FEATURE FCNZ ANNUAL CONFERENCE 2021
Nailing quotes to optimise profits It was a pleasure to be able to present at the recent Fencing Contractors NZ Conference in Paihia. It was suggested that it would be good to follow up the presentation with some articles in WIRED so here is the first of those articles. The aims of undertaking any project are to make a reasonable profit and to have satisfied clients, to name a couple. Here is some brief guidance to assist you in pricing prospective work.
Scope
Costing and Quoting
When quoting a project, it is important to understand what you are pricing.
Confirming the scope of the work enables you to quote the work more easily and efficiently.
Make sure that there is a clear understanding between you and your client of what the scope of the project is: •
What is the finished project to look like?
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What materials are to be used and who is going to provide the materials and
where are they going to be delivered to. What form are they to be delivered in. If the materials are arranged correctly this could help you to be more efficient in the construction. •
Where is the work to be undertaken? Is the terrain difficult? How much travel is going to be involved to get to the work site?
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Is there additional specialised equipment that you may require for the job?
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What is the timeframe that the job is to be completed within?
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Are additional insurances required for the work?
Always try to limit your indemnity for the project to the value of the project or a value you and your insurer are comfortable with. If in doubt discuss with your insurance broker. Lay out your expectation around when payments should be made to you. Include details of how variations are to be dealt with as well as any items or areas of work that are excluded from the scope. Put all of the agreed scope, terms and conditions, and your pricing in writing and get it signed to avoid possible issues later.
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ISSUE 62 / SEPTEMBER 2021
There are a few ways of building up a quote all of which need some rates to be calculated before you commence. Before you do those calculations, you need to know what your fixed costs are that you need to cover. These may be costs associated with your premises
(rent, power, telephone, rates, insurance), computer costs, the costs of your administrator, any finance costs for loans that you may have, and so on. Once you know what your fixed costs are you can calculate how much per hour you need to allocate to your cost of labour or your machinery rates to ensure all costs are covered and you can add a profit margin to that. Using a quoting template is a good idea as this provides you with a check list of things that you need to consider when pricing a job. The rates that you may need to calculate are: Labour rates Things that should be included when calculating a labour rate are: •
The hourly rate you are paying your staff. This may be an average if you have several workers at varying pay rates or separate rates for levels of experience such as Project Manager, Supervisor, Fencer, Labourer.
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Any add-ons to the hourly rates such as ACC, KiwiSaver, holidays, sick leave, any other allowances that you may pay staff.
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Costs of PPE – if not included in fixed costs.
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Costs of staff training – if not included in fixed costs.
WIRED MAGAZINE
