allows users to easily identify and account for all possible labor and material costs. Additionally, material and assemblies are automatically assigned the correct labor unit based on the estimates type of work. The software also helps the estimator identify all direct and indirect costs by utilizing specialized calculators. This allows the estimator to set-up the program to accurately reflect the cost structure of his own company.

As for the learning curve, Gratny not only found the video tutorials to be very helpful but took advantage of TurboBid’s live training. “The support staff of TurboBid was willing and able to walk me through the startup phases of TurboBid. They graciously took the time and led me through several live web based tutorials, numerous personal phone calls and emails to get me up and running. That sold me. I knew if I didn’t get a program with the right support, I’d be wasting my money.” Gratny said.

TurboBid offers electrical contractors the opportunity to test drive the software program for 14 days. During this period of time, TurboBid’s support staff places an extremely high value in helping contractors learn how to use the software. They even take the time to assist contractors in completing their estimates.

Drew Garza of Templar Electric, an contractor in the outskirts of Houston, couldn’t agree more. “I have used four other estimating software programs only to be let down or disappointed. TurboBid is hands down, the most efficient and user friendly estimating program I have used and for the price, it can’t be beat.” Garza added, “TurboBid’s customer support is top notch.”

Eugene, Oregon’s Antone Electric owner, Shelby Antone says, “The folks at TurboBid allowed me to select training times that fit my busy schedule. They have a convenient scheduling calendar where I could schedule my web based training sessions. I really appreciate the effort that TurboBid puts forth to accommodate my business.”

Gary Gomez of Dakota Electric in Sioux City, Iowa simply put it “Follow up and training is most excellent. TurboBid’s support hours are for the working class blue collar owner and beats all. I suffer no working time lost by being able to take training classes in the evening. This is really important to me because I am out in the field working on the residential, remodel and light commercial jobs that I won by using TurboBid.”

Geof Gratny also wanted a program that was capable of importing material pricing updates. “I found out that our three local distributors have pricing formats that are compatible with TurboBid. So I have thousands of prices at my finger tips that I use for reference in addition to bidding. It’s extremely valuable for me to have a program sort and index 60,000 items for easy pricing.” TurboBid is set-up to easily import material pricing updates from TurboPricer, Trade Service, EPIC and NetPricer. There are also a growing number of national and regional suppliers that have agreed to provide price files to their customers that use TurboBid.

The ability to quickly create accurate and consistent estimates is especially important to the small contractor that relies on a single person to do the estimate, submit the bid, negotiate with the customer and then strap on the tools in the field. There is very little time to do it all. As North Florida contractor Shaw Electrical Services’, owner Steve Shaw states “I have 20 years of experience as an electrician, but now that I own my own business, I realized that I needed help estimating. I looked into several different estimating programs. I chose TurboBid not only because it was tailored specifically to my types of jobs but also because I was impressed by how quick and easy it was to produce incredibly accurate estimates, as well as being able to automatically generate professional proposals to give to my customers.”

Geof Gratny says “I’ve used TurboBid to win jobs including small remodels, service work, large residential, medium commercial and several mid sized industrial projects. I really enjoy knowing exactly what my costs are, which enables me to negotiate more confidently. It has been very interesting hearing from general contractors and customers about how they were astounded at the clarity and accuracy of what my proposals included. Recently, a general contractor called and told me that the other bids that he received were 2 pages long and he really didn’t know what they included. The twelve page Room by Room Quantity Take-Off report that I printed from TurboBid gave him perfect clarity. He was able to relay to his customer exactly what I was including, instead of a verbal assumption. He used words like “Comforting”, “Confidence”, “Confirming” and “Clarity” in describing the proposal.“

Drew Garza adds, “The reports are absolutely amazing and they definitely give me a winning edge over my competition. I smile while I think to myself how it only took me five minutes to create it.”

Gratny concludes, “I am convinced that my success in this tight economic time is largely due to being able to produce a professional looking bid package, be accurate with the numbers and know my boundaries for pricing. I am very happy with TurboBid, the support and the flexibility that it gives me.”

For more information, please visit www.TurboBid.net

How Do You Find the Right Estimating Software?

Invest1How Do You Find the Right Estimating Software?

It can be a daunting task when you start to look for an estimating software program that is best suited for your own particular needs.  Every company is saying the exact same thing: Our software is easy to use, it is the most accurate, it is the most consistent, it will help you win more bids……… In fact, you might even start to think that they are all pretty much the same.  This couldn’t be further from the truth.

TurboBid is quickly becoming well known for both its estimating software’s capabilities as well as it’s stellar customer service.  All you have to do is listen to what our customers are saying and you’ll understand why.  But as a contractor who is not currently one of our customers, you have had very little contact, if any, with our company.

