Quoting a job, how do you do it

[forgemaster]

Just interested to get feedback on the way different blokes (and shielas) go about quoting on jobs. Do you have a system where you calculate the weight of the whole job and multiply it by a dollar value then hope you have allowed enough, or do you estimate everything out, down to how many grinding discs, how many electodes, buckets of coke, etc and work from there, then estimate labour time taken etc add it altogether to come up with a price, or has someone come up with a software program for quoting for blacksmithing,(they have them for metal fab businesses). I'm also asking this to kick this section along a bit, lets see your answers.

I normally use a mix of both systems, depending on the type of work that we are quoting on. I really would like to develop a program that allows me to back enter all the costs and times taken for different jobs, to allow the program to average out the costs and give me a figure, say per hour, or per KG (or lb) for different jobs that I quote on in the future. I would like it to include fixed costs per hour such as rent, rates, etc, and variable costs such as fuel (oil gas or coke), electricity, steel etc, and overheads.I would have different job sections in my quoting database, such as architechtural, toolsmithing, engineering, metal fab. I know it probably wont work for everything but it would be something to give me a starting point. Does anyone use someting like this, is it succesfull, is it easy to make it work.

When I started I used to look at my desk with the quote on it look out the window at the sky look at the quote again and take a good guess, normally I was wrong, but sometimes it worked out OK

Cheers
Phil

[monstermetal]

Boy this is not an area where I shine... I hate the money aspect of any job. I really wish I could just bill everything time and materials...

But to answer your question I bid things based on days... I have a good idea of "cost" to keep the shop open and how much I need to net each day to pay the bills a make a profit... Most of the time I dont even consider materials. Unless its stainless, a very material heavy job or a very simple job the materials cost is usually less than 15% of the job.... My target is $750 a day... So my highly sophisticated bidding system goes something like... Aww that should take about 4 days, its going to be $3000

I tend to over bid big jobs and underbid small ones... My nature is to think, shoot thats not a big deal on a small thing and of course it always ends up taking longer than I thought ( am am working on a grab rail now that's just a short (6 steps) run that I bid at $500/foot, Just a grab rail, no infill... I thought it was plenty of money but so far I have a week into the thing and still fiddling with it... I'll end up twice as much time as what I am billing...

On big jobs I build a sample and figure the number of days based on sample construction time.. Almost always I figure out better, faster ways to construct the stuff and thus end up doing it in a fraction of the time allotted..

I think this is one of the reasons I didn't do so well last year, almost all my work was small jobs (less than 20K) an so I ended up doing way more work than what I got paid for...


For forged work I do use a 10X material cost as a base... but its only a rough guess.... But for me its about right for most simple forging a 5 lb item would be $50 or a 100lb item $1000.... And we are talking architectural stuff... You start talking about fireplace screens or labor intensive forging 10X is not near enough

[HWHII]

I have talked to many people on this subject over the years. The first thing everone agrees with is what is your overhead for the day, just to open the door and turn the lights on? You need to find this out first.

When I bid a job I always look at the material cost, not so much on a small job but definitely on a large one. I seem to have a good idea how long it takes to do a job and usually it comes out real close. I take my material cost and bump it up 20% then add my labor. In this area shop rates tend to run between $50 and $60 an hour to be competitive and this works well with my overhead. If I have some doubt in the time I will do the material cost plus and times that by 3 and add 20% to the bottom line and I have always been happy with the out come. On Fence and railing jobs I charge by the lineal foot. I will use all three methods to check my self and if they all come out close to the same I go with the higher priced method. I also look at simular jobs I have done in the past a use them as a guide.

