BidQwik.com

 
Cabling Business Magazine
May 2003 issue
ICON: Seize the Opportunity

Using Computer Software to Bid a Cabling Project
By Peter J. Buitenhek

 

"You ask me if I keep a notebook to record my great ideas. I've only ever had one."
  BidPro - Einstein formula for gross profit margin similar to E=MC squared -Albert Einstein, theoretical physicist (1879-1955)
"Everything should be made as simple as possible, but not simpler."

My involvement with cabling started in 1979. Back then, communications cabling was simple, each manufacturer had a proprietary scheme. Analogous to driving your car from San Diego to Los Angeles, you would use the IBM Highway if you owned IBM computers - the DEC Highway for DEC computers and so on. Today, for computer communications we are using one structured highway and letting standard interfaces do the busy work. These "communication standards" are a credit to IEEE, NEC, EIA/TIA and BICSI. A simple RJ-45 jack and cable allow near-virtual communication connection to hubs, routers, NIC's and computers. Constantly evolving funneled standards and innovative manufacturing processes have yielded cabling products that are all their marketing people claim them to be. Many contractors bidding communications cabling projects still use "seat-of-their pants" practices. Variances in technician/estimator ability and training nearly out-weigh the technical advances of communications cabling and hardware. Larger organizations utilized formalized training programs and cumbersome prepackaged estimator/design software. Conversely, smaller cabling companies only have homegrown software or best-guess practices to bid sophisticated projects. On a recent cabling installation project for a convention center, the owner received seven bids from cabling contractors that ranged from $91,000 to $235,000. Prior to this bid, the owner did the homework with the top supplier/top material vendor (Graybar and Belden) to determine baseline material costs: $89,000. Obviously, major items like tax; labor and profit dollars were over-looked by some contractors and over-extended by others.

Where to Start?
The first question that always pops up is, "Are computer software programs reliable enough to give me consistent winning bids?"
No. The results are only as good as the person entering the data for analysis. If your design includes all possible components and associated tasks you will, most likely, not be the lowest bidder. However, if you include all possible components and tasks but bid the project at a lower gross profit margin, knowing you may not need every item, you will find that lower GPM will rise with every task completed under budget. So challenge the project managers and technicians to excel at their task and include a bonus in your plan if they meet the challenge.

BidPro Sheet Breakdown and Descriptions

1

The Parameter Sheet feeds all other sheets in the workbook. Begin by setting all regular parameters here and save this copy as your company's baseline. This way when you call up BidPro, all company parameters are already set; all you need to do is add labor hours and material costs to start the BidPro calculations.

 
a
Did a site survey take place? "No" may indicate many material and labor items are estimated.
 
b
List Labor and Material (if applicable) sales tax rate
 
c
Are subcontractors involved? Labor and Material costs apply along with markup
 
d
Miscellaneous Material cost and possible freight charges
 
e
Add charges:
-permits and license costs
-parking per day
-driving mileage per day beyond company standard
-Per Diem
-Prevailing Wage
-Premium or weekend rates
 
