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					                           Down Economy

                           Computerized

                     Estimating Workshop




Prepared for:
___________________________
Presented by:
James Huston, John Newlin & Glenn Fahringer
Of:
J. R. Huston Consulting

Your Company: ________________________________________

Date: ______/______/2011
                         Down Economy Estimating Workshop

                                           Schedule

         The J. R. Huston Consulting computerized estimating workshop is a one-day workshop
designed to introduce you to the philosophies and methodologies of landscape and irrigation
construction, maintenance and irrigation services estimating utilizing MS Excel and The Bid
Suite (TBS) software. At the end of the day, you should be able to produce a lump sum bid, an
irrigation service technician’s rate; day-rates for irrigation, landscape and maintenance crews;
and time and materials (T&M) prices; which accurately reflect your company’s general and
administrative (G&A) overhead structure. This workshop introduces you to the estimating
process and the more you use and apply this process after the workshop, the more that you will
gain and learn from it.

Attendees will need:

      A laptop computer with MS Excel and a CD drive
      A calculator (with extension cord if necessary)
      Note pad, pens and pencils
      State unemployment rate *
      Workers’ compensation insurance (WCI) rates/policy *
      General liability insurance rates/policy *
      Medical insurance costs
      Most recent year-end Profit & Loss (P&L) statement *
      Current year P&L (if available) *

       * Approximate numbers provided by Jim Huston for start-up companies

Workshop schedule:

        8:00 – 8:15           Introduction
        8:15 – 10:00          General & Administration overhead budget preparation
       10:00 – 10:15          Break
       10:15 – 10:45          Labor burden calculation
       10:45 – 11:15          Average wage calculation
       11:15 – 12:00          Calculating: Install Crew Day Rates, Time & Materials
                              (T&M) pricing and irrigation service pricing to include
                              Break-even points (BEP) and Gross & Net Profit Margins

       12:00 – 1:00           Working Lunch

        1:00 – 2:30           Continued: Day Rates, T&M pricing, etc.
        2:30 – 2:45           Break
        2:45 – 3:45           The Bid Suite (TBS) software introduction
        3:45 – 4:15           The six methods of estimating
        4:15 – 4:30           Concluding remarks

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                      Down Economy Estimating Workshop


                                       Bid Overview

                                   (The 3 Phases of a bid)

I. PRODUCTION OF FINISHED PRODUCT / PROVISION OF THE SERVICE:

      MATERIAL             LABOR               EQUIPMENT                SUBCONTRACTORS

      (at re-wholesale    (labor hours         (equipment hours on        (at cost)
       cost)               multiplied by       job multiplied by
                           average wage or     predetermined
                           labor rate)         cost per hour)

II. GENERAL CONDITIONS:

     MATERIAL                 LABOR            EQUIPMENT                SUBCONTRACTORS

     (same)                   (same)               (same)                     (same)

III. MARGINS & MARKUPS:

     MATERIAL             LABOR               EQUIPMENT                 SUBCONTRACTORS

A.   Sales tax on materials

B.   Labor burden on labor

C.   G&A Overhead recovery (total number of field-labor hours in sections I & II above
     multiplied by company G&A overhead cost per field-labor hour (OPH)):

              _________ (No. Hours) X _________ (OPH) = $_________

D.   Contingency factor (if applicable)

E.   Net profit margin (a straight percentage margin on total of all costs (the break-even point)
     for the job or desired company average profit per hour (PPH) multiplied by total number
     of field-labor hours in sections I & II above):

              _________ (No. Hours) X _________ (PPH) = $_________




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                         Down Economy Estimating Workshop


         General & Administration (G&A) Overhead Budget Definitions

1. ADVERTISING:

      A. Yellow pages.                                                             $___________
      B. Newspaper ads/help wanted ads.                                             ___________
      C. Magazines, bill boards, door hangers, bulk mail.                           ___________
      D. Web page (depreciate over 3 years) and monthly fee.                        ___________
      E. Company brochures (pro rate over # of years).                              ___________
      F. Garden, trade and home shows.                                              ___________
      G. Company resume.                                                            ___________
                                                                                   $___________
       Note: Does not include business cards, which are put in office supplies.