So how do you know if what we are saying is true?  Doesn’t every estimating software company make the claim that they are better than the next?  Sure, you could do your research and peruse the various blogs and forums on the internet and see all the positive press for TurboBid. While it would certainly help, would you truly be 100% convinced?  Or you could even go to Mike Holt’s website and see that TurboBid is listed as the “Best Buy” among his listing of major estimating software solutions. You might even discover that TurboBid was designed around the principles taught in Mike Holt’s Illustrated Guide to Electrical estimating.

Again, how do you know which is the best estimating program for you?

Just remember: Without using the software in real life situations, on real bids, you are just making a decision based on what others are saying. Instead of casually looking at a limited trial version, we want to help you really use the software and prove that TurboBid is a winning solution.  We are offering you the opportunity to utilize TurboBid for 14 days, performing actual takeoffs. This isn’t just a trial where you download the software and find out that you’re left on your own to figure things out. This trial includes the full support of our company.

Download today and learn first hand why contractors across the country are so excited about TurboBid.

www.TurboBid.net

“You’re going to have to become a business person” – Mike Holt

Mike Holt and Bill Ruffner
Mike Holt and Bill Ruffner

For those of you that don’t know Mike Holt, he is a well-respected author and developer of software, books and video training programs.

TurboBid is the only estimating software that Mike Holt recommends. He has worked closely with the folks at TurboBid to ensure that it follows the same terminology and principles that he teaches in his estimating course.

Mike makes the following statement in his estimating DVD that really sums up the issue:
“You need to make a decision. The reality is that if you’re going to be a business person, you’re going to have to get estimating software. You need to make the decision that, ‘I’m going to be a business person’. Once you’ve made that decision, that’s your goal. Then number two is, ‘What’s your plan? How are you going to get there? What are you going to have to do?’ ”

Why square foot pricing is not a good idea

The ultimate goal of any company is to make money. What determines if your company makes money? You simply have to sell jobs for more than what they cost you to do.

Contractors that use square foot pricing run the risk of losing money on jobs because they neglect to identify and account for all of their costs.

The description of neglect in Websters dictionary is “to give little attention or respect to”.

If a company’s ultimate goal is to make money, why would any contractor use a method of estimating that gives little attention to or respect to identifying and accounting for all of their costs? I have to believe that it’s simply because they don’t know any better.

Producing highly accurate estimates in a timely manner is not at all difficult if you know how to do it.

TurboBid provides a simple step by step process of estimating and bidding that allows you to systematically identify and account for all of the costs involved in a job.

We take great pride is our ability to personally help contractors become better business people. We have a passionate desire to help our customers succeed. Honestly, there is no better feeling in the world than receiving a letter from one of our customers thanking us for helping them provide a better life for themselves and their family.

Following is what needs to be considered when estimating and bidding on a job. Would you prefer to do all of this manually or would you prefer to use the power of TurboBid?

Material costs and labor hours

  • The fastest and most accurate method of estimating is to use assemblies. An assembly should include your material costs and the amount of time to lay out and install the assembly. TurboBid currently includes over 45,000 per-built assemblies.

Assembly maintenance screen

Material Cost

  • Your material pricing needs to be accurate. TurboBid allows you to easily keep your material prices up to date.
  • If applicable, add a percentage of the material cost to account for misc. material.
  • If applicable, add a percentage of the material cost to account for material waste and theft.
  • Add material sales tax.

Labor

  • Manpower: In order to calculate your labor cost, you need to identify the manpower that will be used on the job. Your manpower costs should include the following:
    • The employee’s pay rate per hour.
    • The employee’s burden cost. Burden is the additional cost that you incur on behalf of your employees. This is typically in the form of payroll taxes, workman’s compensation, general liability insurance, health insurance, paid vacations/holidays/sick days, benefits, bonus’, etc.
    • View our manpower selection screen
    • View our labor burden calculator
  • Pay Raises: You should account for any employee pay raises that are incurred in the middle of the job and add the prorated cost to the estimate. TurboBid does this automatically.
  • Skill Level Adjustment: The material labor units used in TurboBid are based on a typical journeyman doing the installation. If you have employees that produce at a lower rate, they will cause the job to take longer to complete. You must calculate the effect that this lower productivity has on the entire crew and add it to the estimate. TurboBid does this automatically.
  • Additional Labor: This is where most contractors leave money on the table. Your estimate needs to include all of the additional time that you’re paying your employees for. This can include things like job set up in the morning, packing up to go home at the end of the day, material handling, meetings, paperwork, sweeping, travel time, etc. These tasks can be for one-time only, per day or per week. TurboBid automatically calculates these costs and adds it to the estimate.
  • Type of Work: You can’t use the same material labor unit to estimate all types of work. For example, residential typically has a faster pace and more repetition than commercial work. You need to be able to quickly adjust your labor units to accurately reflect the type of work that you’re estimating. TurboBid does this automatically.