f
Burdened labor rate markup
 
g
Labor Markup Percentage
 
h
Material Markup Percentage
 
i
Any other direct job overhead costs
 
j
Labor Force breakdown by name, area and Raw Pay Rates
2
The Labor Sheet allows up to 500 task entries. Each task is associated with a specific classification of worker WBS (Work Breakdown Structure) that is set to your baseline parameters. Labor hours for all tasks can be described in total hours or by quantity-per minute (i.e., 300 jack terminations at 3.5 minutes each equals 17.5 labor hours). In addition, all worker classifications are summarized at the bottom of the sheets to provide a quick overview of personnel allocation.
3
The Material Sheet can take up to 500 material entries (each with Description, Part #, Vendor #, Color/Other, Unit Cost, Markup and Extended Price). All material quantities and overall pricing are summarized at the page bottom for review.
4
The Summary Sheet is comprehensive, depicting all entry calculations and is used to fine-tune all calculations. Raw labor cost, non-productive time, prevailing wage, direct overhead charge, burden and sell pricing are depicted. The material section of this sheet allows more fine-tuning (example: add material items at no mark-up charge). The workday length and desired workweek are preset to eight hours per day five days per week, this can be user modified (i.e., 10 hour day, four days per week). The project duration is calculated using the total Labor Line Items, total hours and the work-day-work-week scenario into Days/Weeks/Months.
5
The Margins Sheet is broken down into another six sections to better determine your specific company needs. Section 1 uses your entire Parameter/Labor/Material and Summary Sheet inputs and calculates a project sell price and GPM. Section 2 allows the user to adjust individual GPM per item (i.e., Material, Labor, Mileage, Per Diem, etc.). Section 3 allows the user to set the desired GPM and BidPro calculates sell prices using your labor/material/other costs. Section 4 allows the user to set the desired sell price and BidPro calculates the GPM. Section 5 uses your Parameter Sheet GPM company project baseline. Finally, BidPro will calculate the user chosen project cost and convert the final costs into Time and Material rates.
6
The Cost Chart is a Microsoft® Excel-based graphic depicting four cones (and portions of cones) as category costs (i.e., Labor, Material, Subcontractor and Other). The largest cost item will be shown as a complete cone. The remaining three will be portions of cones to ascertain costs relationships.
7
The Margins Chart is a Microsoft® Excel-based graphic depicting the six profit based options that make project bidding easy within BidPro.

Summarization
The Parameter Sheet sets the company specific information. Project tasks are defined on the Labor Sheet and assigned technicians are applied to these tasks. The Material Sheet list all expected material items needed for task completion. The Summary Sheet is used to fine-tune all Parameter, Labor and Material Sheets supplied costs. The Margins Sheets allows up to six sell options based on desired company profit. The inputs will yield the desired profit options within minutes.

Start to Standardize
Material and labor costs are a good starting point for bid standardizing. By utilizing expected costs for the project, we can structure the bid sell price based on profit margin. If any of these expected costs do not materialize, we can use these monies to purchase test equipment, pay for overruns or keep as profit.
Labor Force: consulting services, drafting, site survey, as-built drawings, installation, project manager and administrative services all require specific skills. List their associated raw pay rates (employee pay prior to company costs for 401K, healthcare, disability, et al). List these services by category, name or assignment.

WBS
Employee Classification
Standard $ Range
This Bid Raw $
01
Albert-Project Manager
$20.25 - $25.00
$16.00
02
Bryan-Lead
$15.00 - $22.50
$12.00
03
Charlie-Mid
$12.00 - $19.00
$7.00
04
David-Tech
$14.00 - $16.00
$15.00
05
Average A/B/C/D
$11.00 - $13.00
$12.50
06
Apprentice(0-2 years)
$8.25 - $10.00
$10.00
07
Supervisor
$28.00 - 32.62
$30.00
08
Technician III
$11.65 - $33.36
$25.00
09
Technician II
$25.00
$20.00
10
Technician I
$18.53 -$28.51
$15.00
11
Warehouse
$10.00 - $12.36
$12.00
12
Network Programmer Sr.
$55.00 - $75.00
$65.00
13
Network Programmer
$35.00 - $65.00
$45.00
14
Sales Lead
$35.00 -$45.51
$35.00
15
Sales
$30.00 - $37.36
$30.00
16
Marketing
$40.00
$25.00
 

The 16 WBS or work-breakdown-structure numbers will later be used to assign specific employees or groups to tasks. Your Standard $ Range versus This Bid Raw $ could be helpful in determining the competitiveness of the final bid. Higher priced people will usually increase the labor pool cost. Conversely, the higher paid people should lower the total task labor hours since experienced people will take less time to accomplish tasks. As depicted in Figure 1 Labor Raw Cost, Employee Classification can be specific named people, groups of people or areas of expertise. Project Manager pay-rates may vary within your organization so set the range and actual pay rates to determine exact labor costs.