2. BAD DEBTS:

       A. Usually .5 to 1% of gross sales.
       B. Percent of Accounts Receivables which are written off.
                                                                                   $___________
3. COMPUTERS and SOFTWARE:

       A. Computer, software, and digitizers are included in this category         $___________
          (Depreciate over a three-to-five year period).
       B. Include costs to have PC consultants train your staff (in-house).         ___________
       C. Maintenance contracts and repairs.                                        ___________
                                                                                   $___________
4. DONATIONS: Do not include donations from profits made to reduce taxes.

       A. Cash or time (hours _______ x ________ CAW) =                            $___________
       B. Only a donation that will put you in a good light in the public eye.      ___________
       C. Team uniforms (i.e., Little League teams).                                ___________
       Note: Donations from profit to reduce taxes are not included.               $___________

5. DOWNTIME LABOR: Time field crews are still paid but are not working in the field and
   producing billable hours. Time spent working on/repairing equipment is not included. Is
   usually one hour per week for field employee.

       A.   Rain/weather - can include non-productive winter crew time.               ________ Hrs
       B.   Equipment breakdown (i.e., to and from jobs).                             ________ Hrs
       C.   Busy work - fixing shovels, cleaning yard, watering nursery plants.       ________ Hrs
       D.   Safety meetings, crew seminars and miscellaneous crew meeting time. ________ Hrs
       E.   Watering nursery material (only if nursery is not separate division).     ________ Hrs
       F.   _____________________________________________________                     ________ Hrs
                                                                                 Total ___________
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                        Down Economy Estimating Workshop


6. DOWNTIME LABOR BURDEN: A percent markup on down time labor to cover FICA,
   FUTA, SUTA, WCI, etc.

7. DUES and SUBSCRIPTIONS:

      A.   Dues to national, state and local organizations.                 $____________
      B.   Chamber of Commerce, Better Business Bureau, etc.                 ____________
      C.   Professional magazines.                                           ____________
      D.   Dodge reports, Plan rooms, Green sheets, etc.                     ____________
      E.   Any type of business-related publications.                        ____________
      F.   Price Club, discount warehouse dues.                              ____________
      G.   ______________________________________________                    ____________
                                                                            $____________
8. INSURANCE:

      A. Office contents insurance (usually $100 to 250 per year).          $____________
      B. Health insurance for overhead people (i.e., owner(s), secretary,
         accountant, bookkeeper, estimator, sales/field supervisors).        ____________
      C. Life & keyman insurance is included as long as the company
         is the beneficiary.                                                 ____________
                                                                            $____________

9. INTEREST and BANK CHARGES:

      A. Interest on line of credit.                                        $____________
      B. Lost interest on company's retained earnings used for working
         capital (interest on 4-5 weeks of payroll).                         ____________
      C. Supplier interest on past due payables.                             ____________
      D. Credit card interest.                                               ____________
      E. Bank bounced check fees and service fees.                           ____________
                                                                            $____________
      Note: Does not include:
              (1). Past due receivables owed to you.
              (2). Interest on equipment or mortgage payments.

10. LICENSES and SURETY BONDS: City licenses are usually not included and are put in
    general conditions on bids.

      A. State contractor's license, city and county business license.      $_____________
      B. Surety bond on contractor's license.                                _____________
                                                                            $_____________




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                          Down Economy Estimating Workshop




11. OFFICE EQUIPMENT DEPRECIATION, REPAIRS and SERVICE CONTRACTS:
     Divide total cost for each category by its years of useful life. Does not include field equipment,
    overhead vehicles, computers, telephones, radios and digitizers.

