Training & Education
Oh no! Material costs jumped since I won the bid! • Estimating 101, June 2021
As estimators, we need to protect our companies from escalating prices when we submit a bid.
July 6, 2021 By Dan Beresford and John F. Wiesel
July 6, 2021 – Getting prices at the last minute from suppliers, customers asking for longer price holds, and increasing material costs are having a major impact on an already-frustrated electrical construction industry.
In the previous edition of Electrical Business, legal columnist Dan Leduc wrote that “copper wire and cable” showed a 26.7% price increase from March 2020 to March 2021, and a 4.1% increase from just February 2021 to March 2021 (Legal Desk, EB May 2021).
In that same edition, Anthony Capkun noted that at least one electrical distributor warned customers they cannot offer any price protection, and that pricing will be finalized on the day the product is shipped to the customer.
As estimators, we need to protect our companies from escalating prices when we submit a bid. We also need to protect against increased costs due to schedule changes that move the job outside of our price guarantee from our suppliers, or because of seasonality, or having to add shift work or overtime to meet the completion date.
In times of volatile material costs, one of the things we need to consider is adding an “Escalation” clause to our bid submission, which would allow for increases in costs outside of our company’s control. It helps us manage and possibly eliminate large and unexpected material price increases and/or schedule changes that would cut into our profit and, possibly, make us take a loss on the job.
To ensure the clause is written properly and protects your company, it is important to have it written by a lawyer who understands and works in construction law.
John F. Wiesel is the president of Suderman Estimating Systems Inc., and has been estimating and teaching estimating since the early 1980s. Dan Beresford served as an electrician in the Canadian Navy, then worked in various roles in the electrical sector before joining Suderman. Visit www.sudermanestimating.com.
Print this page