Successful decorative concrete contractors give their invaluable advice on how to estimate and bid a decorative concrete job successfully while safeguarding your business. Three contractors share their experiences with estimating and bidding.>
If you do quality decorative concrete work, more work is sure to come your way. But what should you be charging? Mastering the art of estimating and bidding a job is important to your company’s success. Bid too high and you will lose the job. Bid too low and yohave enough revenue to cover the costs of your materials and labor.
Three contractors share their experiences with estimating and bidding — what can go wrong, what they have learned and what tips they have for other contractors.
To get really good at estimating and bidding, first you have to make some mistakes. Wes Vollmer, owner of Alternative Finishes in San Antonio, Texas, learned early on how important it was to take his time when bidding a job. One time when he was starting out, he was looking over a potential job site and thought he would only need to use one pattern. After his bid was accepted, he realized the job called for three separate patterns. He didn’t make nearly as much money as he thought he would because pouring the concrete took much longer than he had originally planned. After that, Vollmer learned to slow down and develop a checklist — which he now refers to every time he puts together a bid.
Valerie Wells, owner of Artscapes in Albuquerque, N.M., learned the hard way not to discount jobs when work is slow. “A Santa Fe client to whom I extended a ‘discount’ because work was slow proceeded to pick apart my price and question my every move. When her expectations weren’t met, in my absence, she took it upon herself to throw acid in the middle of the project area in an attempt to ‘lighten it.’ That was the only job I ever walked out on.”
Wells doesn’t lower her bids anymore.
Luckily, it usually only takes one mistake to develop a game plan to be successful at estimating or bidding. Also, by learning from other decorative concrete contractors, you can avoid a few mishaps along the way. Here’s their advice:
Develop a standard routine
The best way to learn from your mistakes is to develop a standard routine when bidding a job.
“I try to triangulate all of my estimates,” says Dave Pettigrew, owner of Diamond D Concrete in Capitola, Calif. “I have a square foot price and then I look at the labor and material cost. When I look at all three of these I make sure all three are within the same range, which helps insure I haven’t overlooked anything.”
Vollmer’s standard estimating and bidding routine for his company is to do all of it himself — he trusts only one other person beside himself to bid a job. “A lot of people have this new way of bidding — I do it the old way.”
Instead of using a computer program for estimating jobs, a method that is becoming more popular, Vollmer uses a checklist that he has developed over the years to cover every detail of a job. And it seems to work — he says he gets about eight out of 10 jobs that he bids. “If you do the same thing every time, if you have a system, you are more likely to get a bid,” says Vollmer. He recommends sticking to the checklist and seeing the site if possible before making a bid.
Wells’ technique is all encompassing. First, she determines who the competition is and what they would bid. Then she looks at the square footage of the site, scope of work, location of project, travel expenses, labor, materials cost, and taxes for that area.
You should also consider whether you want to bid on out of town jobs. All the contractors in this story agreed that you should, but Vollmer, who does consulting work as well, warns to be careful when taking a job out of town. In addition to labor costs, he says you have to look at other things that can add costs to a job outside your area, such as employees having to leave for family emergencies, injuries or sick leave or needing temporary help to finish the project. “The good contractors have plan ‘a,’ ‘b’ and ‘c.’ When you go out of town, you better have plan ‘a,’ ‘b,’ ‘c,’ ‘d,’ ‘e’ and ‘f’…because something will go wrong.”
Safeguard your company
One of the most important things the contractors have learned is to develop systems that will safeguard their company through estimating and bidding.
Creating his system through trial and error, Vollmer advises contractors never to throw out numbers before doing an estimate. “Everyone says ‘give me a ballpark figure.’ But I like to give them a hard bid, because when people hear that first number, they get stuck on that number. They will hear the first figure and say, ‘You said it was going to be $2.50 a square foot,’ when really I said it starts at $2.50.”
After winning a bid, Pettigrew continues to safeguard his company by writing his contracts with progress payments that have to be made when the work progresses. “Twenty-five percent when work begins, 25 percent when ready to stain, 40 percent when floor is stained and ready for sealer — never proceed until you get this payment in full, receiving this payment makes it harder for the client to say they didn’t like the color of the stain,” he says. “Once the customer accepts the color, the sealer is applied and the work is complete. I set them up so I only leave 10 percent of the total contract price on the table after the work is complete.”
Get along with builders and developers
Learn to develop a good relationship with the builders and developers you work with.
“It is essential to build trust, especially when we are doing decorative concrete, as it is still a new concept to most builders and developers,” says Pettigrew.
For any job you work on, make sure the builders and developers know exactly what your bid entails. “They may expect you to do something which is not in your scope of work, and which you did not price out because you assumed they understood that,” says Wells. “Rule number one, ‘Never assume anything!’ Get it in writing, and if it’s a large contract, have your attorney go over it to make sure there are no hidden obligations.”
Wells says that it is important to build a relationship with the builders and developers, but points out that it is not always possible if the job went to a high-bidding contractor from out of state. “I try to call certain sources within the industry to get the lowdown on general contractors I haven’t worked with to see what sort of reputation they may have, such as: Do they pay on time, do they treat their subs well, what sort of site do they run, are they safety-conscious and so on.”
Whether or not to lower your bids
A largely debated question is whether or not to lower your bids when work is slow.
Pettigrew said he likes to leave room to negotiate a bid because people enjoy bartering, but he uses that technique whether or not business is booming. “The most important thing is to look at each job and know your bottom line, material, labor and overhead are a set price. The profit is negotiable.”
Wells suggests not budging on price at all. “Don’t give in to the potential client who says, ‘If you give me a good price on this project, I have three other houses I want you to do,’” she says. “Those are what’s called ‘carrots’ — carrots don’t pay my bills. For every client for whom I lowered my price, I worked three times as hard to please them. I have learned from that, and I simply don’t engage it in anymore. If they aren’t willing to pay my price, then they don’t want a professional job. What you are selling is time — time and expertise. Price it accordingly!”
Final words of advice
Developing a sure-fire plan to accurately estimate and bid is essential to developing your decorative concrete business. “You can do the best job in the world, but if you grossly misbid, you are going to lose money,” says Vollmer. “The main thing is take your time. Bidding is the most monotonous thing, but also the most important.”
In addition, you should look at what kind of budget you are beginning with. “Bidding and writing a successful contract is the one of the most important steps,” says Pettigrew. “Know your costs and know how much profit you want to make. I know what my competition is doing. I try to keep an ear to the ground. If I am bidding an interior stained floor, I research the cost of tile or wood flooring that my customer could possibly use so that I can try to stay competitive.”
Wells agrees on watching the competition. “Artscapes has been in business since 1993. We are constantly looking beyond the curve. There is more competition out there all the time, so you have to set yourself apart from the pack.”