        A. Office equipment (general office equipment).                        $______________
        B. Office furniture, desks (10 years).                                  ______________
        C. File cabinets (10 years).                                            ______________
        D. Coffee machine, copy machine, blue print machine.                    ______________
        E. Calculators, typewriters.                                            ______________
        F. Plan rack.                                                           ______________
        G. Drafting table (10 years).                                           ______________
        H. Plants, pictures, art.                                               ______________
        I. Repairs/maintenance contracts.                                       ______________
        J. ________________________________________________                     ______________
                                                                               $______________
12. OFFICE SUPPLIES:

        A.   Pens, pencils, paper, paper clips, toner, etc.                    $______________
        B.   Stationery, invoices, printing of forms, etc.                      ______________
        C.   Business cards.                                                    ______________
        D.   Postage.                                                           ______________
        E.   _________________________________________________                  ______________
                                                                               $______________
13. PROFESSIONAL FEES:

        A.    Outside CPA or bookkeeper.                                       $______________
        B.   Legal fees (not to include cost of law suits).                     ______________
        C.   Consultants (other than computer consultants).                     ______________
        D.    Outside payroll services.                                         ______________
        E.   Cost of Corporate Tax preparation at end of year.                  ______________
        F.   Incorporation cost spread over five years.                         ______________
                                                                               $______________
14. RADIO SYSTEM and CAR PHONES:

        A.   2-way radio system (depreciate over 5-10 years of useful lifetime)$______________
        B.   Beepers, pagers.                                                  ______________
        C.   Mobile phones (depreciate over 2-3 years).                        ______________
        D.   Maintenance of above items (to include anticipated repairs).      ______________
        E.   Repeater charge.                                                  ______________
        F.   Monthly line charges and monthly long distance charges.           ______________
                                                                              $______________


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                         Down Economy Estimating Workshop




15. RENT (OFFICE and YARD):

       A. Office space (fair market value).                                $______________
       B. Storage facilities and yard.                                      ______________
                                                                           $______________

16. SALARIES - OFFICE: Bookkeeper, office manager, secretary, esti-
    mator, designer, field supervisor (pro-rate if a “working” supervisor). $______________

17. SALARIES - OFFICER (S): Corporate officers’ salaries at fair market value.
    Total of 16 and 17 should total between 8%-12% of gross sales.    $______________

18. SALARIES - LABOR BURDEN (OFFICE): A percent markup on
    16 and 17 to cover FICA, FUTA, SUTA, WCI, etc.        $______________

19. SMALL TOOLS and NON-OFFICE SUPPLIES:

       A. Wheelbarrows and non-motorized items.                            $______________
       B. Hand tools to repair equipment, Rakes, shovels, hoes, etc.        ______________
       C. Tarps, nails, paint and miscellaneous hardware for office use.    ______________
                                                                           $______________
20. TAXES (ASSET or MILL TAX)

       A. Business privilege tax/Mill tax.                                 $______________
       B. G&A office (not field equipment) portion of asset tax.            ______________
                                                                           $______________
21. TELEPHONE:

       A.   Line charges.                                                  $______________
       B.   Long distance charges.                                          ______________
       C.   Rental (if any).                                                ______________
       D.   Depreciate system over 5-10 years.                              ______________
       E.   Answering service/machine.                                      ______________
       F.   Repairs and maintenance contracts.                              ______________
                                                                           $______________

22. TRAINING and EDUCATION: See # 23 for travel and entertainment costs.

       A.   Books, videos, tapes, VCR, etc.                                $______________
       B.   Workshops and seminar entrance fees.                            ______________
       C.   Community college/continuing education classes.                 ______________
       D.   Convention entrance fees/registration fees.                     ______________
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                         Down Economy Estimating Workshop

                                                                         $______________
23. TRAVEL and ENTERTAINMENT:

      A.Travel cost(s) to get to seminars, workshops or conventions.    $____________
      B.Hotel bills associated with seminars, workshops and conventions. ____________
      C. Lunches/dinners for clients.                                    ____________
      D.Christmas party for employees/gifts at Thanksgiving, etc.        ____________
      E.Employee parties/meals if company pays for them.                 ____________
      F.________________________________________________                 ____________
                                                                        $____________
24. UNIFORMS and SAFETY EQUIPMENT:

