Plumbing & HVAC Manhour Estimates
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Introduction | Table of Contents | Back Cover

Estimating plumbing and HVAC is more than just a mathematical exercise; it requires decision-making, sound judgment, attention to detail - and occasional guesswork.

The equipment, material and subcontractor services are the easy part of your bid. You're simply offering to sell them for a known cost, plus over-head and profit. If you've made a careful take-off, there's very little risk involved in bidding this part of the job. You just add your markup to your actual costs.

Here's the high-risk part of your bid. You're also proposing to sell your company's installation expertise, or labor, for a fixed price. That's a lot harder to estimate. To minimize your risk, I recommend that you assign a carefully-selected manhour value, or labor unit, to each activity.

This book lists thousands of competitive manhours that mechanical contractors have used successfully for many years. But they won't be accurate for your jobs if you use them indiscriminately. So please read the following sections carefully before using these figures in an actual estimate.

What is Manhour?

The manhours I use in this book indicate the time required to receive, unload, stockpile, distribute, install and test a piece of equipment or material under normal conditions. These manhours assume that all work will be performed by qualified tradesmen, under conditions that include installation not more than:

• 200 feet from the storage area

• two stories above or below ground level

• 10 feet above a reasonably-level floor surface

If the job you're estimating doesn't meet these criteria, you have to adjust these manhours to make your estimate accurate. To do this, you multiply them by an appropriate correction factor.

Applying Correction Factors

Make a careful evaluation before you use these manhour correction factors. If you adjust your labor prices too high, your bids won't be competitive. If you don't adjust them enough and they're too low, you'll lose money on the job.

Figure 1-1 shows the correction factors I recommend to adjust your manhour estimates for conditions that will decrease or increase your installation time. It's best to note the appropriate correction factors on the plumbing or HVAC drawings during your initial review, before you begin the detailed take-off. For example, you might make this notation on the third through fifth floor piping drawings: "Use 1.05 C.F." Occasionally you may have to combine correction factors. If the third through fifth floors consist of large open areas calling for a factor of 0.85, and you estimate a task will take 0.45 manhours, here's the calculation:

(.45 x 1.05) x.85 =.40 manhours

Exclusions and Clarifications

Construction specifications don't always define who does what. You have to decide which portions of the specified work will be included in, or excluded from, your bid. In many cases you'll have to ask for clarification. This isn't a good place to be assuming things.

The most efficient method is to prepare a master list of tasks that your company does not normally perform. Then you can highlight or check off specific items to exclude for the current bid. Make exclusions and clarifications a part of the bid form or letter, with a statement like "Our price does not include the following:..."

Here's a list of exclusions and clarifications that you can use as a starting point if you haven't developed your own list:

Exclusions

1. Final cleaning of fixtures and equipment

2.  Backings for plumbing fixtures

3. Toilet room accessories

4. Electrical work, including furnishing motor starters

5. Line voltage (over 100 volts) electrical wiring and conduit

6. Temporary utilities

7. Painting, priming and surface preparation

8. Fire protection and landscape irrigation systems

9. Cutting, patching and repairing structural members

10. Equipment supports

11. Surveying and layout of control lines

12. Removal or stockpiling of excess dirt/spoil

13. Foundation/footing drainage and site dewatering

14. Concrete work, including forming and rebar

15. Access doors/panels

16. Setting equipment furnished by others

17. Equipment and personnel hoisting

18. Wall and floor blackouts

19. Pitch pockets

20. Costs for payment and performance bonds

21. Site utilities

22. Asbestos removal/disposal

23. Contaminated soil removal/disposal

Clarifications

1. Trash pickup by us, haul-away by others.

2. We include site utilities from building to property line only.

3. We include piping to 5 feet outside of building only.

4. We include plumbing and HVAC permits for our work only.

Consider Cost When Choosing Material

Most construction specifications allow you to use alternative equipment and materials. When they do, it's your responsibility to select the most cost-effective products. Don't just arbitrarily choose familiar materials or equipment just because "We've always done it this way." Compare your costs before making any decisions.

Make sure you know the local construction codes before choosing plastic products such as PVC, ABS and polypropylene. Most codes don't allow their use inside of public buildings like hospitals, care centers and schools.

It's generally best to select 100 percent factory-packaged equipment. Beware of products labeled "Some assembly required." Field labor costs for mounting loose coils, drives, motors and similar accessories are very high. What you save on the materials you'll most likely more than lose on the extra labor.

