WOOD PRODUCT ESTIMATION

Estimating 1. Contact (Invitation to bid) 2. Evaluate the bid- make sure you can do the job 3. LIST 4. Cost 5. Selling price 6. Contract 7. Follow up (IF didn’t get the job) 8. Schedule the shop 9. Submittal drawings 10. Field Verify 11. Shop drawings 12. Shop 13. Ship 14. Install 15. Punchlist (list all problems wrong with jobs) 16. Bill 17. Analyze and Adjust Purpose of Bidding? Get some orders, while trying not to give product away. Estimate- used to calculate expected cost to complete a project Quote- What we will receive from our supplies. Must buy that material to get it for that specific price Bid- Document that offers to perform a specific job. Parts of a bid- Scope- what is going to happen Schedule- when it is going to happen Terms- when we will get paid Price- How much it will cost Proposal- detailed document submitted as part of a competitive process to win a bid Evaluate of the job Capable of doing the job- Ability /skill? Job too big? Don’t bid more than twice as big as the largest job you have successfully produced to date. Time frame- Do we have time to bid this job? Do we have time to build this job? Do we need this job? Shipping distance- Shipping cost will grow Coordination and field measurements will be more costly Bid list- Who is bidding against you? Is there a lot of competition? Design professionals involved- Contractors- do they pay bills on time? Architects- are they a pain to work with? Interior designers- Will you spend a bunch of time getting them to make a decision? Owners- Home owners, Churches/schools? Quality of plans- Terms and conditions- Retainage- portion of the contract that is deliberately withheld till the end of the job How do you make an accurate bid? Estimating terms- RFQ- Request for quote Purchase order- document issued by a buyer to a seller. Used to control; purchasing of products and services from suppliers. RFI- Request for information Spec book- specifications of a specific job Gross Profit- total revenue minus cost of goods sold. Net profit- Invoice- List of goods and services provided with a slim of the price. Issued by the seller to the buyer Estimating software On screen takeoff- Digital takeoff of plans Pricing software- Uses the takeoff to bid a job ERP Systems- Enterprise resource planning 1/27/20 WHAT TO INCLUDE ON RFQ/PO -Name of (RFQ)(Purchase Order PO) -Purchase order number -Date -Who’s it from? (company name) -Who is it to? -Where its being shipped -Billing address -Shipping Method? LTL(less than loads) Shipping terms- FOB- Freight on Board -Item Description -Include job number -Account name -Authorization Line with date at the bottom -Page number (1of1, 2of2….) Calculating Board foot for Molding THx(w+.5)”xL’x(1+%)/12 Length when ordering material 8’, 12’, 14’ Input- (Changes from job to job) Size- TH/W Species Linear feet Variables- Material cost Waste Factor Time to produce Shop rate How much to mark job up Info we want- Sale price- total for line item (per item) Labor cost- Material cost Profit $ Profit % Profit/ Hour 2/10/20 MOULDING TEMPLATE Setup and run times? Time trials Look at past jobs AWI costing book Material loss factor? Look at history of jobs Talk to lumber supplier Ask shop employees Why do we look at profit differently? How much should our mark up be? How do we find shop rate? Overhead plus shop rate Overhead All the costs that cannot be traced to a specific job All cost except direct labor and direct material cost 2 types of costs (fixed and variable) Fixed- cost that remains constant Variable- Costs that vary How to figure overhead? Process costing-Overhead is figured by part Companies must produce many units of a product for long periods Mass production Shows cost per part for that specific machine JOB ORDER costing- figured as a total and then allocated per activity base Used in situations where many different products are produced Most logical for most woodworking companies Most common allocation base is direct labor hours or direct labor cost Predetermined overhead rate= estimated total overhead cost/ estimated total amount of the allocation base Overhead Formula- Overhead= Machine cost (capital cost, maintenance cost, floor cost) + Indirect labor + Indirect expenses Machine cost Capital cost- expense of owning the machine Capital cost= depreciation + interest + opportunity cost Floor cost- cost of factory space plus cost of inventory Indirect labor- can be physically traced to a certain product Indirect expenses- cost that cannot be easily related to a certain job