They are on the front lines of the project, the center of the flow of information, and the people you’ve made responsible to manage and mitigate the ‘risk’ of every project you perform. Next, all takeoffs, quotes and subcontractor proposals must be assembled and organized into a ‘bid folder’ or ‘bid book’. Failing to know your real costs is a recipe for disaster. Employees are the lifeblood of every construction company. Each separate bonus system should be considered together with the specific character of the company’s activity and project features that are objects of the assessment process. Structure … Now, this is assuming that the project does not present any change order opportunities, which we all know is a rarity these days. Stay tuned for more! Here’s how it works: Once a project is won/awarded, the project’s cost budget is established. Commission Only Structure: Pros & Cons. For every percentage point in excess of 2%, they receive 5% of the profits. Then dedicate someone to make it happen. You would actually make an extra $14,000 at 8%, because of the increase in contract value. The team at Ascent is committed to helping our clients build better construction companies for profitability and performance. Learn how much construction companies pay their employees. Win Work In fact, too many changes can increase the contract value, but result in reduced profitability! Construction of the R$820m stadium project was finally completed in March 2014 and official test event for the newly built stadium was conducted by the organisers of the 2014 Soccer World Cup in May 2014. Air travel rewards (travel vouchers, seat upgrade certificates), Electronic devices and gadgets (Bluetooth speakers, headphones, radios, mp3 players, tablets, etc. We are committed to delivering impressive results in the areas of profitability, performance and growth. This is why we calculate the projected profit dollars as well as the percentage. For every percentage point in excess of 2%, they receive 5% of the profits. Employee Performance, Retention, Incentives. Occupational Employment and Wages, May 2019 13-1051 Cost Estimators. Opportunity-Level Bonus Structures The most common incentive programs for Estimators start with an opportunity-level bonus structure. Since reading Michael’s books and using the markup calculator … Bonuses can encourage reps to sell more and hopefully spur growth, but without requiring the company to pay more until it can afford to. What if there are gaps in pricing? In this fourth article, we will explore successful incentive plans and strategies that are commonly used with Estimators across the construction industry to help with #3 above. Over time they (hopefully) came to understand how to leverage their relationships with clients to win projects without sacrificing profits. Pay them a fair base salary for implementing … As an example, the company might start accruing the bonus pool once the company achieves at least $1 million in net income before taxes. Thus, the major component of project costs is labor costs. Accurate and complete take-offs (nothing missed or forgotten), Sufficient ‘coverage’ (no gaps or unknowns in pricing), Current pricing for anything unstable (ex: steel, copper, lighting, imported materials), Collect three quotes for each ‘type’ of materials, Put into bid management or estimating software, Have complete and ready for review by bid day, Air travel rewards (travel vouchers, seat upgrade certificates), Electronic devices and gadgets (Bluetooth speakers, headphones, radios, mp3 players, tablets, etc. With that in mind, realize that the goal of every business owner should be: In our two previous articles on this topic, we have explored the history of performance reviews, how to use them to gauge employee performance, and some of the pitfalls that can result from improperly-structured incentive programs. This is discretionary and will depend greatly on the type of contractor, value of the project, market sector, geography, etc. A better solution is to first make your list of what type of jobs and customers you want to go after. Construction Estimator Resume Examples. If you're ready to start working on your business, let's talk! In this third article, we will explore successful incentive plans and strategies that are commonly used with Construction Project Managers across the construction industry to help with #3 above. This must be completed by the bid due date, so that the Owner/Manager/Salesperson can review and finalize before sending to the client. This way we don’t have to guess whether we left something important out of our calculation. Performance bonuses encourage personnel to work toward achieving individual and company goals, and nonperformance bonuses can make everyone feel appreciated. We also welcome your feedback and suggestions for other ways you’ve found to incentivize your Estimators! Or undervalued materials? As a business owner or Estimating department manager, the key desired results we want from an Estimator at both the GC and Subcontractor level are the same: Notice that ‘Winning the project’ is not in this list. In this article, you will learn everything about 1) employee bonus plans and 2) how to structure an employee bonus plan. Sugested commission structure for your Project Managers (Bonus) So, finally a good commission for Project Managers should be something like this: Bonus = 40% * OQ + 20% * OS + 20% * OT + 20% * OC. They have therefore increased profits by 2% over goal (14% - 12% = 2%). This will depend on your style and methods for estimating. Now let's get real. An opportunity comes in the form of a RFP (Request for Pricing), Bid Solicitation or Open Bid Request (typical of public work projects). 1648 Estimator jobs in Europe on Careerstructure. While money is not the only motivator, it is typically the ‘biggest’ motivator and the easiest for your employees to recognize. For example: In order to qualify for a bonus, they must increase project profitability by a minimum of 2% (12% or $10,000 on this project). We structure a bonus program based on their ability to improve results. These rewards can also be used in lieu of the financial bonus for PM’s that got close but didn’t quite qualify, or for PM’s on smaller projects that didn’t provide opportunities to increase profits or contract values enough to qualify. The goals from this process: Now, how do we reward the estimator for meeting all of these goals? So, now we’ve set up the Estimator to be rewarded for the desired outcomes: Accurate and complete pricing that allows for confidence when negotiating and leads to a high probability of being awarded the project. For example, w… These rewards can also be used in lieu of the financial bonus for Estimators that successfully assembled complete pricing, but the company was not awarded the project (they were outbid or the project was cancelled). This template will be used by HR, Finance and senior management, who together review the spreadsheet details and make the final … Employees are the lifeblood of every construction company. So, how do we reward them for ‘extra effort’? The goal is to promote and reward the desired behaviors and actions. The difference between this cost budget and the contract value is the gross profit. Annual revenue is expected to exceed $1.3 million in 2013, compared to $1 million … Most construction company owners started out as estimators in their own companies, as well as being the first project managers and superintendents. While money is not the only motivator, it is typically the ‘biggest’ motivator and the easiest for employees to recognize. Why not, you ask? © 2021 Ascent Consulting. All values must be entered into the contractor’s bid management system (estimating software, spreadsheet, etc.) With all of this responsibility, it’s easy to see why hiring the ‘right’ project managers is so critical to the success of your company. If you're ready to start working on your business, let's talk! Easy—structure the bonus so the lowest levels are easy to achieve, so almost everybody get something, and are motivated to achieve higher levels of reward. Read More: The role of an Estimator in Construction. They are the bridge between opportunities and projects. You can multiply an employee’s total sales earned by a fixed bonus … A commercial GC who is bidding on a $10MM project will probably reward their estimators differently than an industrial plumbing contractor who is bidding on $50k projects. For each $20,000 of additional profit the PM generates, they receive 5% of the gross profits. Ascent's founder and president, Adam Cooper has over two decades of experience in construction business ownership, sales & marketing, project management, company operations and leadership. The way you choose how to calculate bonuses for employees can affect company morale. In the case of spot or discretionary bonuses, this might be a dollar figure (you set aside $5,000 a year). Typical resume samples for this job highlight duties like consulting with clients and suppliers, analyzing documentation, making adjustments to cost estimates, assessing cost effectiveness, overseeing tendering processes, and visiting construction … The PM completes the project and increase profits to 12%. We hope this article provides you with some ideas for your own incentive programs, and shows you how to create a structure that rewards Project Managers for both their personal goals and those of the company. Business Operations We also welcome your feedback and suggestions for other ways you’ve found to incentivize your Project Managers! Great Estimators have a blend of traits from other positions: they know how to negotiate pricing like owners, build relationships like business development people, manage subs and vendors like project managers, and build things in their heads like field superintendents. hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, '1c9bbb5d-a847-4032-b289-5e0f35a17887', {}); Ascent Consulting’s mission is to Build Better Construction Companies. Leave a comment below, or email us with your ideas so we can share with our readers! The first step to a good bonus structure is to outline goals accurately. The average L&T Construction monthly salary ranges from approximately ₹ 10,000 per month for Locator to ₹ 68,613 per month for Civil Supervisor. The estimator is now responsible for performing any/all takeoffs which should be clearly identified company-wide and know to all. How is the Short-Term Incentive Plan Calculation Spreadsheet used? This system can be used for both General Contractors and Subcontracts alike. hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, '8368647d-63d3-401e-ab82-1dc00fdce9f3', {}); In our last article on this topic, we will explore incentive programs for Business Development / Sales positions. In this case, the total salary of the employees was $1,000,000--which meant that the bonus would average about $20,000, or 20% of each person's compensation ($200,000/$1,000,000 = … In our case, such project features are as follows: 1. Remember from our example that a 2% increase equates to $10,000, but they have to generate more than 2% to qualify for a bonus. so that a complete estimate is assembled. There is no ideal bonus system. A good use cases for sales bonuses is in a company experiencing relatively slow growth. Leave a comment below, or email us with your ideas so we can share with our readers! The approved time-phased plan (for a project, a work breakdown structure component, work package, or schedule activity), plus or minus approved project scope, cost, schedule, and technical changes. In these construction estimating training classes taught by Michael Stone, you’ll start with a small job (under $12,000) and build skills as the jobs become more complex ($1.2 million remodel). Have you come across a project manager bonus structure … Know how much money you have available for the bonus plan. This could be an additional monetary reward, given as a fixed value, or could be a percentage of the final contract value that is awarded. Again, this is in their job description and is covered by their base salary. The average L&T Construction salary … This system can be used for both General Contractors and Subcontracts alike. The cost budget may be taken directly from the estimate… Surveys show that as many as 50 percent of all construction and manufacturing companies offer some form of bonus plan, and another 33 percent have a pay-for-performance incentive program. Bonuses will be paid based on the higher of the two calculations. See all Estimator … Good Project Managers are the heart of every successful construction company. Finance & Insurance An entry-level Construction Estimator with less than 1 year experience can expect to earn an average total compensation (includes tips, bonus, and overtime pay) of $48,980 based on 203 … The difference between this cost budget and the contract value is the gross profit. © 2021 Ascent Consulting. Ensure they are making a positive contribution to the company. If they