Figure 2 Burden Rate Percent

Burden Rate %:
30.0%

Since raw labor costs do not reflect the company's actual cost only the employee pay, the burdened labor rate will be required. Health benefits, 401K and disability/unemployment insurance are some areas that cost your company money in addition to the actual raw pay. Usually a 30 percent burden rate will cover most employee expenses. Therefore, if one hour of the project manager (we'll use Albert as an example) were to be used; the burdened labor rate would be the raw labor cost times one plus the burden rate (1+0.3=1.3)

Figure 3 Burden Labor Cost

Employee
Labor Hours
Raw Cost
Burdened Cost
Albert - PM
1
$16.00
$20.80

Thus Albert would cost the company $20.80 (16 x 1.3). This value will then be used to calculate the sell price of Albert to the customer.

Figure 4 Labor Markup Percent

Labor Markup %:
60.0%

The sell price per hour of Albert would incorporate the burden and labor rates to give Albert a sell value of $33.28 per hour (20.80 x 1.6).

Figure 5 Margin Calculation

Labor Markup %:
Cost
Sell Price
Calculated Gross Profit
60%
$20.80
$33.28
37.5%

Notice the calculated gross profit margin of 37.5%. This value depicts net sales minus cost of sales or basically how efficiently a company markets their service. As an example, if the labor cost was $30.00 and the sell price $33.28, the corresponding profit of $3.28 would provide a gross profit margin (GPM) of 9.9%. Thus, a higher GPM will reflect higher profit dollars.

Formula for Gross Profit Margin
Gross Profit Margin (GPM) x 100% = (Sell Price minus Cost) divided by Sell Price. Additionally, some companies have indirect costs (additional employee benefits or executive travel benefits) that affect the company bottom-line costs but do not show up in labor cost figures. Therefore, the Direct Job Overhead (DJO) markup can be used in addition to burden margin for this project.


Figure 6 DJO

* Direct Job Overhead %
15.0%

This markup will add overhead charges to the raw labor cost only; but will not markup that cost with the 60% Labor Markup. The sell price is equal to the cost and thus the profit margin will reflect 0.0% GPM. The net effect of DJO is to add cost to the equation without the associated sell markup, which will reflect a less efficient operating company. The * signifies this quantity does not have a sales markup figure.

Figure 7 Margin Calculations with DJO

Category listed on Parameter Sheet
Parameter set on Parameter Sheet
Cost
Sell Price
Calculated
Gross Profit %
Labor Markup %:
60%
$20.80
$33.28
37.5%
* Direct Job Overhead %:
15.0%
$2.40
$2.40
0.0%

Another area of additional labor cost could be "Non-productive" time. Non-Productive time is available to incorporate the time a technician is on-site waiting for other trades, comebacks, meetings etc. The Non-Productive time is the total number of hours per day counted on to complete the task but is really not available. To account for this lost time, we can incorporate an add-on charge per hour to that technician base rate. Since most teams break at the same time and the same duration, this information is converted to an average cost/hour for each technician and added to all technician hourly rates. A 15-minute break every two hours equates to one hour of non-productive time per eight-hour day.

Figure 8 NPT

* Non-Productive Time (hours/day):
1.00

For Albert the PM, the 1.00 per hour of NPT would result in an additional labor cost of $2.00 per hour ($16.00 per hour divided by eight hours per day). The equivalent raw labor rate for Albert would be $16.00 base plus $2.00 NPT plus $2.40 DJO = $20.40. Again the * signifies cost equals sell price. These extra charges would lower the overall GPM since we are adding additional cost at zero profit dollars, which means we are becoming less and less efficient.

