Preliminary and General. Do you know what this is? I have talked to many builders around the country over many years, who often say “I don’t seem to be able to, or seldom manage to achieve, the man hours I allow and price for each job”.
Many think obtaining the total cost of materials for a job from a merchant’s “take off” and guessing the total labour hours times an hourly rate is the correct pricing method — wrong!
First, for the materials, the merchant may not pick up all the materials required and/or calculate the correct quantity. This then becomes a cost to you.
The correct and most accurate way is to measure all the materials required, add an appropriate wastage factor for each material, then allow for cartage, if applicable and an allowance for fixings (nails, glue, screws).
The most accurate way to assess labour is to apply a man hour constant to each material quantity then multiply this by the charge out rate you wish to return for your labour. For example:
500 metres of 100 x 50 framing x 0.19 man hours per metre = 95 hours times a charge out rate of say $40 equals $3800 plus GST.
Margin (profit) is either added to the material and subcontract totals only, or can be added to the total labour cost depending on your pricing structure and the dollar return required for the job after all overheads and costs are recovered.
What has been forgotten, I hear some of you say? Preliminary and General, something many do not know the meaning of.
Where have you allowed for the following costs?
Consent and/or other Territorial Authority costs when or if applicable,
Checking the rights of adjoining property owners,
Rental of others’ land (councils) required to carry out the works,
Setting out the building,
Preparing and updating a programme,
Insurances such as Contract Works and Public Liability,
Setting up a site shed and hireage of same,
Temporary power, water, phone and ongoing rental costs,
Cost of site fencing for security and Health and Safety,
Other Health and Safety provisions, signage, first aid, tagging of electrical equipment, leads etc,
Scaffolding, exterior, interior or special scaffold to stair well,
Roof edge protection,
Portaloo and ongoing costs, such as cleaning, consumables etc,
Sundry plant hireage,
Hoisting/craneage of frame, trusses to first floor level,
Pumping or craneage of concrete,
Transferring materials from delivery truck to the correct position on the work site,
Maintaining temporary roadways,
Cleaning costs, labour and hire waste bins,
Final clean of site and premises,
Supervision, down time of foreman etc,
Travel time and vehicle costs,
Lost time due to wet weather or down time,
Attendance of subcontractors,
Maintenance costs during defects liability period,
Preparing As Built drawings,
Master Build Guarantee, and
Disestablishment of site.
The above list is a guide only and is not fully detailed or comprehensive.
To fully understand the above I suggest you join your local Registered Master Builders Association and learn more.
They have templates of this and much more Best Practice information available to improve your business and minimise your risk.