Updated: Oct 28, 2021
Fixed Price Quoting
In an effort to help consolidate all this info I fire at you, I thought I’d throw out there a blow by blow on Fixed Price Quotes……. Remember, this is what we work through IN DETAIL on our course, so if you think you need more knowledge here then you know what to do, get yourself on the course asap!
Tips ‘n’ Tricks
Because a fixed price contract holds both the most risk and the most potential reward, you MUST BE ACCURATE with it. You CANNOT put forward a fixed price quote for a job with figures that are just thrown together, so before you start, get that right out of your head!
Start with your measure, yes you will have sent out to your merchant and your subbies for pricing and so you should, but do yourself a favour and measure all the materials yourself, split them into categories of material type AND what the material is doing (see the previous blog on pricing labour). Once you have this amazing list of materials and their tasks, go through and apply a labour constant to each item. Total everything together so you have a total labour and a total cost of materials and labour for every line item.
You will have sent out for your subbie quotes nice and early, or at least you should have! As they start to come in go through them with a fine-tooth comb. Make sure their quote is relating to the plans, that nothing major has been missed, and that there are a few a PC Sums as possible. As you enter these quotes into your pricing, make sure you include for some labour of your own to attend upon them, they aren’t just gonna show up and do their thing without needing to talk to you or take up your time!
As you go through the process of measuring materials and labour and analyzing your subcontractor quotes, keep a piece of paper or an open word document on the computer handy. Every time you come across ANYTHING that could be considered a grey area, or is a PC Sum, write a clarification for it down. This will make up your tender letter/fixed price quote.
Apply an accurate labour charge out rate to your total labour hours… and no, this is not what your mate down the road charges! Complete the calculation properly, we have the calculator if you need it just ask.
Work out your P&Gs (onsite overheads) needed for the job. Do NOT use a percentage! Have a look online at our advice on what should be included here, the definition is every single cost that could be attributed to the job existing, NOT that would be attributed to your BUSINESS existing, that is covered elsewhere. Remember to apply labour to each item if it is needed…. Are those site fences going to be put up by magical fairies or will your guys be doing it?
Apply your margin. I have written about margin a million times, it is defined as your offsite overheads plus desired profit, so it is NOT market-driven and it does NOT need to be disclosed to a client. Read more on our info hub about margin……
Put the total value on your quote, include it in both numbers and words JUST IN CASE there is confusion. Remember that you do NOT have to supply your client with your full breakdown of measures and costs. In fact I recommend that you don’t, a fixed price offer is what it is. Do you ask for a breakdown from your supermarket when they give you a price for a loaf of bread? No. Your fixed price offer based on the plans provided and including the tags and clarifications that you have clearly stated is no different.