Figure 9 Margin Calculations with DJO and NPT

Category listed on Parameter Sheet
Parameter set on Parameter Sheet
Cost
Sell Price
Calculated Gross Profit %
Labor Markup %:
60%
$20.80
$33.28
37.5%
* Non-Productive Time (hours/day):
1.00
$2.00
$2.00
0.0%
* Direct Job Overhead %
15.0%
$2.40
$2.40
0.0%

Figure 9 "Margin Calculation with DJO and NPT" can be shown as follows:
1. Raw Rate is $16.00 per hour for 1 hour times 1 plus 30% Burden Rate = $20.80 cost
$20.80 cost times 1 plus 60% markup = $33.28 sell price
2. NPT cost $2.00 per hour for 1 hour with no markup = $2.00 cost
$2.00 cost times 0% markup = $2.00 sell price
3. DJO is $16.00 times 15% DJO markup for 1 hour = $2.40 cost
$2.40 cost times 0% markup = $2.40 sell price
4. The Total Raw Labor Rate is $16.00 per hour
5. The Total Burden Rate is $25.20 per hour ($20.80 raw plus $2.00 NPT plus $2.40)
6. The Total Sell Rate is $37.68 per hour ($33.28 plus $2.00 NPT plus $2.40 DJO)

Usually not all workers are subject to these added NPT costs. Therefore, for extremely competitive situations we can remove the NPT dollar amount for highly efficient technicians from the bid rate. In fact, we may want to consider plus/minus capabilities to account for future expected labor cost increases, like upcoming raises during the project duration.

Figure 10 Labor Cost Summary Sheet

Employee Classification
Total labor Hours
Base Raw Rate per hour
* Non-Productive Charge per hour
*Direct Job Overhead Cost (DJO) per hour
*Plus Extra Labor Cost per hour
Preburden Labor Rate per hour
Burdened Labor Rate per hour
Albert
1.0
$16.00
$2.00
$2.40
$(2.00)
$18.40
$23.20

The negative $(2.00) at the "Plus Extra Labor Cost per hour" input section should remove the value input by the NPT of $2.00 per hour. For many bids we mark the NPT for 1.00 hour per hour and decide at the Summary Sheet if we want to include/exclude a NPT figure for each technician.

Figure 11 Margin Calculations with DJO and NPT minus Extra Cost

Category listed on Parameter Sheet
Parameter set on Parameter Sheet
Cost
Sell Price
Calculated Gross Profit %
Labor Markup %:
60%
$20.80
$33.28
37.5%
* Non-Productive Time (hours/day):
1.00
$2.00
$2.00
0.0%
* Labor - Extra Cost:
($2.00)
($2.00)
($2.00)
0.0%
* Direct Job Overhead %:
15.0%
$2.40
$2.40
0.0%

Example 1 of raw labor rates, NPT, extra cost and DJO

1
Albert ($16.00/hour) will be used for 2 hours
2
Bryan ($12.00/hour) will be used for 3 hours
3
Charlie ($7.00/hour) will be used for 1.5 hours
4
NPT is 1.00 per hour for all technicians
5
We will negate the NPT charge for Bryan
6
Charlie will get a raise of $0.25 per hour just after the job starts

Figure 12 Example Burden Calculation with DJO, NPT and Extra Costs

Employee Classification
Total labor Hours
Base Raw Rate per hour
* Non-Productive Charge per hour
*Direct Job Overhead Cost (DJO) per hour
*Plus Extra Labor Cost per hour
Preburden Labor Rate per hour
Burdened Labor Rate per hour
Albert
2.0
$16.00
$2.00
$2.40
 
$20.40
$25.20
Bryan
3.0
$12.00
$1.50
$1.80
$(1.50)
$13.80
$17.40
Charlie
1.5
$7.00
$0.88
$1.05
$0.25
$9.18
$11.28

If Example 1 was only labor (no material or other costs) the final GPM and averaged sell labor rate would be $27.81 per hour:

Figure 13 Total Sell and GPM

Category listed on
Parameter Sheet
Parameter set on
Parameter Sheet
Cost
Sell Price
Calculated
Gross Profit %
Labor Markup %:
60%
$102.05
$163.28
37.5%
* Non-Productive Time (hours/day):
1.00
$9.81
$9.81
0.0%
* Labor - Extra Cost:
($4.13)
($4.13)
($4.13)
0.0%
* Direct Job Overhead %:
15.0%
$11.78
$11.78
0.0%
Note: * Non-productive Time, *Extra Labor Cost and *DJO have a zero (0%) GPM Markup
$119.51
$180.74
33.9%