Misc. Expenses

  • Misc. Direct Job Expenses: You must take the time to identify and account for all of your misc. direct job expenses.
  • Subcontracts: You need to add any costs for work that you’re paying a subcontractor to perform.
  • Tools: You should not only account for the cost of new tools that a job will require you to purchase but you should account for the cost of using your existing tools as it relates to tool replenishment. TurboBid automatically calculates this cost and adds it to the estimate.

Direct Cost Detail

Your estimate should clearly display the calculated values for all of the above.

Overhead

It is vital that you know your true overhead costs. Overhead is what it costs to run your company. It includes costs such as office personnel, vehicle expenses, advertising, office supplies, utilities, cell phones, etc. It’s basically all of the costs that your company incurs simply because you are in business. It has nothing to do with direct job expenses. TurboBid includes a calculator to assist you in determining your overhead expenses. It also includes the ability to break down your overhead cost into a rate per hour. In our opinion, this is the most accurate method of adding overhead to your estimate.

Profit

The are two steps in determining the price to provide to your customers.

  • Estimating: Estimating is the process of calculating how much it will cost you to do a job. This is also known as your break-even cost.
  • Bidding: Bidding is deciding how much to sell a job for. You simply need to decide how much profit to add to your break-even cost.

When I was contracting, almost all of my customers wanted to negotiate a lower price. If I only had a dollar for every time I heard the phrase “you have to go back and sharpen your pencil”, I’d be a rich man.

When negotiating a job, you have to decide, how badly do you want the job?

  • Maybe it’s for a new big customer than you want to develop a relationship with. This is also known as buying a job.
  • Maybe things are slowing down and you need the job to keep your key employees.
  • Maybe you need cash flow to cover your overhead expenses.
  • Maybe you need a paycheck.

Before I created TurboBid, I have to admit that, for whatever reason, I wanted to win every job that I bid on. What used to drive me completely out of my mind is that I didn’t know how low I could go before I would lose money on the job. At the time, I relied on my gut instinct but in reality, when I look back today, I didn’t have a clue. I’m cringing right now thinking about how many jobs I probably took at below cost.

One of the biggest benefits you’ll find in using TurboBid is that you’ll know your break-even cost. You’ll be in a position to negotiate your bid price without the risk of losing money. If it comes down to it, you’ll be able to tell your customer with conviction that as much as you want to do their job, if you lower your price any more, you will lose money. At that point, tell them in no uncertain terms that they need to be very careful about awarding the job to anyone that claims they can do it for less.

View our Bid Price Detail tab

View our Bid Price report

For more information, please visit www.TurboBid.net or call (888) 417-2458 Ext 102

Click here to download a free trial of TurboBid

Introducing TurboBid 5.0

We are pleased to announce the release of TurboBid 5.0.

Click here to download and install TurboBid 5.0

TurboBid 5.0 adds some incredibly exciting new features to not only TurboBid, but to TurboCloud as well.

For first time users, one of the biggest additions is a brand new training mode. This training mode utilizes a wizard format that will walk you through the estimating process. A floating video player will play the appropriate training video for whatever page you are viewing. The video player will always remain visible, allowing you to pause the video while you enter data into the screen you are viewing, and resume video playback as needed. Whether you’re still using manual methods, or have used other software in the past, using a new estimating system has never been so easy.

As far as TurboCloud improvements, it’s really hard to overstate how much of a positive impact these changes will have on your estimating. Here’s a short video from our founder and CEO explaining why TurboCloud is so essential: Click here to watch

Click here to see all of the new TurboCloud videos

Of course, we still haven’t even scratched the surface on all of the new things TurboBid 5.0 brings. Following are a list of the all new features and improvements in TurboBid:

New Features

  • New “Folder Sync” icon added to TurboCloud’s ribbon. Clicking this icon will synchronize your local folders to match the contents and structure of TurboCloud’s master folders. This is a big deal since we continue to add new folders, rename existing folders, delete folders, and move items and assemblies. No longer are you expected to manually edit your local folders to match the master folders. The new Folder Sync process will do this for you.
  • New “Data Sync” icon added to TurboCloud’s ribbon. As time goes by, it is sometimes necessary for us to change the following data for an existing item in our master database: Description, Manufacturer, Catalog #, UPC # and Original Labor Unit. The Data Sync feature will show you the items in your local database that have outdated information. You can choose to exclude any item from being updated. Once you agree, all the items will be updated with the current data values. This new process will make it very easy to keep your database current and up to date.
  • Our support department will automatically be notified of certain errors that you receive while using TurboBid. This will help us identify and fix critical issues that you might encounter.
  • Video tutorials are played in a floating video player. The video player will remain visible until you close it, allowing you to pause the video while you enter data into the screen you are viewing, and resume video playback if needed.

