by Richard Jaffarian, President Electrical Resources
To obtain work you must submit a bid price. To arrive at a bid price, you must first prepare an estimate low enough to get the job and high enough to cover all costs and be profitable. Two of the five essentials of preparing a competitive estimate to meet those requirements are reasonable prices and realistic labor units.
Too often a contractor will do business with only one supplier assuming the material prices being quoted are reasonable and competitive when in most cases, they aren’t. Allowing yourself to be locked-in with one supplier is a win-win situation for that supplier and as long as you don’t raise the issue of what you’re paying for materials, the suppler won’t either. It also sends a message to other suppliers that they don’t have much of a chance to earn your business. At the moment, the economy is prospering and work is plentiful, but that’s not always the case and there will be times when you need reasonable prices to be competitive in a tight market. Contractors who deal with just one supplier call me saying that they can’t buy materials at the price levels I publish. Only after my suggesting they get quotes from other suppliers do they realize that they could have been buying at lower levels, winning more bids and making higher profits. Having multiple supplier accounts and treating them all honestly and fairly will insure that you receive reasonable material pricing when you need it.
Equally as essential to reasonable material pricing are realistic labor units. A labor unit represents the amount of time necessary to not only install an item, but getting the item to where it needs to be installed; having the proper tools and information to install the item; preparing the item for installation and cleaning up after the item is installed. A realistic labor unit is high enough to cover the direct and indirect labor to install material and low enough to maintain competitiveness in the bid market. Personal experience and historical data define the authenticity of labor units. Realistic labor units are essential in preparing competitive estimates however, to have realistic labor units be essential two simple rules must be followed: 1) the contractor understands the electricians’ responsibility is to install materials and 2) the contractor understands that it his responsibility to provide the electrician with the right materials with the right tools at the right time with the right information.
Richard Jaffarian is the president of Electrical Resources, Inc. He is a former electrical engineer, managed a successful electrical contracting company and is qualified as an expert witness. Established in 1975, Electrical Resources has prepared over 32,000 electrical estimates worldwide and is the publisher of the National Electrical Price Guide Online, the most complete and comprehensive source of up-to-date electrical material prices and labor units in the industry. He is the creator of Quantum estimating software with the revolutionary AutoBranch feature that calculates the bill of materials for branch circuits in seconds; PICS on screen take-off and EPS that updates material prices in most major estimating software.
For more information on EPS+, the NEPG and price updates for your estimating software, visit www.electricalresources.com