BIDDING 101
Construction firms are faced with the task of how to bid a job almost immediately.
So how do you bid a job?
Basically, a construction job should be based on your needs/goals for:
- Labor - Compensation for yourself (what you would be paid as an employee for your work as a contractor) and employees. Also, don't forget to include sub-contract labor, as well.,
- Overhead expenses to cover your non-job related business expenses like the employer's share of FICA taxes, administrative staff expenses, office supplies/utilities, internet/phone charges, advertising & marketing, insurance, office rent, vehicle expenses, etc.,
- Materials costs and other job-related costs like renting tools or equipment, and
- Profit, which is designed to recoup your investments in fixed assets and to provide a return on the use of your capital in your small business.
Also, a range of "billing rates" can be used from a ceiling to a floor. The floor rate may be used on a short-term basis to get experience and cover costs in lean times while the ceiling rate is at your premium rate for work you like and do the best!
Then after bidding a job, it is important to "check" that against what the market will bear and also your billing process will likely need to be tweaked after you determine if you are getting jobs too easily or if you aren't getting any. Your costs may frankly be too high, your estimate of expenses could be wrong or profit may be too fat or thin.
A few resources to help are:
- The Contractor's Group at www.thecontractorsgroup/lets_start_bidding.htm
- A solid, but short guide on submitting a construction bid can be found at www.wikihow.com/Write-a-Construction-Bid.