Understand Quotes and Shipping Terms

Except for the installation of underground utilities, most plumbing and HVAC construction doesn't begin for six months to a year after you bid a project. That makes it important to obtain price protection, in writing, from proposed suppliers and subcontractors before you bid a job.

Be aware exactly what the equipment and material price quotes by vendors include. They're usually conditional, don't include sales tax and are subject to specific payment and shipping terms.

It's important for every estimator to understand shipping terminology because it defines who pays shipping costs and who has the responsibility for processing freight-damage claims:

F.O.B. Factory (Free On Board Factory): The title passes to the buyer when the goods are delivered by the seller to the freight carrier. The buyer pays the freight and is responsible for freight-damage claims.

F.O.B. Factory F.F.A. (Free On Board Factory, Full Freight Allowed): The title passes to the buyer when the goods are delivered by the seller to the freight carrier. The seller pays the freight charges, but the buyer is responsible for freight-damage claims.

F.O.B. City of Destination (Free On Board to your city): The title passes to the buyer when the goods are delivered by the seller to the freight terminal in the city, or nearest city, of destination. The seller pays the freight and is responsible for freight-damage claims to the terminal. The buyer pays the freight and is responsible for freight-damage claims from the terminal to the final destination.

F.O.B. Job Site (Free On Board job site, or contractor's shop): The title passes to the buyer when the goods are delivered to the job site (or shop). The seller pays the freight and is responsible for freight-damage claims.

F.A.S. Port (of a specific city) (Free Alongside Ship at the nearest port): The title passes to the buyer when the goods are delivered to the ship dock, or port terminal. The seller pays the freight and is responsible for freight-damage claims to the ship dock, or port terminal only. The buyer pays the freight and is responsible for freight-damage claims from the ship dock, or port terminal, to the designated delivery point.

Obviously it's to your advantage to instruct vendors to quote all items F.O.B. the job site or your shop.

Isometric Drawings

Most engineering drawings are two-dimensional; they show length and width only. Auxiliary or elevation details are sometimes used to clarify what can't be clearly depicted in a plan view.

Architects and engineers often use another method of drawing which shows objects in all three dimensions: length, width and height. Such drawings, depending on the specific method used, are called either perspective, axonometric, oblique or isometric.

Designers of plumbing and HVAC systems usually use isometric drawings to show details of piping systems. An isometric drawing simply uses 30-degree angles from the horizontal to indicate length and width.

A plumbing or HVAC estimator, however, doesn't need to understand the complexities of mechanical drawing to make a simple freehand sketch that shows pipe, fittings and details that are hidden in a plan view. That helps assure that all the relevant items will be included on the detailed take-off.

Figures 1-2 and 1-3 are basic isometric sketches showing details of typical DWV and water piping required for a bathroom consisting of a lavatory, water closet and shower.

The Estimating Procedure

There never seems to be enough time to carefully prepare an estimate - but somehow you've got to meet the bid deadlines. If you're not organized, preparing a cost estimate under that kind of time pressure can easily lead to carelessness, and costly errors.

Remember, your nuts-and-bolts take-off isn't the only part of the estimate; there are scores of suppliers and subcontractors who must have time to prepare their pricing and proposals for you.

For a typical project, I recommend following these procedures, in the order listed:

1. Get an additional set of drawings and specifications for your potential vendors and subcontractors to use.

2. Study the plans and specs carefully and highlight important items. Make a list of specific activities where you'll have to apply manhour correction factors. Make sure you know and understand the local construction codes.

3. Ask the general contractor for a copy of the proposed construction schedule and the subcontractor laydown (storage) areas. Both of these will have an effect on your price decisions. There are correction factors for increasing distance from the storage area, but the effect of a compressed schedule is less clear-cut. If you're facing an unusually fast time frame, you'll need additional installation and supervisory personnel to meet the completion date. This increases your labor costs and reduces efficiency because of congested construction areas when several trades are trying to work at the same time. These increased costs can go as high as 10 percent. Compare each situation separately and compare it to your normal working conditions to estimate how much it will impact your costs.

4. Schedule all potential suppliers and subcontractors to come to your office to make their take-offs from the extra set of bid documents.

After you've taken these preliminary steps, it's time to begin your detailed take-off. You can use a pad of ruled paper, a preprint- ed form or a computer to assemble your take-off. The method you use isn't important; the results are.

Follow these guidelines for taking off materials and equipment:

1. Take off all piping and ducting by system, floor and building and clearly label each section on your take-off. Don't combine systems such as chilled water, heating hot water and domestic water, even if their specified materials are identical. If there are changes in one system, you don't want to have to redo your entire estimate.