      A.   T-shirts and ball caps.                                       $____________
      B.   Uniform rental services.                                       ____________
      C.   Uniform cleaning services.                                     ____________
      D.   Safety equipment (i.e., goggles, gloves, ear protectors and
           hard hats if not included in small tools/supplies).            ____________
                                                                         $____________

25. UTILITIES:

      A. Water, sewer and electricity for office/yard.                   $____________
      B. Gas and oil for heating office/yard spaces.                      ____________
      C. Trash service/non-job related dumpster/dumpster fees.            ____________
      D. Office/yard dumpster.                                            ____________
      E. Office cleaning services.                                        ____________
                                                                         $____________
26. VEHICLES, OVERHEAD:

      A. Vehicles used by overhead personnel for overhead purposes       $____________
         (e.g., trucks that do not go out on the job).
      B. Office staff mileage reimbursement for personal vehicle use.     ____________
                                                                         $____________
27. YARD EXPENSE/LEASEHOLD IMPROVEMENTS:

      A. Cost associated with maintaining a storage yard.                $____________
      B. Leasehold improvements to your office depreciated over the life
         of improvements (carpet, painting, tenant improvements, etc.).   ____________
                                                                         $____________

28. MISCELLANEOUS: A catch-all category. Keep under $250.                $____________




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                         Down Economy Estimating Workshop


                                     Definition of Terms


1. Sales per hour (SPH): the price for a bid divided by the total field-labor hours included in the
bid.

2. Direct costs per hour (DCPH): total direct costs in a bid (including sales tax and labor
burden) divided by the total field-labor hours in the bid.

3. Overhead per hour (OPH): a company/division's total budgeted general & administrative
overhead costs for the year divided by the projected billable field-labor hours for the year.

4. Profit per hour (PPH): a. a company/division's projected net profit for the year divided by the
projected billable field-labor hours. OR b. the net profit margin on a specific bid divided by the
total field-labor hours in the bid.

5. Break-even point (BEP): the sales dollar amount at which all costs (both G&A overhead and
direct costs) are covered in either a specific bid or a company/division.

6. Overhead (G&A) costs: indirect costs (rent, advertising, office staff salaries, etc.) which
cannot be directly tied to a specific job.

7. Gross profit margin (GPM): G&A overhead costs plus net profit, formatted either as a
percent or in whole dollars.

8. Gross profit margin per hour (GPMPH): gross profit margin dollars divided by the total
billable field-labor hours in either a specific bid or an entire company/division.

9. Material to labor (M/L) ratio: direct material costs divided by direct labor costs in either a
bid or a company/division.

10. Material per hour (MPH): direct material costs divided by the billable field-labor hours in
either a bid or a company/ division.

11. Equipment to labor (EQ/LAB) ratio: direct equipment costs divided by direct labor costs
in either a bid or a company/ division.


12. Equipment per hour (EQPH): direct equipment costs divided by the billable field-labor
hours in either a bid or a company / division.

13. General conditions per hour (GCPH): the general conditions in a bid divided by the field-
labor hours in the bid.

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                          Down Economy Estimating Workshop

14. General conditions per hour (GCPH): the general conditions in a bid divided by the field-
labor hours in the bid.

15. General condition hours to total hours: the general condition hours in a bid divided by the
total hours in the bid (usually 20-30%).

16. Factor: the price for a bid divided by the wholesale cost of the materials in a bid. Or one
component in a mathematical multiplication formula when multiplied by another produces the
product (e.g., 2 x 3 = 6, 2 and 3 are factors of 6).

17. Unit price: the total price of a bid (or section thereof) divided by the respective unit quantity
(i.e., square feet, square yards, cubic yards, man-hours, per plant, linear feet, heads, zones, etc.).




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