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Marketing & Tendering
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Budget Forecasting
• Profit is the key to Business Success– Profit is amount of money after all expenses
• Materials• Labour• Insurances• Depreciation
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Budgeting
• Building Industry may have to ways to Calculate a Profit– Accounting Period (Financial Year)– Job Basis
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Planning for Profit
• Turnover – Is the money the company receives in one year
• Forecasting Turnover – It is possible to predict
when money is likely to be received.
• Similarily it is Possible to Fo
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Budget ForecastingProgress Claim No1
Value of Works To Date (10%) $ 15,000.00
Less Previous Claims $ -
Less Retention $ 1,500.00
Value Progress Claim 1 $ 13,500.00
Progress Claim No2
Value of Works To Date (40%) $ 60,000.00
Less Previous Claims $ -
Value Progress Claim 1 $ 13,500.00
Less Retention $ 6,000.00
Value Progress Claim 2 $ 40,500.00
Progress Claim No3
Value of Works To Date (70%) $ 105,000.00
Less Previous Claims $ -
Value Progress Claim 1 $ 13,500.00
Value Progress Claim 2 $ 40,500.00
Less Retention $ 7,500.00
Value Progress Claim 3 $ 43,500.00
If we programme the that each claim is 3 Months apart we can forecast the following cash coming in
1 Oct - $13 5001 Jan - $ 40 5001 April - $43 500
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Items That May affect Profit
• Rising Costs – Early this year (2008) concrete reinforcement prices doubled
• Bad Weather – 1991 the first 6 months of the year it rained at least 2 days a week
• Economic Slow Down – Most Construction requires finance. Banks are reluctant to lend in recessions
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Planning to Make a Loss
• Expanding the business
• Establish a new Branch in a city
• Diversifying into new type of building work
• Holding onto key staff in down turn
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Planning to make a Loss
• Large purchases in one accounting period to be used in the next period
• This should be planned and done for good financial reasons
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Promoting Building Works
• Promotional Strategy (P7)– What do you do best– Company Structure – Appropriate methods to attract work
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Methods of Promotion
• Advertise• Provide Finance• Associations• Tenders• Subcontract to other Builders• Exhibitions
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Advertising
• Local Newspapers• Radio & TV• Letterboxes• Sign writing on you truck – Aussie Home Loans• Sponsorship• T Shirts• Web Pages
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Tenders
• Usually prepared from four types of documents– Contract – Specification– Drawings– Bill of Quantities
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Contract
• Legally binds you and may contain– Conditions– Commencement & Completion Dates– Payment Schedule (so you can forecast a budget)– Defects Liability etc
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Specification
• Supplement by description working drawings– I.e. Drawings will show bath, Specification will
state what type of bath
• Pass information that cannot clearly be shown on the drawings.
• Will be a contract document
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Drawings
• Will graphically show the intentions of the designer and may consist of – Floor Plans, Elevations, and sections– Construction details– Engineers details– Services drawings
– Very important to keep a drawing register so you know the current drawing
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Bill of Quantities
• Is a detailed list of every item & every trade usually compiled by a quantity surveyor
• Usually not part of the contract
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Tendering
• Decision to Tender (pp 13)– Can you handle the Job– Can you complete in the time frame– Form of Contract– Is the Client financially sound
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Costing the Job
• Costing the Bill of Quantities• Calculating rate for Labour and On Costs– On Cost are cost of labour that is not physically
related to the work e.g.
Workers CompSuperannuationHoliday paySick Pay ACERT
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Costing The Job
• Builders Overhead– Cost that cannot be assigned directly to the Project• Cost incurred by Head Office• Insurances that are not job specific
• Calculated as FollowsTotal Annual Overhead x 100 = % Builder OverheadTotal Annual Turnover 1
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Estimating
• Examination of the Documents– Contract Conditions– Cross Reference Documents for errors or omissions
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Estimating
• Tenders require that you visit site– Difficulties in access– Location of services– Site Topography– Protection of adjacent buildings– OH&S Issues both on and adjacent to site– Security
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Estimating
• Prepare a program– To ensure you can meet the contract date– Cash Flow– Confirm with subbies that they are available
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Estimate
• Remember you Estimate is not the actual construction cost but a very educated guess
• After the actual estimate is compiled– Add Overheads– Add any special allowance– Add allowance for profit
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Tendering
• The final tender price will be determined by management– Do you really want to do the job– The Client
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People Associated with Tendering• Quantity Surveyor
• Architect
• Consulting Engineer
• Consultants– Landscaping– Lighting– Acoustic– Fire Control
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Selection of Plant
• Outright Purchase• Leasing• Hireing