Any of these could result in a low number which ultimately wins the project, but doesn’t have sufficient funds to actually cover the cost of the work to be performed, resulting in no profit, or worse – a negative job that loses money. In order to attract them and keep them on your team, you need to have a compensation and incentive program that rewards them for their talents and keeps them motivated to perform at a high level, day in and day out. The estimator is now responsible for performing any/all takeoffs which should be clearly identified company-wide and know to all. The team at Ascent is committed to helping our clients build better construction companies for profitability and performance. Read More: How To Recruit and Hire Top Performers. EMPLOYEE BONUS PLANS. hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, '1c9bbb5d-a847-4032-b289-5e0f35a17887', {}); Ascent Consulting’s mission is to Build Better Construction Companies. Remember, back at the beginning of this article, we mentioned that there are ‘fringe’ benefits you can offer your PM’s as incentives beyond money? A commercial GC who is bidding on a $10MM project will probably reward their estimators differently than an industrial plumbing contractor who is bidding on $50k projects. If you're ready to start working on your business, let's talk! Ascent's founder and president, Adam Cooper has over two decades of experience in construction business ownership, sales & marketing, project management, company operations and leadership. An opportunity comes in the form of a RFP (Request for Pricing), Bid Solicitation or Open Bid Request (typical of public work projects). In our case, such project features are as follows: 1. However, contrary to popular belief, most contractors do not really make 15-20% on changes. 64% of workers prefer spot bonuses over other one-time bonuses like signing bonuses, employee referral bonuses, or retention bonuses. Business Operations Remember from our example that a 2% increase equates to $10,000, but they have to generate more than 2% to qualify for a bonus. Construction Estimator Resume Examples. These rewards can also be used in lieu of the financial bonus for Estimators that successfully assembled complete pricing, but the company was not awarded the project (they were outbid or the project was cancelled). We are committed to delivering impressive results in the areas of, Finance, Succession, Exit Strategies & Acquisitions, Employee Performance, Retention & Incentives, Employee Performance, Retention, Incentives, Ensure that they are making a positive contribution to the company. Commission Only Structure: Pros & Cons. For instance, your bonus structure … You would actually make an extra $14,000 at 8%, because of the increase in contract value. Creating an effective bonus structure … Structure … So, what if we could design an incentive plan for Estimators that drives these key results we are trying to generate? In this article, you will learn everything about 1) employee bonus plans and 2) how to structure an employee bonus plan. hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, '8368647d-63d3-401e-ab82-1dc00fdce9f3', {}); In our last article on this topic, we will explore incentive programs for Business Development / Sales positions. All rights reserved. In fact, too many changes can increase the contract value, but result in reduced profitability! The PM completes the project and increase profits to 14%. Written By Adam Cooper, President of Ascent Consulting. When thinking about an incentive plan for an Estimator, it’s helpful to think about the actions and end results we are trying to achieve and reinforce. Let’s create another rule: For good measure, we can put in a disclaimer as well: So, now we’ve set up the PM to be rewarded for the desired outcome: Increase project profits, either by reducing costs, increasing net profits, or increasing scope/contract value while maintaining profitability. This estimate is based upon 6 Clark Construction Group Estimator salary report(s) provided by employees or estimated based upon statistical methods. The PM completes the project and increase profits to 12%. Annual revenue is expected to exceed $1.3 million in 2013, compared to $1 million … Here’s how it works: Once a project is won/awarded, the project’s cost budget is established. A straight commission structure means a … This way we don’t have to guess whether we left something important out of our calculation. For every percentage point in excess of 2%, they receive 5% of the profits. The first step to a good bonus structure is to outline goals accurately. We are committed to delivering impressive results in the areas of profitability, performance and growth. Stay tuned for more! They are given responsibility for the financial outcomes of their projects, and are therefore directly responsible for the company’s gross profits or losses (before operating expenses). 1708 Peachtree Street NW Suite 520 Atlanta, GA 30309. We are committed to delivering impressive results in the areas of profitability, performance and growth. They have therefore increased profits by 2% over goal (14% - 12% = 2%). The most common incentive programs for PM’s start with a project-level bonus structure, which is based on their ability to increase profitability over budget. All values must be entered into the contractor’s bid management system (estimating software, spreadsheet, etc.) Good Project Managers are the heart of every successful construction company. Once accepted, the cost budget becomes the initial ‘projection’ of the actual cost to build/perform the work. Browse construction companies salaries, reviews, benefits, bonuses, and more from data provided by real employees. Read More: The key to an effective Incentive Plan. Construction Estimators prepare cost estimates for construction projects. The most common incentive programs for Estimators start with an opportunity-level bonus structure. In these construction estimating training classes