The expenses of the subcontractors can be a significant portion of a construction estimate. The general contractor may get multiple estimates from various trades to arrive at the price of a project. Rates, inclusions, exclusions, allowances and qualifications may vary between each quote. For that reason, it is important that an estimator have a procedure to evaluate those costs prior to making a bid. When project scopes change or several bids are received in various formats, this process can be tricky using manual spreadsheets.
Subcontractor pricing must be well handled in the overall project estimate. Construction Cost Estimating Software can link trade scopes to quotes, quantities, cost categories and estimate sections. Estimators can then compare the pricing that’s submitted and check for scope differences and track selected costs. This method makes the relationship between subcontractor bids and the project’s total estimate more apparent. Today’s estimating tools also relate subcontractor costs to labor, materials, equipment, allowances, and markups
What Are Subcontractor Costs in a Construction Estimate?
Subcontractor costs are the cost of the work that the general contractor assigns to the specialized trade contractors. These expenses can feature electrical, plumbing, HVAC, concrete, roofing and flooring along with other trade packages. Each cost should be related to a specific scope of work in the estimate. This provides estimators with a better understanding of where subcontractor pricing fits into the project budget.
Trade-Specific Subcontractor Costs
Construction projects tend to break up subcontracted work into smaller trade packages. Individual packages may contain different scopes, quantities, specifications, and pricing needs. An electrical package might include wiring fixtures, panels and installation, for instance. A mechanical package can include HVAC equipment, ductwork, controls and installation.
These packages can be grouped together for estimation prior to requesting a quotation. This way, incoming bids are easier to compare since each subcontractor is bidding on a specific work category. It also helps to alleviate confusion in cases where multiple trades are listed in one project estimate.
Direct and Indirect Subcontractor Costs
Direct subcontractor costs typically are linked to specific work done by a trade contractor. But costs that are associated with project conditions, other temporary requirements, or other indirect costs can also be included. Estimators should be aware of these variations prior to final pricing.
The clear cost structure helps to avoid unrelated costs in a package with a subcontractor. It also provides construction teams with a clearer picture of the overall expense of the project. Typically, platforms will divide subcontractor costs from the cost of labor, materials, equipment, allowances, and other direct costs.
Subcontractor Scope of Work
The detailed scope outlines the scope of work to be priced by each of the subcontractors. It can determine quantities, specifications, materials, installation requirements, exclusions and project conditions. A clear scope also provides the estimator with a standard that they can use to evaluate the proposals that they receive.
If the quote is not comprehensive, then there is a difference that could impact the final estimate. Thus, scope review should be done prior to the subcontractor price selection.
How Does Software Collect Subcontractor Quotes?
Often times, the process of estimating begins before subcontractors have even given an estimate. Estimators begin by identifying the trade packages needed and preparing bid information. These packages can then be organized by software and tracked as they are received through the estimating process.
Creating Bid Packages
A bid package brings together the drawings, specifications, quantities, scope requirements and other information for a given trade. Estimators can develop their own packages for electrical, plumbing, concrete, mechanical or other sub contracts.
This way, each bidder will have all the information that they need to make a suitable offer. It also provides a standard of reference with several quotes arriving.
Sending Subcontractor Bid Requests
Each trade package can have selected subcontractors to whom the estimator can submit pricing requests. You can log deadlines for the bids, documents submitted, and the status of the response. This makes it easier to keep track of the submissions from each bidder in a separate spreadsheet.
When there is a centralized workflow, it is also easier to find missing quotes ahead of the deadline. There are some platforms that allow you to link requests for quotations directly with the bill of quantity lines and subcontractor packages.
Recording Received Quotes
Subcontractors submit their proposals, and the estimator can enter the amounts and conditions of the subcontracts. Inclusions, exclusions, alternates, allowances, and qualifications may also be included.
Having these details with the quote leaves a better audit trail. Estimators can then go back and see why a specific price was included in the estimate and the scope the price was applied to.
How Does Construction Cost Estimating Software Compare Subcontractor Bids?
