In the last post I mentioned “awareness of capabilities”. Let’s expand on that. I recently had a lengthy conversation with a customer about labor factoring. The answers to his questions were not simple because many facets of factoring depend on the capabilities of the electrical contractor.
An estimator, whether in-house or outsourced, has to know his employers capabilities. For example, a bid I prepared included 14,400′ of 4″ rigid conduit mounted above the truss at fifty to eighty feet above the floor. As an estimator, I had to know if my customer had the trained manpower and the tools to do this work. He said he had the best, so I factored the labor down. We won the project, and the crew actually beat the labor I had in the estimate.
An example in the other direction was an industrial water project. My customer told me I would get a general foreman and several journeymen with extensive experience in this type of work. I factored the labor appropriately. We won the project, and he staffed it with electricians that had never done that type of work before. The labor did not turn out so well.
As these examples demonstrate, an employer must communicate his companies’ capabilities to his estimators. Failure to do this can result in the loss of profits from missed opportunities or missed labor projections.