Figure 14 Total Labor Rates

Raw Labor Cost/Hr:
$12.08
Burden Labor Cost/Hr:
$18.39
Labor Sell per Hour:
$27.81
Labor Hours:
6.5
Does not include Sub-Contractor Labor price

The Labor Sell rate can easily be used if any add-on work is applied to this project. Assuming we use Albert, Bryan and Charlie, a job estimates at 35 labor hours could be quoted at $973.35 (35 x $27.81) with little seat-of-the-pants input. The 33.9% GPM (gross profit margin) is very healthy for a company financially. Personal Note: many companies tell me they easily get 35% plus GPM on all their projects. But after using the BidPro software, find they are averaging 20% - 30% GPM. Remember, consistency in pricing and quality of work will take the company along a strong financial path.
Three additional items can add to the cost of labor: Prevailing Wage, Premium Wage and payroll taxes (if paid up front). Prevailing Wage - usually relating to government and school type jobs, dictate the pay rate for your technician by time-in-grade. There are two methods to handle these cost items: add a blanket dollar amount to all technicians (say $2.50 per hour) or calculate each technician (or groups or areas) at the Prevailing Wage and plug those numbers into the raw labor rate.


Figure 15 Prevailing Wage add

Prevailing Wage:
yes
Prevailing Wage (add $ per hour):
$2.50

If we continue to utilize the Example 1 input, the Labor Summary would reflect the $2.50 per hour increase for each technician.


Figure 16 Example Burden Calculations with DJO, NPT, Prevailing Wage and Extra Costs

Employee Classification
Total labor Hours
Base Raw Rate per hour
* Non-Productive Charge per hour
Prevailing Wage per hour
*Direct Job Overhead Cost (DJO) per hour
*Plus Extra Labor Cost per hour
Preburden Labor Rate per hour
Burdened Labor Rate per hour
Albert
2.0
$16.00
$2.00
$2.50
$2.40
 
$22.90
$28.45
Bryan
3.0
$12.00
$1.50
$2.50
$1.80
$(1.50)
$16.30
$20.65
Charlie
1.5
$7.00
$0.88
$2.50
$1.05
$0.25
$11.68
$14.53
SUB-TOTALS
6.5
$78.50
$9.81
$16.25
$11.78
$(4.13)
$17.26
$21.64

The associated labor rate would also reflect the added Prevailing Wage amount:

Figure 17 Total Labor Rates

Raw Labor Cost/Hr:
$12.08
Burden Labor Cost/Hr:
$21.64
Labor Sell per Hour:
$33.01
Labor Hours:
6.5

The Total Sell and GPM figures:
Figure 18 Total Sell and GPM

Category listed on
Parameter Sheet
Parameter set on
Parameter Sheet
Cost
Sell Price
Calculated
Gross Profit %
Labor Markup %:
60%
$102.05
$163.28
37.5%
* Non-Productive Time (hours/day):
1.00
$9.81
$9.81
0.0%
Prevailing Wage:
$2.50
$21.13
$33.80
37.5%
* Labor - Extra Cost:
($4.13)
($4.13)
($4.13)
0.0%
* Direct Job Overhead %:
15.0%
$11.78
$11.78
0.0%
Note: * Non-productive Time, *Extra Labor Cost and *DJO have a zero (0%) GPM Markup
$140.64
$214.54
34.4%

The added prevailing wage cost has the usual 60% sell markup. Note the higher GPM of 34.4% (versus 33.9%), which reflects the profit percent of prevailing wage at 37.5%. The Premium Time markup (expressed as a percent) can cover holidays, union, emergency or weekend work. If premium time were chosen, all technician raw labor rates would have risen 10% (i.e., Albert would add $1.60).