Some may say I work to cheap but I believe I have a low overhead and my profit margine is the same. It works for me :D

[Mainely,Bob]

One thing I must say here is that you are off in an area of bidding/quoting then it becomes EVEN MORE IMPORTANT to keep close records of EVERYTHING!!!
You absolutely MUST get in the habit of closing the day with time set aside to record what went on that day,and that starts with that pocket notebook.When you see an area that either is or may be a problem take the few seconds to write it down in the notebook.Memory will not cut it,I can guarantee something else will come up and knock the thought right out of your head before the day ends.
It may be a PITA to start and you won`t like to do the paperwork at first(nobody does)but if you make it a point to set that time aside and make it habit then the paperwork will pay BIG dividends further down the road.
I will also guarantee that if you DON`T start recording it all (starting today,no excuse to wait)things will NOT change,except to become worse.
Writing leads to thinking,which leads to identifying and tracking problems,which leads to fixing or eliminating those problems,which leads to quotes with a solid basis in reality instead of guesswork,which bring PROFITS instead of losses.
If you don`t track this stuff you condemn yourself to making the same mistakes over and over and never getting any better at anything but denial.
You already start the day thinking about the work(or should).If you want it to grow,get in the habit of ending the day thinking about the business.

Handing off the soap box now(and pulling the notebook to write this down).

[Mills]

I have implemented what I call a job sheet or ticket. It is the first thing I do, even talking about a job. The sheet looks similar to an invoice or packing slip. Name address phone number email fax etc. This is generating a client list so that in I can generate a mailing list. After talking with them and assessing their level of committment I will put a job number on the sheet. The systemm I like is yy/mo/day-#. Currently I am billing 100304-6, 4 Mar 10 6th job of the month. Sketches, sticky notes, prices of materials, receipts, everything goes into a folder with the job sheet and is labeled with that number as well as a title to remember intuitively what that job was. It goes on the desk til dispensed with, either finished, put on indefinite hold or closed out in some way. Then it is filed by number. I am then able to refer to it years hence if a question comes up.

This system allows me to review my work efforts and processes as if I were an employee. How good did I do in bidding right, where do I need to add more money if I got stomped. Materials, Equipment, Outsourcing, Time to build, Unforeseen events that may need to be added into future bids. This is an automatic process because ALL the info for that job is in the file except for time. I have to review this to produce the invoice. Tracking time is the most difficult part.

This system then produces 'right now' feedback as if I were to ask any of ya'll "how did I do Boss? huh? Did I do good? earn my pay?". It is what I have done on other jobs on behalf of somebody who made more money because of it. Inefficiencies are done away with, and whether you ought to buy a tool or machine vs rent or outsource.

This then becomes institutional knowledge and you develop your process and procedures on what your operation can really do.

John Larson uses a blog to keep this info available to himself, we are allowed to share in it a bit. Nakedanvil has a little different method and looking at Sam Yellin you'll see that my method looks like his, for good reason. And Mainely,Bob said about the same thing, establish a tracking system that best suits you.

YMMV, peace out dude, :D

[Pat Roy]

Mainely, Bob and Mills, I like your thoughts and methods. I have been keeping track of how I make stuff but not in a way that is easily retrievable. And I haven't been keeping track of my time. This is still only a hobby for me although I do sell some things, but the process of thinking things through as I come up with a particular design and actualy do the work eats up a lot of hours. I can't charge for my learning time I don't think.

[Mainely,Bob]

Pat,you may not be able to charge for your learning time but you should only have to pay for it once.

[Fe-Wood]

I use a similar version of Mills' but I go by client name and year alone. My jobs tended to be longer lasting, having been a General Contractor. I make the hard copy folders the same. Now that I am changing my focus to more product lines and shop work. I will most likely create a client number that includes there initials or something like that. One system I like is using the first two initials followed by the last 4 digits of there phone number. This can be very easy for sorting.

I do all my bidding and estimating on an excel spread sheet I have been building for years. It includes catagories for estimated time as well as actual times. I also made function codes so I can sort it and mine for information quickly. I track EVERYTHING!!! and when I'm bidding a job- I use real number multipliers for as much of the work required as I can foresee. If I have doubts, I will do a simple time study to get a better idea. I also have prompts on my bid sheet to remind me of the simple stuff, Ie. basic consumable, TRASH DISPOSAL, time spent finding supplies and actually getting them on site. This all relates to the categories I use when filing my taxes. I cut and paste into a master sheet that then produces a summery sheet that I furnish to my tax man.

