Steel Advice - The Fabricator's Resource
Dedicated to support the steel fabricator with real world solutions to real world problems.
Some estimators like to see how their assigned labor hours and costs for goods and services match up with what was actually expended. If your company does not have a developed cost accounting mechanism, one can be designed on a simple spread sheet program.
Create the line item budget for assigned costs for the detailing, labor, materials, hardware, buyouts, coating, handling and shipping. Then check the labor hours and other costs by job number once a week to track the progress. Certain fabrication assemblies - columns apart from beams, or stairs apart from handrail could be broken out so that those specific labor hours can be reviewed.
In doing this, you will be able to see the impact of expedited costs and how they directly affect the estimated budget.
Check your jobs!
Estimated Budgets vs. Actual Expenditures
If you do not have a system for breaking down the steel estimate to align with progress billings, this task can be an added irritation to your daily workload. Billing solutions for small projects are simple, but for the larger projects the work involved in creating the information needed by the accounting department can become a nightmare.
When the estimate is broken down into specific categories of fabricated items at the time that the estimate is created, these billing problems may be avoided, or at least, reduced considerably. Look for suggestions toward a solution for these and other problems in future issues of The Fabricator's Resource.
Progress Billing Breakdown
You've been bidding work like crazy, but it seems like even though you are low bid, the work still isn't coming in the door. Contractors don't return your phone calls. The gossip from the steel suppliers indicate that our fellow fabricators that should be busy, are not. Why are all these jobs not moving forward at the breakneck speed as per normal?
Since the whole world is fueled by billing cycles and cash flow, you can guess that this delayed award syndrome is about money. Projects may be stalled due to banking requirements that have become more strict. Contractors will not award the projects early, as this will create financial obligations ahead of pay schedules.
As a rule, steel fabricators generally see projects awarded about six weeks beyond when they should have been. Good economy or bad, this condition remains the same. The steel fabricator seems to always be making up for lost time. Every project is fast track, yet everyone talks about it as though this is different from any other job we've done.
While there is little we can do about the timing of project awards, we still continue to quote our jobs with a 'best case scenario' attitude. Things that cost extra - extended financing, expedited purchases, overtime, special shipments, are not factored into our quotes, yet will find their way into projects that have a short fused award and delivery schedules.
Worse yet, how do you tell after the project has been completed, what the exact impact of an expedited project had over and above our budget? We know where the finger of blame points when projects run over on their hours AND costs.
Get copies of the cost accounting records, and do some record keeping of your own for comparison of actual expenditures against what was estimated. Watch the progress of the fabrication and check the hours. Remember that if additional workers were added there is a certain percentage of hours for training that may not be costed that way. There may also be out of sequence fabrications that add hours, as well as special truckloads, or loading in a certain order as directed by the erector or contractor. While these activities may be out of your control, knowing about them and giving a cost to them will account for the difference between what was quoted and what actually happened.