When comparing subcontractor bids, you should look beyond the lowest number and consider the other factors. A trade can have two subcontractors come in with two different prices as the scope of work is different. Hence, a person should look at the price and scope before deciding on the amount to be included in the estimate.
Side-by-Side Bid Comparison
Side-by-side comparisons show subcontractor proposals and common project requirements side-by-side. Quoted amounts, inclusions, exclusions, alternates and qualifications can be previewed in a single view.
Using this method helps identify price differences. It also helps to minimize the risk of choosing an underquote that lacks crucial work.
Scope and Exclusion Checks
Scope checks are used to ensure that all subcontractors have quoted for the work they need to complete. Exclusions are given special consideration because they can result in unpriced costs to the main estimate.
For instance, one electrical subcontractor may be doing the testing; another may not. Before comparing the two totals, the estimator must identify that difference.
Bid Leveling
Bid levelling equalises bids on the same scope. It can find missing items, duplicate coverage, exclusions and other differences between bids. In the present day, industry software defines bid levelling as a method for comparing subcontractor bids based on the identical scope baseline.
This helps to provide a more uniform foundation for estimating subcontractor prices. It doesn’t just line up numbers in columns. Rather, it focuses on the services that each quoted price is for.
How Are Subcontractor Costs Added to the Overall Estimate?
Once bids have been evaluated, estimators need to assign costs of selected subcontractors to the proper areas of the estimate. Construction Cost Estimating Software can link these amounts to trade packages, cost codes, quantities and project scope. This maintains the subcontractor pricing comparable to other project costs.
Linking Quotes to Estimate Sections
The selected subcontractor price should be linked to the related work category. As a general rule, quotes for plumbing jobs should be entered into the plumbing field instead of general miscellaneous items.
This is the structure that maintains cost information. It also facilitates later budget reviews, as teams are able to follow the budget back to the original trade package.
Applying Markups and Overhead
You can’t always take what the subcontractor charges as what you will get on your final bill. Other project factors, such as overhead, markup, insurance, or other project-specific pricing rules, may need to be applied.
These values can be computed through software based on rules set up in the software. This helps to minimize repetitive manual calculations and maintain uniformity in pricing equations in estimates. When estimating a construction project, it is common for construction estimating software to add up the costs of subcontractors, add markup and other costs, and then come up with the final estimate.
Handling Allowances and Alternates
Allowances and alternate pricing options are a part of some projects. It is important that these amounts be clearly identified as such, since they cannot make up a part of a base contract value.
These numbers can be added to the base subcontractor price by the estimator. This enables teams to examine various pricing scenarios and not lose out on the original bid information.
How Does Software Handle Subcontractor Quote Changes?
The price of the subcontract may vary prior to the period of time of the estimate. Subcontractors may need to revise their proposals if the design changes, an addendum is issued, a quantity change occurs or a clarification request is made.
Revised Subcontractor Quotes
If a subcontractor provides an updated quotation, the estimator should keep the previous quotation. The proposed price can then be substituted for the active price, but the old price will be used for reference.
Easier to review this history. It also provides better documentation of the changing subcontractor costs in preconstruction.
Quote Expiration Dates
The price of some subcontractors may only be valid for a limited time. When projects have a lengthy bidding or approval cycle, estimators should be aware of these dates.
Documenting expiration dates can help ensure that teams follow up on pricing before submission. This will ensure that any old quotes don’t get caught in an active estimate.
Maintaining Quote History
History quotes provide the estimators with previous estimates and/or revisions. Teams can check if a quote was received, what was modified, and which quote was used at the final estimate.
This record will also give some context if project teams doubt the estimate cost later on. A documented history results in better traceability of bids to final pricing.
How Does Software Manage Missing Subcontractor Pricing?
Not all of the estimates are submitted to an estimator before the bidders’ deadline. Without pricing, there can be a lack of clarity, and it could impact the overall project price.
Identifying Unpriced Scopes
Software has the ability to display the trade packages that have not yet had subcontractor pricing. This will provide an estimator a better picture of any unresolved spaces prior to bidding.
For instance, an estimator could have quotes from electricians and plumbers but not have an HVAC quote. The system can remain with the missing package, rather than having it disappear into a spreadsheet.
