How Subcontractors Can Choose Suitable Projects & Improve Margins

The topics that we’ve been talking about in the past few blog posts (design, development, communication, common language, and transparency) don’t just apply to general contractors —they are also very relevant to subcontractors. Whether you’re a carpenter contractor who only bids on framing and trim or a piping contractor that specializes in sewer treatment plants or process piping, here’s how you can determine which projects to pursue and secure better margins with estimating software.

Base your decision on past successes

What’s nice about Sigma is the ability to refer back to previous projects. Let’s say you’re a carpenter and you’re invited to bid an assisted living facility or apartment building. You can use estimating software to look at projects you’ve done before and see how you fared in terms of costs. Maybe you did well on framing but not so well on the trim. You can see those details because you’ve captured your actual costs after the estimate was done. This is an ideal opportunity for the owner of the company, the estimator, and maybe a project manager to sit together and flip through the plans to decide whether they want to bid on the project based on how they did on other similar projects.

Make tweaks and adjustments to your strategy.

Markup, profit, and overhead are organized into categories, and you can create as many different categories as you need. The typical ones are labor, material, equipment, and general conditions. But let’s say you have a subcontractor for a particular trade (e.g., electric lighting) that you don’t want to mark up as high as the rest of the project because you think there will be many change orders. You can create a separate category for it and change the overhead, markup, and profit on it as a distinct entity. That way, all the other categories will retain the original markup. You might decide to change the electric lighting category to 5% markup while the rest of the project stays at 20%, for example. This allows you to employ different strategies with the estimate. In a competitive bid situation, you can adjust your markup on specific categories to reflect your bidding strategy.

Make sure everyone understands the costs involved in the project.

Estimating software can help increase the understanding of costs for everyone involved in the project, including the owner, clients, and general contractor. When contractors are reviewing an estimate with the business owner, they might want to display the total cost and markup or have it broken down into division 16. It’s possible to present the millwork by floor, by room, or by page number in the drawings. However you’ve done the takeoff (perhaps using a tool like PlanSwift), you can go into Sigma to sort the estimate and filter it for the cost items that the business owner wants to see. When reviewing the bid, It’s also very convenient to show the sales price instead of the cost/markup.

By taking full advantage of software like PlanSwift for takeoff and Sigma for estimating, subcontractors are better equipped than ever to make smart decisions about which projects they should pursue and how they can secure better margins. If you have any questions, don’t hesitate to reach out to support.