I’ve also written a little bit about the problem with canned estimating data before (On Using “Canned” Estimating Data) but while working with some contractor clients these past few weeks on both developing their own customized data and importing some data from some of the data books that are out there I picked up on some other intrinsic problems with pricing manuals and data books that I haven’t heard anyone really call attention to before.
In considering the cost of installing field tile I noticed that for installing the exact same size 4-1/4” x 4-1/4” field tile that two different books from two different publishers one had a Labor Hour figure for that same task that was 41% higher than the other.
So which one is right?
To tell you the truth,…they both are. It really all depends upon how the estimator interprets the data and which one most accurately depicts the way your company performs the task described.
As I written here before:
A contractor estimator needs to look at the “canned” book figures for labor hours as starting benchmarks, they are not absolutes. The labor hour units are standard as to “generally speaking” but individual as to interpretation. They are based on valid statistical samples that those publishers have researched but we don’t know the exact criteria they had in mind so they are subject to interpretation, in fact your interpretation. Use those data book labor figures with your own interpretation of their meaning. If it “sounds right” then go ahead and use it and monitor the results to see how accurate your judgment and interpretation actually turned out to be.
Also in talking with my client(s) about those figures for laying tile it was my considered opinion that laying tile that makes up an edge where you have to cut the tile is perhaps twice as labor intensive as the general field so to really develop a good pricing system for tiling you need a SF Labor Hour figure for the main body tile and a LF Labor Hour figure for the edges.
While I think any tile installer will tell you it is more expensive to lay tile on the diagonal than in a square grid pattern it is really only the perimeter edge work which is more labor intensive and therefore more expensive than the field where you are essentially laying full square tiles just like you do in a basic square grid installation.
I have yet to see a data book that mentions that or gives a special labor rate for that consideration.
What is essentially that same thinking then again also applies to other task such as installing trim for instance. If you strictly use a LF (Linear Foot) Labor Hour figure for installing trim when you get to that quirky 14′ x 16′ library that instead of just having 6 corners requiring miters or copes instead has 36 that price per LF wont work. You need to have a Labor Hour per joint figure for work that exceeds a typical amount of cuts in a space.
Lets say that a hypothetical Kitchen and Bath Contractor is perfectly happy with one of those tile installation figures for the work his or her own employees do. The labor cost plus the material cost figure regardless of which markup method you use, Capacity Based or Volume Based, gets marked up to give you a price for that task.
The next thing the estimator does is look for the task of installing the sink, toilet and shower and again a markup is applied to that to give you a Price for that group of tasks.
The problem is that the “Price” that comes out of that book or software with the markup applied is really the “Price” a plumber should charge for that work. The “Price” the book is telling you to charge your customer is actually more realistically the “Price” you are going to pay your plumber for the work. That book “Price” is actually really your “Cost.” If you use that figure to charge your client you wont make a dime on that subcontracted work even though you thought an appropriate markup was applied to it.
And Case Three
After correcting and adjusting some imported data for roofing for that subcontracted work markup problem I just mentioned I noticed that the base costs for some of the material budget costs seemed off to me.
Checking the figures that that particular book was giving I made some calls and compared them to some real material cost figures from actual real suppliers.
The cost they had designated in that particular book and data set I was working with for Laminated Lifetime Shingles was 211% higher that what the local cost actually is and the cost for the “economy” alternative 3-Tab 25 Year Shingles was 35% lower than what the local cost for those shingles are. You therefore might overprice yourself out of the better LifeTime shingle job or lose money providing the economy alternative if you trusted the book data.
Again I think this all goes back to what I said earlier.
…Use those data book labor figures with your own interpretation of their meaning. If it “sounds right” then go ahead and use it and monitor the results to see how accurate your judgment and interpretation actually turned out to be.
Actually come to think of it. I wouldn’t wait for the results to come in to see how accurate your judgment and interpretation is. I would check the figures before ever using them in an estimate.