Here's one example- How long to put 4 mounting screws into 2" thick Quartz pavers VS 2" thick Sandstone Pavers? If you had a dozen posts to mount, That could be the difference of half an day and another drill bit @ $20.00.

I worked for a guy once who used what I jokingly called the dart board bidding method. I think he basically went for the perceived value approach. Sometimes we made great money, other times-oh, it was scary how far off he was... He is no loger in business, Bankrupt!

[Mills]

One resource not mentioned much anymore is the library. I have checked out books on bidding and estimating and read them. It didn't really matter the specific industry, though mostly carpentry. Bidding is knowing your industry and your shop, you can glean insight from other areas.

Fe wood I love that example of drilling holes. It seems so easy, till you get bit by paying out the profit of the job to your labor, whether yourself or others. And you are dead on about having the ass biters listed on the bid sheet.

(The following is a generic ramble, kinda me talking to myself out loud, like I do in the shop. )

As for perceived value, that is what I grapple with after I have decided how much I gotta have to do the job. If I am the only game in town and they are idiots I will add on more money for the hassle. And there is the idea that I want my work respected. I wouldn't sell YOUR stuff to cheap cause that is disrespectful to your time and effort. If I can sell YOUR stuff at a better price because it is worth that price no matter what it takes to make it, I will do that for you. I see it as a duty to look out for you the best I can. How much more should I look after my own interests. Biblically, it is known as stewardship and the Amish seem to be doing well with that.

Only recently has the idea of the price of an item being used to regulate the demand garnered my attention. Listening to Dave Ramsey respond to a stressed out businessman one day opened new vistas for me. The man was wanting to expand debt free but could not stretch the budget to do it. After a couple of leading questions DR suggested he raise his price. He hadn't in several years. The man quickly responded by saying the business would fall off. That was the idea. Price was set such that he achieved the same profit margin for less work with no need to expand. His income stays the same and he has less stress. Then he may want to look at honing production so that it took less time to do the work. After that he may be able to increase production and expand with the profits OR this fellow had some other ideas if he only had the time/money to pursue them. That was a yippee moment for me.
What if there was no wiggle room to do that? was also dealt with. if this widget or process has no room to grow then by definition it is a dead end. Life is too short to get stuck in a dead end. Time to switch products/careers.

Kind of full tonight, I'll quit now.

[forgemaster]

We have a job card system in the shop, that I use for all jobs. All jobs have a number, even making stock when someone has run out of work is given a job No. and of course a job card.
Getting the boys to fill in all the details as they do the job is the hard bit, such as times taken, getting them to sign and date it is fairly hard to.

I have drafted our job cards are using ideas gleaned from the best ones I've seen around, just used the bits I wanted.
I'll attach it, someone may find it useful.

Job card PDF.pdf

[Mills]

Now that is a job card! Very detailed and repeatable. Do you have a spreadsheet for tracking this info? or is a review of it enough to assess long term benefits of a process or operator?

[Fe-Wood]

Forgmaster- That is quite a job card! I hope you don't mind if I make a few observations...

There is too much information on that card and its a little confusing to fill out.
I would divide it into 2 or 3 pages. Organize all the pages and contense in the linear way the work flows through the shop.

First page would be a work order type page. This could be generated from the estimating process. It would include all the customer info, type and description of job. Hours and Materials required, weights, etc. all as estimated. This is also where notes would be for fabrication/forging process, providing insight into how the estimate was generated.

Second page would be the actual time page. Lay it out based on how the work flows through the shop. I use codes, usually 4 numbers. I base these numbers on the department and function with-in the department etc. For example, Department 1 would be bidding and estimating, so 1-003 would track the time spent finding suppliers. 2 would be cutting, so 2-001 would track cold cutting and 2-002 would track hot cutting. The learning curve takes a little time for the codes but once people get it, its easier and faster. This could also be used to generate the time cards for each employee (read that as incentive to fill them out promptly and properly). There are several computer programs and systems that automate this process too. As a cheat sheet, the "work order" page will have all these codes because the job was estimated from the same framework or format. When it comes time to see how you did, the codes make it simple to sort and tally.