Figure 19 Premium Time

Premium Time:
yes
Premium Time Differential (per/hour):
10%

The final labor cost item could be the labor tax (if applicable in your area). Some companies pay these taxes up front, as a cost. Some companies always markup all costs. However, for this example we will calculate tax only on material.

Figure 20 Labor Tax as cost

Location Material Sales Tax %:
7.75%
Tax on Material (M) or Labor and Mat (LM):
M
Pay Sales Tax Up front as Cost ?:
no

Material Sell Prices: The approaches to material sell prices are threefold:
1. List quantity and material cost along with a standard material markup
2. List same as Item#1 but make each markup unique.
3. Combine the Item#1 and #2.

Figure 21 Material Markup Percent

Material Markup %:
40.0%

This standard markup will be applicable to all material entered for your project. If there is a special widget that your company buys but wants to sell at a higher markup, the "Desired Markup %" unique section can be utilized. It will negate the standard markup and use the unique input value.

Figure 22 Material Cost and Sell Prices

Quantity
Material Description
Unit Cost ($)
Parameter Markup %
Desired Markup %
Unit Sell Price ($)
Extended Sell Price ($)
Extended Cost ($)
12,000
CAT5e PVC cable
0.06523
40%
 
0.091322
1,095.86
782.76
1
Special widget
250.00
 
60%
400.00
400.00
250.00
75
cable hanger group
2.71
40%
 
3.794
284.55
203.25
75
ceiling grid wires
0.00
40%
 
0
$- 0
$- 0
75
J hooks and wire clip
0.00
40%
 
0
$- 0
$- 0
75
wood screw mount
0.00
40%
 
0
$- 0
$- 0
end
 
252.77523
   
403.885322
1,780.41
1,780.41

The list of material items (description, vendor, supplier, colors and part numbers) can be stored under separate covers. Simply call up the specified material description/price sheet and copy to the material sheet. Add quantities and desired markups for this project and you have a comprehensive material layout. Two items can add costs to your material sheet:
1. Miscellaneous Material
2. Shipping or Freight Charges
Miscellaneous Material is a percent of the Total Material Cost to account for cable hangers, cable ties, setup, ceiling tile damage, oversight, etc. The industry average miscellaneous material cost is 10 percent of the total material cost. Set your specific values.

Figure 23 Miscellaneous Toggle

Misc. Material (% of Material Total):
10%

Freight percentage is calculated from the Total Material Cost (with miscellaneous material charges included) to account for shipping handling, warehousing and pickup. The industry average freight cost is five percent of the total material cost. Set your specific values.

Figure 24 Freight Toggle

Freight % (average 5%):
5%

Since we are using the Example 1 labor hours of 6.5, the material - labor skew for this example may not be accurate. It will take about 80 hours to install 12,000 feet of communications cabling (average run 152 feet), 75 jacks and associated faceplates. With a CAT5e patch panel the total sell price of this project may be around $7,000. See http://www.profitdeveloper.com for CablePro software package.
The cost of our project is $1,578.44, which has accounted for material, labor and freight charges. The sell price of $2,436.27 will provide us with $706.06 in profit (tax excluded) or 30.9% GPM.

Figure 25 Margin Calculations for Material, Labor and Freight

Category listed on Parameter Sheet Parameter
set on Parameter Sheet
Cost
Sell Price
Calculated
Gross Profit %
Material Markup %:
40%
$1,236.01
$1,780.41
30.6%
Misc. Material (% of Material Cost):
10%
$123.60
$178.04
30.6%
Pay Sales Tax Up front as Cost:
no
     
Location Material Sales Tax %:
7.75%
 
$151.78
 
Labor Markup %:
60%
$102.05
$163.28
37.5%
* Non-Productive Time (hours/day):
1.00
$9.81
$9.81
0.0%
Prevailing Wage:
$2.50
$21.13
$33.80
37.5%
Premium Time:
10%
$10.21
$16.33
37.5%
* Labor - Extra Cost:
($4.13)
($4.13)
($4.13)
0.0%
* Direct Job Overhead %:
15.0%
$11.78
$11.78
0.0%
Pay Sales Tax Up front as Cost:
no
     