Using Historical or Budgetary Costs
If the final price of the subcontractors is not known, it is possible to use the data from the past or budget allowances for the estimation of the final price. The figures must be made to be clearly labelled as provisional.
Past data can be used as a guideline for what to expect in costs. But it’s important for estimators to check the scope of the project and conditions in the marketplace before assuming that the numbers are correct.
Reviewing Estimate Risks
Not having subcontractor pricing gives the job estimating uncertainty. These gaps should be identified prior to finalizing the bid by teams.
A structured estimate will clearly specify the costs that are based on definite quotes and the costs that are based on assumptions. The distinction provides decision-makers with greater insights into pricing exposure.
How Does Software Track Subcontractor Costs After Bid Approval?
Cost management for subcontractors should be a process that should persist after the estimate is turned into a project budget. The approved estimate can be used as a measure for checking how the project is spent.
Approved Estimate as a Cost Baseline
The approved subcontract dollars may be used in the project budget. Project teams can then make comparisons later on when commitments and actual costs will be measured.
There are some estimating systems where the approved estimate is linked to the project budget. This makes it easier to achieve continuity in preconstruction pricing and project cost control.
Budget Versus Actual Subcontractor Costs
The actual cost of the subcontractors may vary from the original estimate. Data can be compared at committed or paid dollars versus the budgeted subcontractor value.
This comparison provides project managers with a better understanding of the changes in cost. It can also expose packages that require more in-depth monetary scrutiny.
Change Orders and Revised Costs
It’s common for scope changes to take place after the award. A change order can cause a subcontracting price to either go up or down.
These changes can be recorded on the appropriate trade package to maintain up to date project budget. It also provides the reasons for the changes in the subcontractor cost from the original estimate.
What Should You Check When Choosing Software for Subcontractor Costs?
The best estimating software for a company needs to be compatible with their preconstruction process. The teams should discuss features based on their experience of sourcing quotes, comparing scopes, developing estimates and managing project budgets.
Quote Management Features
See if the system is able to handle bid packages, subcontract packages, revisions, subcontractor deadlines, and quote history. These features allow a defined history of subcontractor pricing.
Bid Comparison and Leveling
Find comparison tools that discuss scope differences and not just totals. Bid levelling should show exclusions, omissions, qualifications and price variations.
Estimate and Project Integration
Ideally the estimating workflow should tie back into the project budgets. This minimises the double typing of data between estimating and project management system.
Historical Cost Data
Information about the historical cost can be helpful to the estimator. Previous estimates and actual project information should be easily accessible in the system.
A strong cost history will also help to give context to future bids. But, to be sure, it is still advisable for the estimators to check whether the scope and pricing conditions are still as they are currently.
Conclusion
Costs of subcontractors must be organized, as each trade may present special pricing and scope conditions. A formal estimating process provides teams with more control over these differences. Construction cost estimating software can package bids, gather offers, contrast range bids, tie the picked pricing to the entire estimate, and so on. It can also store the history of quotes and transfer accepted costs to the project budgeting. Estimators can develop more traceable project pricing with consistent cost structures and keep good visibility during the project lifecycle with clear scope records.
FAQs
What are the subcontractor costs in construction cost estimating software?
Construction Cost Estimating Software arranges subcontractor scope, quote, exclusion and picked costs into the project estimate. Can also relate these costs to budgets, markups, and other costs of estimates.
Does software allow for comparing several subcontractor quotes?
Yes, it’s possible to compare several subcontractor offers and common scope needs. Bid levelling can show exclusions, nulls, qualifications and other distinctions prior to selection.
How is the cost of the subcontractor calculated on a construction estimate?
Estimators determine which subcontractor pricing to use and which to allocate to the corresponding trades and/or cost categories. This estimate can then be added to the cost of labor, materials, equipment, overhead, markup and other costs.
Are there ways to trace subcontractor charges once the estimate has been accepted?
Yes, the approved estimate can be used as a yardstick when drawing up a project’s cost tracking. They can make comparisons of subcontractor commitments, actual costs and change orders to the original budget.