Presenter: Victor C. Tyler, P.E.

1. Estimating and Bidding Strategies that Drive Best Practices Presenter: Victor C. Tyler, P.E.

2. Victor C. Tyler, P.E. • President/ owner of Tyler Construction Engineers, P.C. • Licensed Professional Engineer in state of Tennessee • Author “How To Estimate Road Construction Accurately” • Cost and Pricing Specialist • Management consultant to the engineering & construction industry

3. How Time In Construction is Spent Opportunities for improvement Planning makes actual installation more efficient Other activities such as site movement, material logistics, general non-productive time and rework is minimized 36% other activities 64% Installation

4. The Average Construction Day

5. Look at 176 Man-hour Month For one employee approximately 63 hours per month is spent on activities other than actual installation …. approximately 760 hours per year for that one employee. Where can we improve?

6. $45,619 per year If you have 4 full-time field employees paid at $15 per hour … That’s why I talk about productivity in the estimating processes for both field employees and equipment. Today’s Tip Use accurate rates and reduce idle time.

7. Only _____ ______ are 100% Productive! Lunch Breaks

8. Estimating Accurate Job Costs Bidding on Profitable Jobs Making Profits on Every Job Won

9. The job of every estimator is to help his or her firm acquire profitablework. Thus the top priority for the estimator is to estimating accurate job costs.

10. Strategy

11. Tyler’s Cost Strategy 101 Organized and document data Be detailed and factual Base the estimate on historical data Use a predictable, measurable and repeatable processes (use checklists, templates, software) Always monitor your progress and make adjustments as required

12. Tyler’s Cost Strategy 101 Know and understand your costs (Labor + Material + Equip + Subs + Job Site Overhead) Make the estimate comparable to the P&L Statement (Revenue – Job Cost – Overhead = Profit) Cost first,…then price (Price = Direct Costs + Overhead + Profit)

13. Know Your … Direct Job Cost • Material • Labor • Equipment • Subcontractors • Other direct cost

14. Know Your … Job Site Overhead Costs (General Conditions) • Labor Burden • Indirect Labor • Job Supervision • Tools & Consumables • Insurances • Travel • Other

15. Cost First, then Price

16. . Strategy

17. Accounting is BORING!

18. Bid Price Structure Contract Price Total Cost Profit Direct Cost Gen & Admin. Profit Work Item Cost Jobsite OH Markup Mat l. Labor Equip Subs Jobsite OH Markup

19. Estimate Summary The Estimator’s View Direct Costs …………………….. $$$ Direct Labor Equipment Materials Subcontractors General Conditions plusLabor Burden (%) plus Job Site Overhead (%) equalsTotal Direct Cost ……….. $$$ plus General & Administrative (%) plusProfit Rate (%) plusBond Rate (%) equals Total Contract Price ……… $$$ Company Income Statement The Accountant’s View Contract Revenues …………………… $$$ minus Direct Cost of Sales Direct Labor Equipment Materials Subcontractors Other Direct Costs minus Indirect Costs .……………… $$$ Labor Burden Benefits Indirect Expense equalsGross Profit ………………… $$$ minus General & Administrative Expenses equals Income (Loss) Before Taxes …… $$$

20. Understanding Risk & Pricing Example from Book, “Managing a Construction Firm on just 24 hours a day”, by Matt Stevens

21. Understanding Risk & Pricing Example from Book, “Managing a Construction Firm on just 24 hours a day”, by Matt Stevens

22. Margin vs. Markup Job Profit and Loss Statement Sales ……………. $ 700,000 Less COGS …... 507,000 Gross Profit ……. 193,000 Less OH ………..… 175,000 Net Profit ..…….. 18,000 As a % of Sales 100 % 72 % 28 % 25 % 2.6 % Markup As a % of Direct Cost 138 % 100 % 38 % 34.5 % 3.6 %

24. Quick Study Example: Cost Multipliers You are preparing a bid for Project XYZ and have estimated the direct costs as follows: Direct Costs Labor - $ 75,000 Material - $150,000 Equipment - $ 75,000 Subcontractors - $ 50,000 Create an estimate summary utilizing the cost multipliers we calculated. Therefore, the estimate summary becomes: Direct Cost (labor, material, equipment, subcontractors) = $ 350,000.00 Labor Burden: $ 75,000 x (25.93 % ) = 19,447.50 Job Overhead: $ 350,000 x (14.53 %) = 50,855.00 $ 420,302.50  Office Overhead: $ 420,302.50 x (7.81 %) = 32,825.63 Total Project Cost (without Profit) = $ 453,128.12

25. Position (Market) • Project • People • Product / Service • Price • Production • Profit Strategy to winning more profitable work.

26. Best Practices … • Know Your Cost (Estimating) • Understand Your Cost (Project Management) • Control Your Cost (Project Accounting) • Continuous Improvement (Always)

27. on each & every job

28. More Predictable

29. QUESTIONS?

30. Thank You! 810 Dominican Drive, 3rd Floor Nashville, TN 37228 dbe_supportive_services@tyler-engineers.com  www.tyler-engineers.com 1.888.385.9022 615.469.5398