BUILDING FIRM QUOTATIONS: WHAT YOU SHOULD INCLUDE IN YOUR QUOTES
Question: What should a builder charge for in their building quotations?
Answer: Everything!
All too many building businesses under-charge and it’s the reason why many of them end up on the rocks. At HBXL, it’s our mission to stop building firms under-charging. To have a long-term future in this industry, building firms must charge for everything. There’s no place for guesswork or rough calculations, no place for discounts.
Here’s our checklist of everything you need to include in your estimates.
Materials – based on up-to-date prices
Wastage – expect broken bricks, spilt cement etc.
Labour – account for every “man” hour of every task (including your time)
Plant hire – from the cement mixer to the JCB
Wear and tear – spades wear out, wheelbarrows need replacing etc.
Other project-specific costs – parking, insurance etc.
Business overheads – monthly costs such as mobile phone contracts, vehicle payments, office rent etc.
Inflation – the costs WILL increase over the duration of the project
Profit margin – essential for a viable business
And go into this in more detail below.
UP-TO-DATE MATERIAL PRICING
If you don’t use latest material prices, an inaccurate estimate is the likely outcome. Who covers the costs if prices rise? Materials make up nearly half your project costs, so under-pricing them will have a big impact on your profits.
Builders who buy or subscribe to any version of EstimatorXpress benefit from monthly material price updates, included in their Support & Updates package.
Our team review the prices of over 6000 products in the EstimatorXpress Price Book, using merchant catalogues to review and collate average prices. We’re not restricted to one particular builders’ merchant so EstimatorXpress users benefit from realistic market averages.
LABOUR COSTS
How effective are you at pricing up all of your labour? Do you know how many hours each task will take? Are you charging for your own time - liaising with customers, estimating, visits to site etc.? Your time is a project cost; it should not come out of the profit. EstimatorXpress will work it out for you - the number of hours it takes the groundworker and mate to excavate and lay the foundations, how long it takes the bricklaying gang to lay the bricks and blocks and form the window openings … We review labour rates across the country to establish an up-to-date picture of current rates – be sure to check the going rates in your area too.
OTHER JOB COSTS
EstimatorXpress highlights a range of additional costs - such as site clearance, skips and scaffolding – that could easily get forgotten. EstimatorXpress gives you the option to allow for wear and tear on tools and equipment. It protects your bottom line and helps you ensure you take home all of your hard-earned money. EstimatorXpress also adds a wastage factor to cover you for the tiles that didn’t cut correctly or the chipped basin. The software does all the thinking for you. If your project requires reclaimed bricks, for example, EstimatorXpress adds a higher wastage allowance because it knows there’s likely to be more unusable ones on each pallet.
BUSINESS OVERHEADS
Mobile phone payments, van leases, insurance premiums, utility bills and software subscriptions have to be paid by someone… and it shouldn’t be you. These overheads form part of the job cost. They should not come out of your profit. Just like when you buy a jar of coffee from the shop, the price you pay will include a percentage to contribute to the shop’s lighting, heating and till software costs and so on, the homeowner should contribute to the operating costs of your business. After all, they need you to be on good form and operating smoothly!
EstimatorXpress prompts you to add an overheads percentage to each job. You just need to come up with a figure that will, over a year, cover all of your running costs.
PRICE RISES (INFLATION)
When should you add inflation to your estimates? The short answer is, always! But the longer answer is, it’s particularly important in the following circumstances:
1) It’s a long project – the prices of materials which are used later in a project, such as plaster or paint, are likely to increase more significantly
2) The project is starting further in the future – if the project starts in six, nine or 12 months’ time, inflation will have a bigger impact on costs
The EstimatorXpress inflation tool takes away any concerns you may have about the future as you’ve already prepared for it. Let’s look at an example of why inflation matters:
At the time of writing, building materials prices are increasing 0.7% every month. This means materials costing £100,000 today, will cost £4304.11 more after six months – at which point the job might not even be underway. A year on from quoting, those same materials will cost £8731.07 more.
Who’s paying the extra? You’ve got a couple of options. You can show the customer two versions of the quote – one with ‘the worst-case scenario’, maximum inflation factored in, so they’re ready for that possibility. Or you can just go for it and quote with the inflated prices. The one thing you can’t do is nothing. If you do, your profit will take the fall.
PROFIT MARKUP
We’ve got loads of other content on profit – because we know it’s essential for every building firm. Take a look at What a successful building firm looks like for example. Watch our Price & Profit masterclass or check out the latest episodes of our podcast series Running a small building firm. The main thing we want you to know is that EstimatorXpress has a place to add your profit margin percentage. It spreads the figure across the quote so the customer doesn’t see it as a separate cost. Profit is not a “desirable”, it’s key to a successful business.
So hopefully you’ve got a clear idea of ‘everything’ that should be included in an accurate, professionally produced building quotation.
NEXT STEPS
Call us on 0117 916 7898, have a quick demo of EstimatorXpress or download a free 14-day trial. We’re here to support you in charging your true value.