taught by Michael Stone, you’ll start with a small job (under $12,000) and build skills as the jobs become more complex ($1.2 million remodel). Now that we have defined the process, we can establish goals and rewards. Why we like the Markup Calculator Software is that it lists all the expense categories a typical construction company has to consider. A bonus is an additional amount of payment given to the employees with their agreed salary at fixed time of the year. Again, this is in their job description and is covered by their base salary. Company owners always ask which structure … An entry-level Construction Estimator with less than 1 year experience can expect to earn an average total compensation (includes tips, bonus, and overtime pay) of $48,980 based on 203 … Bonuses can encourage reps to sell more and hopefully spur growth, but without requiring the company to pay more until it can afford to. Employee Performance, Retention, Incentives. Ensure they are making a positive contribution to the company. See all Estimator … Simply winning the project is not enough! The estimator is also responsible for soliciting and collecting pricing from vendors and/or subcontractors as required by the project. Rewarding Construction Estimators: Incentive Packages Part IV. The difference between this cost budget and the contract value is the gross profit. In the case of longer-term bonuses… Without great estimating, it can be very hard to grow a business in these competitive times. You can multiply an employee’s total sales earned by a fixed bonus … Each separate bonus system should be considered together with the specific character of the company’s activity and project features that are objects of the assessment process. If you're ready to start working on your business, let's talk! They are on the front lines of the project, the center of the flow of information, and the people you’ve made responsible to manage and mitigate the ‘risk’ of every project you perform. Employees are the lifeblood of every construction company. So, we will start with common financial structures of bonus and incentive plans, and later we’ll explore some other ‘fringe’ benefits that can be used to compliment these plans and help drive employee performance. Where I may differ with Brose … Read more about Incentive Plans & Bonus Structures. The average L&T Construction salary … Many of them ran projects during the day and estimated at night and on the weekends, always hunting for the next project. For each $20,000 of additional profit the PM generates, they receive 5% of the gross profits. Much like our previous article about Project Managers, here are some of the most common ‘extras’ that can be given to reward Estimators. Leave a comment below, or email us with your ideas so we can share with our readers! They are the bridge between opportunities and projects. This system can be used for both General Contractors and Subcontracts alike. Let’s first define the desired estimating process. Rewarding Construction Project Managers - Incentive Packages Part III, Hire the right individuals for each position. We are committed to delivering impressive results in the areas of, Finance, Succession, Exit Strategies & Acquisitions, Employee Performance, Retention & Incentives, Employee Performance, Retention, Incentives, Hire the right individuals for each position. Air travel rewards (travel vouchers, seat upgrade certificates), Electronic devices and gadgets (Bluetooth speakers, headphones, radios, mp3 players, tablets, etc. The goals from this process: Now, how do we reward the estimator for meeting all of these goals? When factoring in bonuses and additional compensation, a Estimator at Structure Tone can expect to make an average total pay of $87,803 . hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, 'dcf87608-b845-40ad-a794-578d7f8f6446', {}); Ascent Consulting’s mission is to Build Better Construction Companies. © 2021 Ascent Consulting. Once accepted, the cost budget becomes the initial ‘projection’ of the actual cost to build/perform the work. While money is not the only motivator, it is typically the ‘biggest’ motivator and the easiest for employees to recognize. Failing to know your real costs is a recipe for disaster. Next, all takeoffs, quotes and subcontractor proposals must be assembled and organized into a ‘bid folder’ or ‘bid book’. We hope this article provides you with some ideas for your own incentive programs, and shows you how to create a structure that rewards Estimators for both their performance and supporting the goals of the company. You will know if (and how much) you can cut your number in order to close a deal, without significantly impacting or sacrificing your profitability. Then dedicate someone to make it happen. These rewards can also be used in lieu of the financial bonus for PM’s that got close but didn’t quite qualify, or for PM’s on smaller projects that didn’t provide opportunities to increase profits or contract values enough to qualify. This system can be used for both General Contractors and Subcontracts alike. As a business owner or Estimating department manager, the key desired results we want from an Estimator at both the GC and Subcontractor level are the same: Notice that ‘Winning the project’ is not in this list. Bonuses will be paid based on the higher of the two calculations. The way you choose how to calculate bonuses for employees can affect company morale. Prepare cost estimates for product manufacturing, construction projects, or services to aid management in bidding on or … With so many types of bonuses given … 1708 Peachtree Street NW Suite 520 Atlanta, GA 30309. While they have qualified for a bonus, they have not earned any additional profits and are not paid a bonus. Project Management This will depend on your style and methods for estimating. Over Time they ( hopefully ) came to understand how to Recruit and Hire Top Performers of profit... 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