2. Use the engineer's ID numbers to identify listed equipment. Terms such as "pump" just aren't specific enough.

3. Use colored pencils or highlighters to line out items you've taken off and listed. Use a different color for each piping and ducting system.

4. Don't forget to apply manhour correction factors!

5. Don't jot telephone quotations or other important data on scraps of paper or desk pads. Use a preprinted form to make sure you ask for and record all the important information.

Additional Job Costs

Perhaps the easiest part of estimating a job is taking off and listing the various items of hardware shown on the drawings, then assigning their related labor costs. But there are many miscellaneous costs that can - and will - cut into your profits if you ignore or forget them. Figure 1-4 is a checklist you should review before finalizing your bid price.

A Sample Estimate

Figure 1-5 is an isometric sketch of a simple two-pipe reverse-return hot water heating system. The specifications call for Type L copper pipe with wrought copper fittings and brazed joints. Let's assume you have vendor prices for the boiler, pump, expansion tank, fan-coil units and valves. You also have prices from specialty contractors for the thermal insulation and temperature controls. Now your job is to prepare a cost estimate and a competitive bid price.

I recommend using a four-step process.

1. First, study the specifications and drawings and note any conflicts, building code violations, required labor correction factors and other data that could have a significant effect on our pricing. Any major deficiencies should be brought to the attention of the architect or engineer, in writing.

2. Then make a detailed take-off of all material and equipment, following the guidelines we discussed in the section called The Estimating Procedure. List and total all quantities, with the prices and estimated labor manhours, in the Material and Equipment Take-off. See Figure 1-6.

3. Now list and price the estimated labor manhours and additional cost data on the Labor and Other Job Costs form, as shown in Figure 1-7. Go over the Additional Job Costs checklist to make sure you haven't omitted anything.

4. Finally, transfer all job costs to the Estimate Summary, assign the overhead and profit markups, and total the numbers. See Figure 1-8. Most of the items in the surnmary are self explanatory, but I'll clarify two of them:

• Line M. The bond premium is the fee charged by a bonding company to issue a bond or "insurance policy" protecting the owner in the event of payment or performance defaults on the part of a contractor.

• Service reserve is money allocated for the performance of any service work during the warranty period.

Preparing the Proposal

It's common courtesy to deliver an unpriced copy of your bid or proposal to the general contractor three or four days before the bid deadline. This gives them time to check your proposal and get prices for any items you may have excluded.

To avoid any misunderstandings, every proposal should include at least these sections:

1. Specification titles and issue dates
2. A complete listing of bid drawings and their latest revision dates
3. A complete list of addenda and their dates of issue
4. A listing of specification sections (or parts of sections) included in your proposal
5. A list of your exclusions and clarifications

Phone (or fax) your final bid prices to the general contractor five or ten minutes before the bid deadline. Don't submit them too early. You don't want to have to revise them because of last-minute price changes by your suppliers or subs.

Value Engineering

Even when you do your most careful, accurate estimate, there may be a competitor who comes in a little lower. Let's suppose you've submitted a combined plumbing and HVAC bid for $233,000 and your competitor's price was $229,000. You've obviously lost the job. Or have you?

Let's further suppose that in addition to bidding the work according to the plans and specs, your proposal included the following:

This is called value engineering. That's finding ways to reduce costs without reducing the quality, integrity or performance of the systems you'll install.

If you include value engineering in your proposal, you increase your chances of winning a contract even though your basic bid price isn't the lowest. You're sending a message to the owner: "We care about your project; that's why we've spent additional time and money to find ways to reduce your building costs."

Don't waste your time offering to reduce costs by installing cheaper plumbing fixtures and lower-quality equipment. After all, the owner has already asked for specific quality standards from their design team. If they wanted a lower-quality installation, that's what they would have asked you to bid on.

Remember this: When you offer value engineering deductions that require design changes, you'll probably be questioned or challenged. You must be prepared to convince the owner and the design engineer that your recommendations are based on sound engineering principles.