Location Labor Sales Tax:
no
     
Freight % (average 5%):
5%
$67.98
$95.17
28.6%
Note: * Non-productive Time, *Extra Labor Cost and *DJO have a zero (0%) Gross Profit Margin Markup
$1,578.44
$2,436.27
30.9%

Is this the end of cost inputs? No. We can still account for the following direct cost items:
1. Subcontractor material and labor cost
2. License and permit costs
3. Mileage, per diem and parking charges
4. Material cost items at pass-through or no-markup rates

The intent of accounting for all anticipated costs is to not to get caught with unexpected costs that eat away profits. Assume we have provided for all cost inputs to this project, but have learned a competitor may bid this project near $2,100.00. Beside the obvious impact of losing the bid to a lower bid contractor how does the $2,100.00 impact our profit margin assuming we try to match that lower bid?

Figure 26 Sell Price Information

Labor Hours
6.5
Labor Sell Price/Hour
$30.62
Enter desired sell price ($),
#4 will calculate Gross Profit (%)
Material
$1,688.13
Desired Sell Price (>$ 0.00):
$2,100.00
Tax
$130.83
Program estimates gross profit margin to be:
19.8%
Labor
$199.00
Note 1: Backward Accuracy +/- 1%
$2,100.00
Other
$82.04
   
Subcontractor
0

Our profit margin would drop to 19.8% with only $390.74 profit dollars. Obviously this project sell price would require management override signatures in order to bid the project. Assume management has insisted the GPM must be 25%, regardless of the lower bidder, and asks you to sell the customer on the difference. Utilize the following GPM input portion to attain the desired sell price.

Figure 27 Sell Price based on GPM

Labor Hours
6.5
Labor Sell Price/Hour
$32.72
Enter desired gross profit (%),
#3 will calculate Sell Price ($)
Material
$1,804.21
Desired Gross Profit % (1% to 99%)
25.0%
Tax
$139.83
Program estimates sell price to be:
$2,244.41
Labor
$212.69
Note 1: Backward Accuracy +/- 1%
$2,100.00
Other
$87.68
   
Subcontractor
0

Our sell price now will be $2,244.41 with $526.15 in profit dollars at 25% GPM. This sell amount difference of $144.41 above the lower bidder may provide discussions with your management, estimators or the customer. Many companies have taken their cost/sell pricing sheet to their construction loan companies in order to show planned profits; bankers love profits!
This standardized bidding process is available in a Microsoft Excel-based software package, BidPro from http://www.profitdeveloper.com. Any company bidding a variety of products or services can use BidPro. In addition, BidPro can be used as an input to TrakPro in order to track actual-costs-to-contract-costs and provide for financial WIP information like cash position and over/under billing. The complete software suite of five packages; BidPro, TrakPro, CablePro, ConduitPro and AttendancePro are available for sale.

Conclusion
Over the years, many companies have bid cabling projects, by whatever mechanism, with usually good profit success. The business climate post-2002 has been somewhat limited for some contractors who failed to remain competitive in their bids.
Today's communications cabling contractor must:
1. Standardize the bidding process to assure proper cost pictures
2. Provide fast and accurate cost/sell information
2. Work with suppliers for proper products, pricing and shipping information
3. Provide technicians with formal training programs by BICSI and many university/technical schools in order to install all products with minimal or no problems
Your company will need to quickly and accurately ascertain a competitor's bidding tier in order to better prepare your winning proposal. Remember information resource management (IRM) and computer influenced decision-making are being utilized by your competitors.

About the Author
Peter Buitenhek has been involved with contracts and estimating projects for nearly 30 years. In 1996, Peter started developing a suite of software products to consistently bid and track projects keeping the PROFIT picture always in sight. This software utilizes simple parameter and project specific entry forms to allow project bidding and tracking of any type of product/service combination from one dollar to $99.9 million.

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