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| Subject - Preconstruction Budget Consulting | |
| rabbitgun |
On occasion I do consulting work in preparing preconstruction budgets for Developers, Architects and E.E's. I have been asked to put together a budget and some value engineering for a prenegotiated project that came in high and will be put back out to bid. Here is the rub. The developer wants to purchase both the lighting and gear package and pull it out of the electrical bids. The developer does not have a relationship with any of the electrical wholesalers in the area and I have tried to explain that his purchase price will more than likely come in higher than an electrical contractors price including his mark-up. ( I estimate the package can be bought by an EC for around $65K.) However, the developer is insisting that I see what kind of pricing I can get for him and compare the pricing to my own quotes. I have spent some time on the internet looking for an outside or direct resource to get a decent price for this developer but am coming up blank. Keep in mind that he will need a couple of 1200A 3R switch/C.T. sections. It is not like he can go to Home Depot and buy a couple panels off the shelf. I know the question is a bit unusual.... Any ideas? Thanks. |
| MONOLITH | Is the gear already spec'd as to a particular manufacturer by an electrical engineer? I would assume that since it already went to bid once, it is. Have you tried to approach a rep from that manufacturer, as opposed to a wholesale house? I seem to recall dealing directly with reps from Square D, Siemens, etc. |
| rabbitgun | Thanks for the thoughts and quick reply, Monolith. The first thing I did was to throw the original spec out the window. The gear quote will be open to all manufacturers. I can contact the individual reps but the actual sale will still need to go through a local distributor. The distributors and their sales people will protect their clients. (The electrical contractors.) They have no incentive to provide low end pricing to a one time buyer.....These waters run very, very deep! I have no problem subbing the fixture package to an out of state source and purchase the package for less than a local reps package. |
| wilkie | It appears the developer has found another creative way of trying to prevent the electrical contractor from earnig an ethical profit. Suppose he is successful in this venture, is it possible that the contractor could possibly underbid the project as this would be an unusual factor? Could they be losing their "cushion" because they will no longer have any surplus to be found off of equipment? Could this also be the project that ruins this mans business? I say take a stand with the developer. It is better for the contractor, developer, you, and the community. When a business goes under, it ruins families. It can involve other businesses and their families. Why not represent the working man here? I mean this guys in the arena, with mud on his face, and the developers wants to pull money out of his pocket. I say no. |
| kbsparky | Many large clients use National Accounts for switch gear and fixture packages. Get used to it. If you place a bid on a job that uses those packages, then it is up to you as the electrical contractor to put enough in your bid to allow for your "cushion" as well as a decent amount of operating costs, like overhead, and profit. As for the difference in pricing on those packages, it's the manufacturers and their reps, as well as the local supplier who have added mark-ups along the way to pump up the local pricing. Case in point: I recently found a combination meter/service entrance panel on eBay. I took the catalog number and called my local supplier to see if I could buy them locally. The quote provided back to me was more than double what I could get them for. I called them back, and explained what I could buy them for, and asked "how many do I have to purchase to get this price"? I was willing to buy a whole pallet of these boxes to make it easier for pricing, shipping, etc. The response was astonishing. They basically said that the "market" for those panels was in the South, and the further South I went, the better the price I could get them for. But they refused to sell them to me for even close to what I can buy them for from a southern supplier. Even if I paid for them in full, up front, before delivery. So, the developers may reducing job costs, by using national accounts, but it's not coming out of the electrician's pocket. Or at least, most of it is not, anyways <shrug>. 
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| rabbitgun | Well there is certainly no intention to put contractors out of business by prepurchasing the lighting and gear package. In fact the lighting types and counts will be spelled out on the bid drawings as well as panel schedules and the entire one line with fault current calculations. There will be a note on the drawings asking the E.C.'s to verify these items on their proposals. The developer has been burned in the past with gear and lighting that did not show up in time to meet the schedule. Which, has then turned into leasing issues with prospective tenants and their schedules. The National Account issue brought up by kbsparky is a good one. Keep in mind that even if a national account is used the E.C. is required to purchase the package on his dime and this type of package needs to be double and triple checked by the E.C.. I have seen more discrepancies between drawings/spec's/schedules on this type of job than most others. Most of the national account projects I have been involved with are chain stores. The engineer may be out of state and the one-line may or may not reflect local requirements. Fixture schedules can be years old and not even reflect accurate cat.#'s. Just a word of caution to make sure your covered as an E.C. on this type of project. Anyway, I have solved the issue by purchasing the gear package under my business with a markup agreement. |
| kbsparky | >>...Keep in mind that even if a national account is used the E.C. is required to purchase the package on his dime and this type of package needs to be double and triple checked by the E.C....<< In my experience, the projects using National Accounts for gear and/or fixtures were paid for by the developer, not the EC. But, the EC was responsible for acceptance of delivery, and checking the shipment for accuracy, and damages. (Double and triple checked as you said)  We had to spend half a day just receiving a trailer load of fixtures for a 10,000+ square foot store, just unloading and counting fixtures and bulbs. 