Let's go back and see how you might justify the cost -saving ideas presented our example:

1. Pipe hanger spacings: The pipe hanger spacings recommended in the Uniform Plumbing Code (UPC) were calculated by professional structural engineers and include conservative safety factors. They have been used for many years and have proven to be more than adequate.
2. Changing HHW Delta T: In hydronic heating, you're pumping British thermal units (Btus) throughout the system. By increasing the Delta T from 20 to 40 degrees F; you're not reducing the number of Btus being pumped, you 're merely reducing the GPM of water. As a result, you can reduce pipe, insulation and pump sizes without affecting the transmission of heat. You'll also reduce operating costs because smaller pumps require less horsepower.
3. Thermometers/pressure gauges: Thermometers and gauges installed on vibrating machinery, or on connecting piping systems close to such equipment, have a short life expectancy and quickly lose their accuracy. That results in misleading readings. The use of insertion-type pressure/temperature taps allows readings to be easily taken with accurate gauges that can be kept in a safe place when not in use, protected from damage.
4. Water treatment: Studies conducted by ITT Bell & Gossett have shown that corrosion in closed hydronic systems, having a makeup water rate of no more than 5 percent per year, virtually stops once the entrained air (oxygen) has been removed by the air control system, or depleted.
   
    
5. 100 percent standby pumps: Using two pumps piped and operated in parallel is a more economical choice than the standby pumps. Even if one pump fails, the remaining pump will deliver 75 to 80 percent of the design flow rate, which is adequate for emergency operation.

These cost-saving ideas are only a small sample of the potential of value engineering. When estimating any job, watch for other opportunities and note your findings. I recommend splitting the savings 60/40 with the owner. For example, if you can save $1,000 by using a different type of pipe hanger on a project, you can offer a $600 price break to the owner, and still pick up an extra $400 profit for yourself. And this extra effort might help you to land the job you otherwise missed by a hair!

Managing the Project

During the 1970s and early 1980s, construction companies were easily able to earn gross profits in the 18 to 22 percent range, and often higher. But since then, the commercial and industrial industry has seen a steady decline. Residential building has ranged from a negative growth rate to a minimally-positive one.

This reduction in construction spending has meant increased competition between contractors and a resulting drop in profit margins. Today, if you bid a job at a markup higher than 12 to 14 percent, you probably won't get the work.

That's why more and more contractors are turning to a project manager to help boost their dwindling profits. Many others, however, still expect their job site foremen to handle the complex and time-consuming paperwork and project management. Of course, this means the foreman has less and less time to devote to job supervision, which should be his primary function.

Some small companies assign managerial duties to their estimators. While this does avoid overloading the foreman, it limits the time an estimator can devote to estimating future jobs. Perhaps this is one reason why many small contractors remain small.

Functions of the Project Manager

The primary duty of the project manager is to organize and supervise the job so it's efficient and profitable, while fully complying with code and contractual requirements. Here's a list of a manager's typical duties, listed in order of performance:

1. Schedule in-house turnover meetings.
2. Order additional copies of plans and specifications for distribution to field foreman and subcontractors.
3. Study the project documents for value engineering potential.
4. Set up a project filing system.
5. Finalize all major equipment and subcontractor pricing.
6. Prepare and mail letters of intent to subcontractors and major equipment vendors.
7. Order the specified number of submittal data from vendors and subcontractors, plus additional copies for in-house use.
8. Prepare and submit equipment, material and subcontractor's technical literature to general contractor for approval by the owner or the owner's representative.
9. Prepare and submit construction schedules.
10. Direct project foremen to prepare shop drawings if major deviations from contract drawings are anticipated. Submit for approval.
11. Prepare monthly progress billing format and submit for approval.
12. Order all long-lead equipment when approved submittals are in hand. But don't commit to any purchase orders until you have a fully-executed contract with the general.
13. Prepare and send contracts to third-tier subcontractors.
14. Prepare a job site safety program in accordance with OSHA regulations, and get the required federal and state statutes to post in job site offices.
15. Prepare and submit change estimates to the general contractor as they occur.
16. Prepare and submit the specified number of project closeout items, such as operation and maintenance manuals, test and balance reports, as-build drawings and the warranty letter to the general contractor.

As if that weren't enough, the project manager is also responsible for handling correspondence, job problems, damage and warranty claims and attending construction meetings. As you can see, there are reams of paperwork generated for each job. To be effective, the project manager has to be able to locate any paper when it's needed.

The Project Filing System

It hasn't been too many years since the paperwork for a construction project was either stuffed in a gang box with the tools or in a cardboard box on the floor of a foreman's pickup truck. But that won't do anymore. Today, each job generates too much paper - and paper that's too vital to the contractor's success. That means a more sophisticated filing system is needed.

As a minimum, a project filing system should include the following categories. Add others as the need arises.

• Correspondence in / Correspondence out
• In-house correspondence
• Prime contract
• Subcontracts
• Project estimates
• Vendor quotations
• Change estimates
• Change order log
• Project meeting minutes
• Schedules
• Safety
• Shop drawings
• Submittals
• Punch lists
• Miscellaneous

Introduction | Table of Contents | Back Cover

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