Third page would be essentially the shipping page.
This page would have all the required tempering results with the signature of the person who performed them. Actual weights for shipping, Crating requirements, product quantities, etc. It would also include the release to shipper/customer.

I don't know if this is helpful for you or not but it was good for me to refresh my memory... Its been a while sense I thought about any of this stuff.

[pkrankow]

Forgemaster,
I understand the desire to have that much information attached to the job, but that seems more like its supposed to stay attached to the job until it is ready to be packed and shipped. Some of that information may be better done as a time card, the employee writes down the job#, start time, end time. This gets turned in with the time clock cards.

Don't forget to have a job for scheduled preventative maintenance. If lubrication, etc. needs done daily, and takes more than a few seconds it get a job #. Workstation cleanup gets attached and recorded as well.

My experience is limited though, but I know what happens when PM is not considered in a cost reduction productivity tracking scheme. Equipment wears out and fails prematurely because the employee is not getting paid to perform daily maintenance.

Phil

[forgemaster]

Thanks for everyones input guys. Will give me some thinking to do.

Phil

[divermike]

I don't do a lot of contract work, but a couple of the better smiths I have studied under have a formula that I follow. Once you have materials and times estimates, and have added the percentage of estimated profit, then I send a letter with all of it, including my pay schedule, 60-30-10, 60 percent up front, 30 per cent at halfway, and 10 upon completion, I also generally tell them if they are not satisfied, the last 40 percent can be refunded. This has not happened yet, but if they are not happy, the give back will hurt enough to make me better the next time. 3 times recently people have just paid me 100 percent up front, and I always have in my contract a looooong time for delivery, cause I may be slow, but I'm stupid!!

[Mainely,Bob]

3 times recently people have just paid me 100 percent up front, and I always have in my contract a looooong time for delivery, cause I may be slow, but I'm stupid!!

Sounds like the unofficial motto of one of the yacht yards I used to sub for,
"We may be slow,but we`re expensive".
Fit them to a T.

[pkrankow]

...I always have in my contract a looooong time for delivery, cause I may be slow, but I'm stupid!!

That seems more smart than stupid.
Phil

[Dragons lair]

Sign on my door. 3 Types of work done here. Fast,Cheap,Good. You pick 2
If its fast and cheap it won't be good. If its Fast and good it won't be cheap
Cheap and good it won't be fast. Under that is hourly rate in 1/2 hrs. Min 1/2 hr.
Ken.

[damo....forgemaster]

boo i fill the job cards out correctly and put my hancock on it too

[bajajoaquin]

I don't charge for my smithing (still an amateur), but I did set up a cost and pricing model for a manufacturing company a few years back.

I used Microsoft Excel to set up a spreadsheet that would calculate the parts of the job, and then add them up. It was broken out by component, with a unit of measure for each part of it. There was also an overhead component that accommodated rent, lights, consumables, etc.

So, if we were building a run of 150 clothing racks for a retail store, it might have 3 shelves, 2 hang bars, one base and one central frame. I'd break the components out into shelves, bars, base, and frame.

Each component would then be further broken down into the steps required to build it. Shelves would be cut, then edged, then trimmed, laminated, drilled, and boxed. Each step had a time factor, for which I had a shop cost (note, that's separate from price). Multiply times quantity per unit and times number of units, and you would have your cost for that component. (It would also give me the ability to price additional components, which came in handy.)

When I calculated the overhead, I figured on a dollar figure per hour, and a certain percentage of capacity (I figured the shop ran at a steady 80%). The total hours in each component then got an overhead charge associated with them.

This all got added up, and the cost was calculated. I had a couple more formulae to calculate certain percentage markups, so the owners could make an informed decision.

Working it back to blacksmithing, think about Brian Brazeal's post on making a crane. All the steps are laid out. If you give a time estimate for each one, you could come up with a total time estimate for a crane. Of course, this is if you think of your work in clear steps like that. I'm not there yet.

Another thing to note is that I made sure to include setup line items. Every time you have to change a tool (or make a heat, I suppose), you need to account for the time it takes.