Improvements

  • When opening an item or assembly in TurboCloud, a preview screen appears rather than opening the item or assembly maintenance screen. Along with all the data, a picture of the item is also included in the preview. A single click in the preview screen will open the maintenance screen if desired.
  • New activation wizard makes it easier to register and activate your license keys for both TurboBid and TurboCloud.
  • Default values for tab dropdowns can be set. If you add “(Default)” to the end of a dropdown item’s description, that item will automatically be selected when creating a new project. For example, if you change “Foreman” to “Foreman (Default)”, the Foreman classification will automatically be selected and added to the Direct Labor tab when creating a new project. Every dropdown has this capability. This allows you to create default values for all tabs when new projects are created.
  • The Flat Rate reports now include the values from the Additional Labor tab, Tools tab, and Subcontracts tabs.
  • Both sides of TurboCloud (local and master) can be resized by dragging the middle bar to the left or to the right.
  • Added more options to the TurboCloud Item right click menu:
    1. Edit: Opens the item maintenance screen
    2. View Picture
    3. View Catalog
    4. Locate in Master: This opens and highlights the assembly in the master
  • Added more options to the TurboCloud Assembly right click menu:
  1. Edit: Opens the assembly maintenance screen
  2. View Picture
  3. View Catalog
  4. Locate in Master: This opens and highlights the assembly in the master
  • Entire folders of items and/or assemblies can be deleted. No longer do you need to delete one at a time. Items that are included in assemblies, and assemblies that are included in estimates, will not be deleted.
  • When a folder, item or assembly is dropped into the local side of TurboCloud, the folder tree expands and highlights the item(s) or assembly(ies) that was dropped. This will allow you to easily verify what was dropped, and where it was added.
  • The category names that are displayed in red text in the take-off tab have been revised. Previously only the root folder description was used. For example: “Distribution Assemblies”. Now, the name of the root folder’s 1st child folder will be added to the category name. For example: “Distribution Assemblies : Home Run Circuits” This new feature greatly enhances the organization of the take-off tab.
  • The material list can now be generated per tab. It no longer combines all the tabs in one material list.
  • Centralized license management screen to easily manage both TurboBid and TurboCloud license keys.
  • A TurboCloud subscription is no longer needed to refresh the contents of the master database.
  • Dramatically reduced the amount of time it takes for TurboCloud to open. Now when you click on Materials or Assemblies, TurboCloud opens right away.
  • The Go button in the search screen is active by default. Hitting the Enter key starts the search.
  • The Help menu in TurboBid has been revised for increased organization.
  • Updated video tutorials.

Estimating Large Residential Developments

 

Tract3We would like to share a post that we previously responded to on Mike Holt’s forum. Click here to view the entire thread.

Question
“I’m looking at going into wiring new residential developments. Do any of you know of any websites or have any information as to how I can bid on these large developments? Any help would be appreciated”

Our Answer
Toll Brothers, Pulte Homes and Centex are some of our customers. They are typically good to work for. Their superintendents are usually qualified and know how to run a smooth project. We usually don’t have any major problems with payouts.

Large tract projects have certain benefits. When you bid on a project, you are actually bidding on a lot of homes. You can sell one job and have work for a multitude of years.

The key is that you really need to be confident that your estimate is correct. You have to know what your true costs are. To win these type of projects, you need to go in on your base bid very, very tight. It is the cost of admission.

You will make your margins in the options that the home buyers select. You will need to provide the builder with a standard option price list that contains the standard options that a home buyer will add to the base model. Our margins on options ranged between 60 to 360 percent. It’s really an illusion. It’s a matter of taking the prices as high as you can while keeping them under the point of pain. It’s not taking advantage of the home owner. They are either going to pay for it in the base price or in options. Since the builder is more interested in being able to keep the base price of the homes low, it is expected that you are going to make higher margins in the options.

If possible, you need to help the sales people with selling electrical options. We provided them with electrical option catalogs that they give to the home buyer. This makes a HUGE difference in revenue.

You also need to keep in mind that these projects consist of a hand full of models that will be built over and over again. Because of the repetitive nature, your crew will become very fast at the rough. Also, when your crew finishes work at a certain lot, the next house is just right down the street. This helps minimize down time. You can also keep your van on site. This reduces your fleet cost. We utilized small trailers that we backed up to the house. The tools and material are right there. If you give two of your employees keys to the trailer, work can still continue if your foreman can’t make it to the job.

You can make good money on tract projects. It’s just a different way of thinking.

You asked about how to estimate these types of jobs. We actually developed our own estimating program. It turned out so good that we decided to offer it to other contractors. The program is called TurboBid. (www.TurboBid.net) Mike Holt has sent out numerous newsletters regarding TurboBid. You can download the free trial and judge for yourself. We have also made the electrical options catalog available through our website.