When it comes to bidding, it’s the exceptions that kill

The millwork business is a business of details .. maple or oak, clear or stain, standard laminate or Chemmetal, on and on, the details of a job make it unique. Of course, in the “low bid gets the job” market and also make it easy to lose money, before you ever cut your first board.

So is the angst of the estimator .. ensuring that each job is priced for the exceptions of that particular job. Historically estimators have handled a lot of this thru intuition .. “plywood cores? .. I’ll add 10%” .. “a filled finish? .. even the mouldings? .. I’ll tack on a couple of grand for that” .. “install during off hours? .. I bet my guys will do that if I just kick in some meal money” .. “we normally mark up materials 50% but this job has all those marble buy out tops on it so I’ll drop my markup to 30%” .. and on it goes.

Take The Fix Restaurant on the Vegas Strip .. it’s the pic I use here for the header and one of my favorite millwork projects. If you’ve never seen it in real life make a point of looking it up when in Vegas. It’s composed entirely of strips of curved laminated panels that form the walls, partitions, and ceiling. A real millworker’s dream .. or nightmare, depending on how you priced it! How many exceptions does a job like that have?

Is it no wonder why so many owners place so little faith in the estimates they rely on? I recently had a new customer tell me that over the years he had a staff a 3 estimators and in all his years he never believed a single estimate from any of them. Wow .. and why was that? It was about the exceptions in every job and how they are handled. Every job is just different enough to make profitable pricing a challenge.

So my advice .. carefully consider how you handle the exceptions .. they will bite you if you’re not careful.

My real tip about exceptions is to minimize them .. maybe even eliminate them .. but how? First move towards material and labor pricing. Suddenly changing out materials is no exception anymore. Second, put in research, especially as it relates to labor estimations. Need to quote something very unusual? Put in the rest of the team, especially for work you really want to get. Let the foreman take a shot at what he thinks. Break the processes down and find the risky parts. If it’s still scarey, you can walk away .. not even bid the job, or pad the job till you feel safe. Do these things and there won’t be any fudge factors in your bidding .. and you’ll be able to sleep at night once you’ve signed that contract.

3 thoughts on “When it comes to bidding, it’s the exceptions that kill

  1. Auditing the jobs is a learning experience ,Knowing ones real overhead is a very understated factor. A large part of our work is as we call “Reinvent the Wheel type” so knowing how close we come to our bids is a real information for any similar job. In our case we are wholesale to resellers so tight margins on our side must be realistic .In my case insurance and government fees and taxes ,healthcare cost are escalating. I would agree that your information well worth thing about.

  2. Radiuswoodguy

    Thanks for chiming in. You bring up a good point regarding anticipating overhead changes. It sounds like you have a pretty disciplined operation. Are you actively charging actual overhead costs in with a project’s job cost to analyze the jobs for profit now?

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