I took over a 5-man shop a few years ago that is mostly residential. I started work for a GC last year who sends me small plam TI jobs. I like the work and want to pursue more commercial work. I'm not quite sure where to start. I'm pretty busy keeping up with my current workload. I'd like to hire an estimator, give him some parameters of the type and scope of jobs I want to bid and set him loose. But I don't think that's a full time job at the size I'm at yet. And I'm not sure where to look to find the smaller to medium sized jobs that would be in my wheelhouse.
LOL, "a good estimator is expensive". Statements like this make no sense. If there is anyone on your payroll that is "expensive" then there is an issue at the top of the food chain. Because most employees have different salaries while working at the same company, I guess one could say that employee "A" is more profitable than employee "B". In the end it is up to management to make sure that all employees are profitable, if that isn't happening you need to look at yourself first.
If you are working in residential now, I think you will find commercial to be more forgiving. The contractor is going to tell you where you need to be and after some experience, you will see who your competition is and where you have to be to get the job. Getting into commercial is probably a good idea. If the economy falters, residential will be hit first. Being diversified is a good idea. Once you find out where the price has to be, be sure it is going to be profitable for you. Not all shops can produce at the same efficiency. Be aware, commercial contractors typically hold back 10% until the job is completed. That means the entire job is completed, not just you. The final payment might not come for many months past your completion. Also, typically a commercial contractor will require your billing to be in by the 26th of the month with payment 45 to 60 plus days later. Also, I rarely see a large deposit. Generally, the Contractor is getting their payments for work completed. You have to be financially strong enough to finance some of the job.
Thanks Paul. I've done enough commercial jobs to understand the process.
My question is more about sales and estimating. For a smaller shop like mine, is it feasible to hire someone to go search out commercial jobs, do the job walks, and create estimates (that I would review before submitting)?
The commercial work that I've done thus far has come through designers I've worked with or word of mouth. So, I haven't ever staffed anyone to find and bid this work.
Steve, I think you absolutely get into the commercial world.
However, I would not hire just an estimator. At your point in time you need someone who can estimate a couple jobs a week and also project manage the commercial jobs.
There are things in the commercial world that can be more complex, like a reception desk that has Corian, or quartz tops. You'll want to partner up with a local shop to give you accurate and quick turnaround on bids. Taking on the countertops is normal on small to medium commercial jobs. There is margin to be made, but probably less than your normal markup to be competitive. Plus you are taking on that liability if something goes wrong. A small error on a Corian top that you have to eat, can suck all your margin out of the job. You may also need to start purchasing things like 3-Form Acrylics, Chemetal and other specialty products on some jobs. These add to the liability and difficulty.
The good news for you is that since you already have a full workload, you can be selective about the jobs you bid. So if it has a really intricate reception desk, or feature, you can pass on the project.
What I would recommend you do is call around or google search for GC's in your area. If you're like me you see their trucks on the road and at gas stations and can probably rattle off a dozen GC's right now that work on the smaller tenant finish jobs you're looking for. Call them up and ask for the estimator, tell them you would like to be added to the bid list. No GC I have ever called has told me, "No thanks, I am happy with my current cabinet shop". GC's are always looking for a good shop. All they do is put your e-mail on a list and when they send jobs out, you'll get a chance to bid them. If you get to talk to the estimator, tell them a little about yourself and invite them to come take a look at your shop for a tour. You can always stop by in person, but I find it's hard to get past the receptionist. Call first, find out and then ask if you can stop by in person if they can't make it to your shop.
A couple things to watch for in the commercial world are the specifications. They can burn you. Each architect has their own standards and they change from job to job. You have a way you build drawer boxes, but they want it another way. For example, you might build a really nice 3/4 or 5/8 doweled melamine box with sidemount glides. But the spec says they want Metabox. If you don't have the Metabox drilling pattern or template set up, you'll lose a lot of time figuring all this out. Or maybe you do have Metabox, but they want Zargen. Sometimes you can get things changed, other times you cannot.
Section views show more of a design intent, and usually you can get away with a construction method that is different than what is shown in a section. But the specifications need to be followed. Always follow up in a week or two, put it on your calendar, and ask where you fell with the other bids. Most guys will tell you vaguely where you fell. Like you were 2nd out of 4.
I would advise you to get with someone to lay up your panels for you.
Stay small at first, develop a system, learn frameless, network with some GC's by taking on a couple 8' breakroom elevations that are too small for the big guys and scale from there.
I have hired salespeople over the years and it has never really worked out. But, there is so much about your shop or your product that we do not know. What kind of tooling do you have? Do you have a showroom? Do you have a Designer on staff? If you do hire a salesperson, unless you have a standardized product, you will have to have control over pricing.
Pat, that is a good list. The line "Does one need to "tip" any person on this job, to facilitate getting it done?" Hit home because of a job we did in Michigan. The union refused to unload the truck (a contract carrier) unless the driver "tipped" the job steward $100 in cash. A call to the contractor didn't get us anywhere as he said it was normal to "tip." We wired the driver $. Have had similar happen on the East coast.
So if your only completed part of the job, "some" millwork completed what do you bill for on the 26th? How do you assign a value? Most of our work goes by milestones so if its completed we bill for it.
Generally there is a schedule of values included with the job. You get to bill whatever is completed on this schedule. 90% complete on 50 patient rooms gets you nothing, 100% complete on 45 of them gets you paid. Or so I gather, I don't deal much with the billing.
We bill for completed work in storage, partially completed work in production, we insure and send pictures.
Most jobs we don't build until they are ready but there are times where we sit on stuff for long periods of time. We create a schedule of values at the beginning of the job and submit it. That's what we bill against.
We don't bill for install on work not installed. We under bill by about 5-10% so there are no issues.
If vendors require deposits we bill for deposits. If the deposit is a BIG number we qualify when it is due in the bid, if not, we pay out of pocket and then get paid back or pay when paid.
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