Address, Architect (if any), date started, date completed. Name of Foreman, type of building.
Total number of points, lighting, heating power. Total quantities of materials.
Average lengths of conduit, wire, etc., i.e. totals, divided
by the number of points.
Cost of conduit, wire, accessories and labour per point.
There are other matters of interest but with the minimum information given for, say, a dozen different jobs, the estimator has solid ground on which to work.
What I always call the "density" of installations varies considerably. By this I mean that one room 40 ft. by 12 ft. may have 3 ceiling points and another room of the same size may have 20 wall brackets and this is where the fallacy of "a pound a point" comes in, i.e. the length of run per point for the 3 points is obviously greater than for 20 points cover- ing the same area. All this, however, can easily be covered by the estimator who has the analysis of previous jobs before him.
After this visit to the costing department, we return to our list of material required and we can either put in labour as a total number of man-hours or we can let each item of material bear an appropriate sum to cover labour.
In the case of new buildings or factories with long, straight runs, the latter method is much the easier.
By this time you should be able to tot up the various sections and arrive at what you consider to be the net cost of each, such as;—
Intake.
Submain distribution.
(a) Lighting.
(b) Heating.
(c) Power single-phase.
(d) Power three-phase.
Circuit wiring a,b,c,d above.
Special items such as consumer units for a block of flats. Isolators for motors.
Thermostats for heating.
Cooker control units, etc., etc.
Overheads
Now comes the question of overhead costs for which allowance should be made. The total of last year's overheads such as rent, rates, telephone, stationery, etc., also office staff, can be taken from last year's accounts and this can be worked out as a percentage of your total sales, but if you had a good year the percentage will be lower than if you were not working to capacity. Again your total sales will have been made up of goods which you merely bought and sold again with little effort and also of labour and material for wiring which has meant hard slogging all the time and greater over- head cost.
This question of overhead costs is not a simple one. If you are your own employer, naturally your drawings do not enter your overhead cost, or such items as directors' fees in the case of a limited company. On the other hand, travelling expenses-whoever may incur them-should be included.
Having arrived at an average figure, preferably over a number of years, you can then adjust the percentage slightly to make it "cost" instead of "sales" and add the correct pro- portion to the estimated cost of the job.
Profit
Having now determined what you anticipate the job will cost, all that remains is to add for profit. Whether you add a single percentage or whether you take a higher percentage on labour and a lower one on materials is really a matter of choice. The more certain you are that the costing is correct, the lower the percentage which can be added safely for profit.
There was an agreement between the Chartered Surveyors' Institution and the National Federated Electrical Association before the war in respect of charges for day work and this agreement was as follows:-
1. In respect of labour-the prime cost, to which 33 1.3% is to be added, In ascertaining this prime cost, the time of the charge hand electrician is to be included, and over- time (if any) to be charged on basis of the agreement with the Electrical Trades Union in force for the time being-time and a half or double time as the case may be. Out allowances and fares (town and country), dirty money and out-of-pocket expenses to have 15% added.
2.
3.
In respect of materials (excluding specially designed or price maintained articles, lamps, domestic appliances, fittings, etc.) net trade prices, as invoiced to the electrical contractor, plus carriage, to which 20% is to be added. The above percentages are to be held to include all insur- ances, use and repair of ordinary hand tools and tackle, general establishment charges and profit. They are also to include, where applicable, the payment by the elec- trical contractor of 21% cash discount to the general con- tractor. These rates do not apply to jobbing work. Now the above percentages hinge on the expression "day work" and imply that no fixed sum has been agreed between the purchaser and the electrical firm. The purchaser expects a good job at reasonable cost and the firm should get a reasonable profit without taking any financial risk, but the arrangement is very rough and ready.
Keen tendering which is required to deal with nearly all inquiries demands vigilant care in all its stages beginning with the costing records.
48
There is a point which puzzles me and lead me to think that in many firms the costing department is not given the attention it deserves and the reason is this-frequently, when tendering, contractors are asked to provide schedule rates to be used for variations during the progress of a contract and when these schedule rates are examined, it is often found that the firm tendering the lowest figure is higher in price item by item.
An example came to my notice recently; the rates per foot for in. conduit fixed complete were quoted by five firms, as follows:-
Firm A-1s. 2d. Firm B-2s. 41d. Firm C-Is. 5d. Firm D-1s. Firm E-8d. and yet in the total tender Firm B was lowest with Firm A as runner-up.
The reason for this discrepancy can only be due, as 1 see it, to lack of accurate costing analysis in which case estimating can only be very haphazard, which is why so many young fellows come to grief: but surely this is where we came in.
In view of this it is felt that a careful study of all the ideas and suggestions set out in the foregoing should prove of considerable value.
Conclusions
The man who first printed "Estimates Free" at the top of his notepaper created a very heavy charge on industry.
Wide variations in tender prices, whether they are for electrical installations, battleships or printing a leaflet, are common knowledge, and on the face of it one would suppose that the firm quoting the highest figure would never get any work and soon go out of business; this, however, is not so and the reason for the variation in tenders must be sought elsewhere.
There is probably a number of different reasons. One is certainly that firms cannot help to some extent specialising in the class of installation they carry out or ship which they build. Another is that a firm may be so busy they cannot see their way to handle the job and therefore quote a high figure. Au contraire, they may be very anxious to make contact with the purchaser in view of future business which may result.
Then there are new estimators who are not fully experienced in what is really required.
The truth is that estimating and tendering is rather a dreary job and a very exacting one if it is done properly. If it is not done properly you run the risk of losing money which is almost the only easy thing for us to do nowadays.
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