Estimating Part II: Job Costing, Accounting and Overhead

Transcription

1 Estimating Part II: Job Costing, Accounting and Overhead By Charles Vander Kooi Continuing Education Credits Hanley Wood is a Registered Provider with The American Institute of Architects Continuing Education Systems; State of Florida Department of Business Professional Regulation (DBPR/CILB) and Mason Contractors Association of America (MCAA). You will earn credit on completion of this program provided you sign in with appropriate license and/or member number. Electronic Certificates of Completion for all attendees will be available 6-8 weeks post show. This program is registered with the AIA/CES for continuing professional education. Select programs are registered with State of Florida and MCAA. As such, it does not include content that may be deemed or construed to be an approval or endorsement of any material of construction or any method or manner of handling, using or distributing or dealing in any material or product by the AIA, State of Florida or MCAA. Questions related to specific materials, methods and services will be addressed at the conclusion of this presentation. Copyright Materials This presentation is protected by US and International copyright laws. Reproduction, distribution, display and use of the presentation without permission of the speaker is prohibited. Vander Kooi & Associates Inc.,

2 Learning Objectives Upon completing this program, the participant should be able to: 1. Clarify how to incorporate job costing with accounting 2. Identify what items to include in overhead and understand overhead recovery 3. Describe how to budget overhead for estimating 4. Compare two formats for a financial statement Produce the Product Material Labor Equip. Subs What is Prod. Hrs X Prod. Hrs bought Avg. Wage daily / hourly General Conditions (Job Overhead) Material Labor Equip. Subs $ $ $ $ Markups Tax on materiallabor Burden (taxes, ins., benefits) Overhead Profit Ding Dong Factor Bid Equipment Costing 1. Purchase price $24, Plus interest 4, Minus salvage value (3,800.00) $25, Lifetime Usage 40 weeks X 5 days a week = 200 days a year X 5 years = 1,000 days $25, / 1,000 days = $25.00 per day ½ purchase price X interest rate X length of ownership-$12,000 X.08 = $960 X 5 = $4,800. 2

3 Equipment Costing 2. Maintenance + insurance + Licensing 11, $8, $1, $20, / 1,000 days = $20.00 per day 3. Fuel 6 gallons X $3.30 = $20.00 per day Total - $25 + $20 + $20 = $65.00 per day Labor Burden Field Office Company Share FICA Work comp. Federal unemployment State unemployment Liability insurance Vacation 1 Health insurance 2 Holiday pay 3 Breaks TOTALS 1. Vacation calculation Total vacation weeks divided by total workforce weeks in a year. 2. Health insurance calculation Total health benefits payment for a month divided by total payroll for a month. 3. Holiday pay calculation Total holiday days divided by total workforce days in a year. Overhead Recovery Mr. Vander Kooi s favorite subject Our Greatest Nightmare It must be recovered ABC job $800,000-31,000 $769,000 XYZ job - 53,000 $716,000 3

4 Not Your Accountant s Overhead Must Be Pre-budgeted Three questions to ask line item by line item 1. Is this item going to go up or down due to inflation? 2. Is this item going to go up or down because we are going to do more or less work? 3. Is this item included in our bid elsewhere? Properly & Fairly Allocated What do I mean by allocation? $4,000,000 1,000, ,000 $5,500,000 3 methods self-performing contractors use to allocate overhead 1. As close as she gets M% L% E% S% MORS (60-75%) 4

5 3 methods self-performing contractors use to allocate overhead 2. Close but no cigar Payroll hours divided into overhead equals overhead per hour. 3 methods self-performing contractors use to allocate overhead 3. Deadly Overhead divided by costs equals 25% Material Labor w/ burden Equipment Totals $100,000 $10,000 $10,000 $120,000 Material Labor w/ burden Equipment Totals $30,000 $70,000 $20,000 $120,000 Results with 25% vs. MORS Bid 1 Cost = $120,000 x 25% = $30,000 = $150,000 MORS = $5,000 60% = $6,000 20% = $2,000 Total overhead = $13,000 + $120,000 = $133,000 5

6 Results with 25% vs. MORS Bid 2 Cost = $120,000 x 25% = $30,000 = $150,000 MORS = $1,500 60% = $42,000 20% = $6,000 Total overhead = $49,500+ $120,000 = $169,500 Profit & Loss Sales Direct Cost of Sales Material Labor Labor Burden at bid Percent journal entry Rental Equipment Company Equipment (from time cards at bid rates journal entry) Subcontractors Total direct cost of sales Gross Profit Indirect Cost of Sales / Equipment Company equipment/overhead (journal entry credit from Ovh. Rec. Depreciation Interest (on equipment loans) Insurance (on equipment) Maintenance and repair Profit & Loss Gas & oil Licenses Mechanic if have one Mechanic labor burden if have one Shop rent (if have one) Shop Utilities (if have one) Total Indirect Cost of Sales/Equipment (profit/loss on equipment) Indirect Cost of Sales/Labor Burden Labor burden (journal entry credit from cost of sales) Labor burden (journal entry credit from mechanic) Labor burden (journal entry credit from overhead) FICA FUTA SUTA Workman Comp Liability 6

7 Profit & Loss Vacation pay Holiday pay Field health insurance Other Total Indirect Cost of Sales/Labor Burden (Profit/Loss on LB) Overhead Advertising Depreciation (office equipment and furniture) Donations Dues and subscriptions Insurance (office items and health / life) Interest and bank charges Downtime Labor burden (downtime) Office supplies Professional fees Rent Salaries office Salaries officer Labor burden office Small tools and supplies Taxes business Telephone Travel and entertainment Utilities Yard expense Overhead vehicles Radio systems Misc. Licenses bonds Education Uniforms & hard hats Computer Bad Debts Total Overhead Profit & Loss NET PROFIT / LOSS Thank You! This concludes the Continuing Education Program. Any Questions? Charles Vander Kooi Vander Kooi & Associates Inc. 303/ cvk@qwestoffice.net 7

8 Hands-On Education at WOC Concrete Repair Masonry Concrete Block Wall Place & Finish Floors Stamped Concrete Surveying Automatic and Digital Levels Total Stations Outdoor Practical Using Total Stations Look for more hands-on opportunities in 2014! Train-the Trainer URGENT FEDERAL NOTICE: Per the November 2010 Federal Construction Crane Rule, all persons operating cranes must be nationally certified operators by Nov 10, These trainthe trainer courses will allow you the convenience of having a certified trainer in your office. Train-the-Trainer: Articulating Boom Crane Train- the- Trainer: Rigging, Spotting and Signaling Also offered: NCCCO Articulating Boom Crane Operator Certification Written and Performance Exam Keep in touch with WOC year-round Join the Conversations! hashtag - #worldconcrete.com 8