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| luckyshadow | I did a job at NSA in Maryland . This one job had 1.25 million in switch gear.( Multipule gears in multipule locations ). Guess who provided the gear and earned the mark up ? The General Contractor ! When it was put out to bid they excluded the gear from the EC package and bought it themselves. They made quite a nice profit on this move. Just when you think you have it figured out some one finds another way to turn buck. |
| IndCom | Whenever I bid on a job that has Fixtures and Gear supplied by others; I ALWAYS exclude in my proposal any shipping or handling and always put the monkey on the GC's back for receiving, count,unloading, and storage of same Fixtures and Gear. My guys only have to handle it once-and that's the installation of said furnished by others fixtures and gear. BTW-I also exclude all maintenance, warranty, and/or repairs of any and all FBO (or Developer) Fixtures and Gear. They want to go around the bend to get national market prices, they can get also get national market warranties and maintenance as well. Not on my dime. Though I will provide maintenance and repair on a T&M basis only and after I have received a waiver of warranty from the manufacturer. |
| JimmyDee | quote: Sounds like you have the right solution for that problem. Jim |
| Russell120 | Jimmy Dee, I agree. After you let the G.C. do all the storage and handling on a job, it will be the last time (at least their field people) ever want to do that again. You have to be sure that when the product comes in your guys don't check it in and sign for it. Another problem with pulling the equipment out of the package is that the equpment is often the first items that you get paid for. That can help a lot with turning your money and keeping your cash flow going. I have seen some of the "quality" contractors that the big box-beat- down-the-price-retailers often get. They only think they are getting a bargain. |
| IndCom | No problem there, Russell. My guys know up front if it's a FBO job or not. FBO in their dictionary means "No Signing For & No Unloading/Moving". And, that's just suits them nicely. This also means if it is stored on the jobsite and it's "parked" in some spot that construction has to continue on-they don't move it from one spot to another either. The only time they touch it is when they install it...period. This is another reason I have Storage or Storage Fees excluded in my proposals. Jobs are bid tight enough without me providing free labor for the GC and burning up manhours that aren't being applied to the construction of the job. And, believe it or not, my GC's that I do regular work for have alot of respect for this and have congradulated me on several occassions for this little clause. Even though some of their Field Supervisors complain of non-co-operative between trades, His boss backs me up. Which I really appreciate! Besides, I generally provide an alternate lighting and gear package of similar products that will generally beat the National Accounts pants off. And, I'll generally receive those alternate packages in about half the shipping time as opposed to National Accounts. |
| YukonRay | I do this kind of consulting for customers and contractors/developers all of the time. Aside from the "elthical issues" this pricing practice goes on all of the time. What I do is tell the developer what his electrical cost are going to be. I don't typically price out the cost of the "gear" or "fixture package" seperately from the installation but it doesn't matter. I would call a local or regional custom gear maker and ask him for a price for the service. The rest of the gear you can get a budget from local suppliers but if they know it is a budget it will be about 20-50% higher than at bid time. Same thing with light fixtures. Regardless of who pays for the packages - the building owner pays for it eventually. I will break out a budget by line item and than qualify the information. If you are going off of a full construction set of documents than your line items should be pretty close to what the industry will offer. Remember that a budget that is low is a crisis. One that comes in high is a releif. (but not too high) If you are a contractor - than you can use your supplies to give you bid pricing for the fixtures, but beware if they find out you were only doing owner budgeting. Sometimes estimating is like an art. It just takes gut feelings. |
| John A. Peters | Scott, Can you please change the title of this thread to Preconstruction budget consulting. Do you have that ability? Great Board!!! |
| Scott Vickrey | You know it! Thanks John |