Squaring Off

Electrical contractors often ask me what I think the square-foot pricing (SFP) is for a job. They usually ask without giving any details or showing me any designs, so I just blurt out a crazy number and listen as they sharply respond, “What? That’s not right. That’s too high!” I always ask, “How do you know?”

What’s in your SFP?
It is critical you know everything about your SFP and how it was prepared. What proven, factual data is it based on? Does it represent today’s materials costs? Does it include all installations and vendor quotations? Did your comparative SFP come from a single project? Or is it an average based on the cumulative data of many? How is the project you are pricing today similar to those projects?

SFP should be thoroughly supported with specific details of what the pricing includes, e.g., elements of design, structural characteristics, site layout (is the site included in the price?), labor rates, overhead and profit values, vendor quotation values, and materials specification. The same goes for specialty systems, such as communications, security, fire alarm, etc. How does your current SFP cover these: “Rough-in only” or “complete install, including all equipment and devices”? These systems also can have huge variations in material (and installation) costs, so you must know exactly what is and isn’t included.

I highly recommend you segregate the various elements of the building, especially all site work. Site work is always different from one job to the next, so you cannot include it in an SFP comparison study.
Separating and analyzing a multilevel building by floor is also a smart move. To lump the entire building into one SFP value could produce very inaccurate results, especially if you are not comparing similar buildings. Lobby areas, conference room quantities, corridor lengths, and ceiling heights can all vary greatly.

I like to take things a couple steps further by breaking out any vendor quotation packages, such as lighting fixtures, switchgear, generators, etc. The pricing for quoted equipment packages (especially lighting fixtures) can vary significantly from one job to another, even if they are similar types of projects.

By taking away variable pricing elements, you are then left with highly comparative, consistent installation elements, such as common devices, conduit and wire, lighting fixtures, labor, etc.

Material price fluctuation
Raw materials pricing is a major cost element to consider with any SFP. Material costs are in constant flux, especially those involving copper and steel. So yesterday’s square-footage pricing could easily be 10–20 percent higher or lower today.

Lighting fixtures can definitely carry significant variations in material and labor costs. You must ensure the project(s) you are comparing had similar quantities and quality of fixtures as those used to generate your current SFP.

On the other hand, labor remains fairly consistent, even over time. However, you should be careful with escalating labor rates and knowing which labor rates were used to create your current SFP.

Is your square footage based on 2-D or 3-D?
Most square footage values are based on a two-dimensional measurement of a building’s footprint. This is acceptable for most comparisons, but ceiling heights, building shape and other design elements should always be considered.

For example, the SFP value of electrical installations in “open/exposed ceiling” architecture can be dramatically different than those installed in “T-bar” or “solid gyp” ceiling designs. This is especially true when you are dealing with ceilings higher than 20 feet, such as in conference centers, lobbies and warehouse areas.

Also verify any square footage information provided by the architect (or anyone else, for that matter). Sometimes the “square-footage data” tables provided on the architectural drawings or in an “invitation to bid” are not accurate. They may or may not include areas of the project that are or are not part of your current bid.

Checking your accurate estimates
If you know your SFP is sound, it can be a benchmark for confirming the accuracy of your takeoffs and final bid pricing, thereby quickly exposing a major mistake before sending out your final bid. Again, it is important you compare apples to apples. Never assume the SFP is more accurate than your estimate just because the last job you did confirmed your SFP.

I have found books for the construction market that claim to have solid data are actually lacking vitally important, specific cost details—especially for electrical and communications systems. So I do not recommend using anyone else’s SFP data.

You should only use your company’s recent historical SFP data, which should be compared to actual “final build costs” of comparable projects. Every company’s estimating department should be tracking and keeping detailed records on this information and every company’s accounting department should be confirming its accuracy

SHOOK has been estimating for more than 23 years. During the past 12 years, he operated a fully staffed estimating company, TakeOff 16 Inc. He is currently focusing on writing, teaching and speaking about electrical estimating. Read his blog at stanshook.blogspot.com or contact him directly at StanleyShook@gmail.com.

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