How to Measure Profit on Masonry Jobs

With any project, profitability is based on estimating your costs and subtracting that from the asking price. With masonry and construction in general, there are reputable computer programs and contractors that can measure profitability to a high degree of accuracy. However, there are always challenges. The client may request additional work, or work could go slower than estimated and overtime must come into play. Even the weather could be a factor if a project is delayed due to rain or snow. The best option for measuring profit is to estimate conservatively and seek advice from experts.

Things You'll Need

• Budget
• Budgeting software
• Cost estimates
• Bid proposals
• Price data on resources

Instructions

1. Break the project down into categories, and then use past jobs or advice from experts to determine what costs may be per category. A full listing of categories could be found in most masonry resource guides or construction software. Examples are: transportation, communications, insurance, fees, supplies, small tools, salaries (management), salaries (office), salaries (field workers), taxes, and warranty/callback.

2. Check current prices for concrete, tools, fuel, and supplies. If you estimate fuel prices based on 2008 costs, and it is 2010 and prices are up a dollar per gallon, your final project estimate could be off by hundreds or thousands of dollars.

3. Include labor man-hours in the estimate. This is generally phrased as dollar amount per unit of work, such as "$20 per cubic yard of wall." Take into account location, inflation, and work difficulty (such as building a wall on a hill rather than level ground).

4. Look for best pricing. Some projects call for sole-sourced items (i.e., customized or very limited availability) and really need it; for other projects slight adjustments can allow you to select resources that are more popular, hence the ability to entertain diverse bids.

5. Analyze equipment and time. Is it more profitable to rent or buy resources for this project? Is it better to increase workers and equipment and finish quicker, or use less to increase the timeline?

6. Use reliable subcontractors. Some projects have an extremely large percent of cost in hiring subcontractors who may not optimize their labor and costs. Be sure your subcontractors are licensed, bonded, and can provide references.

7. Maintain records of jobs, estimates and profitability. Because all contractors when on a job should have about the same estimate of man-hours, quality of materials, types of materials and time frame, the main difference in bids is usually profitability expected by each bidder. If you have records of other companies, then you can estimate if it is worth bidding on a project, or know that you must bid with expectations of X percent of profit since another company is bigger or has access to different resources than your company.

8. Calculate total costs and subtract that from the price you are asking for the project. Consider hiring a professional estimator and researching online resources to aid in understanding what an appropriate asking price and margin for profitability would be.

References

• Proper Estimating
• Nine points of measuring profit