By H. Kent Craig
Project Management Authority
Generating a bid from instinct and tossing it out there takes sheer guts and isn't for either sissies or for anyone who doesn't have many years in the business. Years of experience can give one an almost-psychic sense of what a given number for a job might be based on such factors as square footage, type of building, municipal location, who the a/e firm is that designed it, and local zoning and business regulations.
Most residential plumbing companies price housing jobs by the fixture and most residential HVAC companies price houses by the ton, but I'm not talking about that. I'm talking about rules of thumb for estimating commercial, institutional and similar jobs. I'd love to hear your own rules of thumb. Please send them to at my e-mail address at the end of this column.
I'll never forget the first large commercial HVAC job on which I saw a SWAG estimate applied. I was the head of their estimating department with 20-plus years' experience, and I was shown it by the owners of the company, no less. because it was their company and their money, I couldn't say anything but, I have to admit, I was scared, well, effluentless for them. We not only got the job, but we made something like a 39% gross margin and a 14% or thereabouts net, so I did indeed learn something.
This was a 10-story government office building built back in the 1940s with low interior ceilings. all the steel I-beams were "cut and collared" to where the ductwork was penetrating through the interior structural beams. the old system was truly a magnificent example of solid engineering and field execution. some floors and areas within floors had lots of ducts, some average and some not so much.
The owners of the company literally took three sections on the original plans, one each 100-sq.-ft. area: one with a lot of duct, one with an average amount and one with little. They figured out the respective total duct poundage in those three areas, came up with an average for all three, divided that into a single poundage per square foot number and then multiplied that number by the total square footage on all 10 floors. sound insane? Felt like it to me too. but we got the job and made good money and that's the name of the game.
A consulting client of mine who owned a $10 million-a-year industrial piping company had never done a "proper" estimate in his life. He would simply do a piping footage takeoff and then use a per-foot multiplier for his total labor and add that to his material costs. sounds like what we all do to a point, except he never counted hangers, tool-and-equipment rental costs, excavation, permits, fees, bonds, insurance, taxes, job trailer, shop drawings, supervision or any other contract-specific conditions, nothing but footage of pipe.
His dad, who had started the company 40 years back, had come up with the original sWaG numbers. all he had done over the years were slight bumpups to adjust for inflation.
The most amazing thing about this system was that it didn't matter what kind of job he bid. If it was a pulp mill renovation, a factory shutdown with tons of overtime, a hospital job that wouldn't be finished for two years, a grain-drying facility or a boiler job at a military base, he never tweaked his sWaGs to account for different kinds of jobs, but almost always (true net profit might fluctuate by a point or two either way) made the same consistent 6% or thereabouts net profit, and he was happy with that.
Another "tradition," to which I admit to being guilty, is estimating single-story strip shopping centers or stand-alone boxes by taking my equipment costs, count my points of air distribution and then assign a single dollar multiplier to each grille/register/diffuser, add that to my equipment cost and then throw it against the wall. You'd be amazed how much work this method has gotten me.
For higher-tech jobs such as pharmaceutical plants or medical facilities, which tend to have much higher potential overhead because of safety concerns and the need for day-to-day field supervision and on-site project management, as well, I've been known to generate a number for my base material costs and then do a straight multiplier for both the job labor (I assume that a crew will have to be assigned almost full time to the job) and job supervision based on total calendar or work days allowed in the contract. think that method would generate silly-high numbers? think again.
For single-story or big-box commercial plumbing jobs, my favorite SWAG method is a variation on residential pricing. based on actual fixture costs, I'll double or triple (or more or less, depending) total fixture costs divided by actual fixture count to come up with a per fixture labor-and-materials price that includes everything inside a bathroom or office footprint. For all water and waste lines both overhead and underground outside the interior space footprint to a point 5 ft. outside the building, I'll take my actual material costs and then throw a higher multiplier on it to account for labor and overhead, anywhere from four to 10 or more times, depending on my gut feeling for job conditions. I add that to my fixture SWAG number and then bid it.
I've got lots of other methods for "enhancing job estimating productivity metrics" but only limited column space here. More importantly, I know that I don't know all of them. Please share yours with me and COntRaCtOR's readership.
Even more importantly, remember that these methods and others like them can be a fool's game if you're not careful. they are not a substitute for a proper estimate carefully done. Real numbers always are preferable to fantasy ones, even if you are accustomed to living and working in that fantasy world most days.
H. Kent Craig is a second-generation mechanical contractor and project manager with Master's licenses in boilers, air conditioning, heating and plumbing. He can be reached by calling 919/291-0878, or via e-mail at [email protected]. His Website is hkentcraig.com.