meet all of these goals, then you should have high confidence in their estimate and be able to finalize your proposal to your client. hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, 'dcc731c4-01d6-4e36-956c-82fcf7668202', {});   hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, '3b9aeb4f-a77a-46b2-8e2e-3c1b171d1e56', {}); Finance & Insurance They have therefore increased profits by 0% over goal (12% - 12% = 0%). Get instant job matches for companies hiring now for Estimator jobs in Europe like Senior Estimator, Electrical Estimator, Mechanical Estimator and more. Once accepted, the cost budget becomes the initial ‘projection’ of the actual cost to build/perform the work. Rewarding Construction Estimators: Incentive Packages Part IV. All scopes/trades should be identified up front, and three quotes/proposals are required for each of these. Shouldn’t the PM be rewarded for this type of effort as well? Construction Estimators prepare cost estimates for construction projects. Let’s create another rule: For good measure, we can put in a disclaimer as well: So, now we’ve set up the PM to be rewarded for the desired outcome: Increase project profits, either by reducing costs, increasing net profits, or increasing scope/contract value while maintaining profitability. Business Operations For example: It is now the PM’s basic responsibility to manage the project effectively to maintain costs and complete the project at 10% or $50,000 profitability. All rights reserved. They are given responsibility for the financial outcomes of their projects, and are therefore directly responsible for the company’s gross profits or losses (before operating expenses). The most common incentive programs for PM’s start with a project-level bonus structure, which is based on their ability to increase profitability over budget. When factoring in bonuses and additional compensation, a Estimator at Clark Construction … With so many types of bonuses given … Why we like the Markup Calculator Software is that it lists all the expense categories a typical construction company has to consider. So, what if we could design an incentive plan for Estimators that drives these key results we are trying to generate? However, contrary to popular belief, most contractors do not really make 15-20% on changes. Let’s first define the desired estimating process. Michael has taught estimating … In order to qualify for a bonus, they must increase project profitability by a minimum of 2% (12% or $10,000 on this project). When factoring in bonuses and additional compensation, a Estimator at Structure Tone can expect to make an average total pay of $87,803 . No matter what the economy is doing, great project managers will always be in high demand. Simply winning the project is not enough! No matter the size of the company, each individual serves a purpose, and their performance either helps or hinders the organization – there is no middle-ground. Let’s first define the desired estimating process. 14% of $500,000 = 70,000 x 5% = $3,500 bonus. Much like our previous article about Project Managers, here are some of the most common ‘extras’ that can be given to reward Estimators. Project Management In the case of longer-term bonuses… You will know if (and how much) you can cut your number in order to close a deal, without significantly impacting or sacrificing your profitability. The estimator is also responsible for soliciting and collecting pricing from vendors and/or subcontractors as required by the project. Prepare cost estimates for product manufacturing, construction projects, or services to aid management in bidding on or … A commission only plan is the better of the two options if deciding between commission and salary or hourly only. Once you know the real numbers, then you are in a position to negotiate with a client to win a project. The phrase “we always do takeoffs on (blank)” should come to mind. No matter the size of the company, each individual serves a purpose, and their performance either helps or hinders the organization – there's zero middle-ground. 2. Read More: How To Recruit and Hire Top Performers. Written By Adam Cooper, President of Ascent Consulting. We are committed to delivering impressive results in the areas of, Finance, Succession, Exit Strategies & Acquisitions, Employee Performance, Retention & Incentives, Employee Performance, Retention, Incentives, Ensure that they are making a positive contribution to the company. In order to attract them and keep them on your team, you need to have a compensation and incentive program that rewards them for their talents and keeps them motivated to perform at a high level, day in and day out. Stay tuned for more! So, how do we account for increases in contract value as it relates to their bonus? Every business needs a bonus plan at first, for the purpose of carrying out successfully the execution of bonus to their employees. Here are some of the most common ‘extras’ that are given to successful PM’s as additional incentives. So, we will start with common financial structures of bonus and incentive plans, and later we’ll explore some other ‘fringe’ benefits that can be used to compliment these plans and help drive employee performance. Utilize software to manage your bonus structure. When thinking about an incentive plan for an Estimator, it’s helpful to think about the actions and end results we are trying to achieve and reinforce. But, here’s a question for you: would you rather make 1) 10% on $500,000 or 2) 8% on $800,000? If it accrues a bonus pool equal to 25 cents on the dollar for profits in excess of $1 million, the goal of the bonus … This system can be used for both General Contractors and Subcontracts alike. ... structure, and building exterior contractors; The Bureau of Labor Statistics (BLS) reported cost estimators earning a yearly median salary of … Estimator salaries at Clark Construction Group can range from $74,558 - $78,285. Since implementing the estimator’s bonus structure, Autosport Collision’s sales have increased by roughly 25 percent. hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, '8368647d-63d3-401e-ab82-1dc00fdce9f3', {}); In our last few articles on this topic, we will explore incentive programs for Estimators and Business Development/Sales positions. The most common incentive programs for Estimators start with an opportunity-level bonus structure. being: OQ = On Quality OS = On Scope OT = On Time or Schedule OB = On Costs or Budget. 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