Price right

Posted: 28 September 2018

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Pricing residential building projects can be difficult, but applying some simple quantity surveying principles will help ensure your costs are accurate and projects run more smoothly.

In the past, pricing for a residential project meant writing a few simple calculations on the back of a paper bag. You added together subcontractor quotes and a merchant estimate and decided that a couple of people on-site for a couple of months would be enough. Add on a percentage for site overheads, multiply the whole lot by 10 percent and the job was done, right?

Take time to get pricing right

These days, to remain competitive and profitable and within contract legislation, pricing is a task you should really spend some time on. In addition, as a licensed building practitioner, you need to ensure that you’re meeting your obligations while being as profitable and competitive as you can.

General quantity surveying  principles can help a lot here. They can be used for any project, even the smallest renovation job. If you consistently apply these principles along with best practice, you will be able to more accurately price jobs and projects will run more efficiently.

Principle 1 – materials measurement

It is very important to make your materials measurement as accurate as possible. If using a merchant estimate, double check it. This might sound obvious, but if you win a job with a merchant estimate and find out it was missing key items or undermeasured, that can cause real issues. You might then need to try to negotiate with the merchant to have the extra goods delivered for free or negotiate a variation with the client so that you can continue with the job.

Avoiding these issues is not the only reason that you want your material measure to be accurate and detailed. The other reason is specifically aligned to principle 2.

Principle 2 – labour measurement

While measuring labour is a standard tool for quantity surveyors, builders don’t always understand how to do it well when they price their own work.

To measure labour for a job, it is best to use a labour constant, which is a figure based on how long it will take to complete a task on a per-measurement basis such as per square metre. It is calculated as a constant figure that can easily be multiplied.

You use a labour constant so that, regardless of the measurement (or size of the task), it is easy to figure out the amount of labour needed to complete it.

Follow this example

If your project requires 100 m² of plasterboard, you want to know how many square metres of plasterboard can be installed per hour:

  1. You know it takes 5 minutes to put up 1 m² of plasterboard for a simple job.
  2. Divide 5 minutes by 60 minutes – this will give you a labour constant of 0.08/m² of plasterboard. 
  3. Multiply the measure (100 m²) by the constant (0.08/m²) to calculate your labour requirement in hours – 100 × 0.08 = 8 hours.

Materials measurement and labour measurement are the first building blocks for pricing a job effectively. If you have your materials measure correct and you apply a labour constant to each line item, your labour amount and costs are likely to be correct too. 

Help available

Luckily, you don’t have to work out a labour constant for every task (unless you want to) because there are resources to assist you. There are a variety of books and online quantity surveying tools available to help you understand what average labour constants should be. You can also get professional help and advice by hiring a quantity surveyor.

Quiz

1. Applying quantity surveying principles can have what benefits?:

a. more accurate pricing for jobs
b. higher-efficiency projects
c. fewer surprises
d. all of the above

2. The materials measurement principle sets out to ensure what?

a. using a correct materials measure is key to getting the labour requirement correct
b. your supplier will provide you with lots of extra materials
c. the homeowner should supply you with everything

3. Which best describes a labour constant?

a. the amount of time it takes to install plasterboard
b. a calculation that only quantity surveyors can do
c. a value that can be applied to a measurement to work out the labour required for the project
d. a measurement of how much material you need to order

Check answers

This information is published by the Ministry of Business, Innovation and Employment’s Chief Executive. It is a general guide only and, if used, does not relieve any person of the obligation to consider any matter to which the information relates according to the circumstances of the particular case. Expert advice may be required in specific circumstances. Where this information relates to assisting people: