Estimating & Pricing

How StairBiz costs jobs

Overview

The following is only applicable to the Estimate module. There is a difference between costing (estimating) a job and quoting a job. • Costing a job involves knowing exactly how much it will cost your company to produce that stair. • Quoting a job is putting a figure on what you’ll charge the client. The variables for costing are roughly as follows:

1. Cost of labour (both staff and contract)
2. Cost of timbers and parts
3. Cost of truck usage
4. The job’s share of all other costs associated with running the company (overhead). The difference between the cost and the quote is your profit margin (or loss). Market pressures and marketing policy have nothing to do with costing a stair - they should only impact your margin - to properly control a company you know what the production costs are, and what the margin is, for each job you quote. The cost of timbers and parts for a job is set in the Materials window. The cost of labour for a job is set in the Labour window. Allowances for overhead and profit for a job are set in the Quote Calculation window. Note that it is possible to cost (quote) for the stair and balustrading separately – see the Active buttons in the Process window. Note also that the Don’t Process menu-item when you right-click a stair unit in the Stair Setout pane of the Design window can force StairBiz to ignore certain units of a stair for the purposes of spec’ing and costing labour and materials.

How StairBiz Costs Materials

StairBiz costs materials for a job exactly (or, at least, as exactly as you want it to). Component for a job are selected in the Components window of the job, and fall under two categories:

1. Blank items, which include a style and size.
2. Parts Timber selections are made in the same window. For blank items: • If the item type is set as Blank (any of the 3 categories) in the related Style window, then the cost per metre/foot of the blanks for the relevant sizes and timbers are pulled from the Timbers window. • If the item type is set as Blank; Contract Profile in the related Style window, then the cost for the outhouse machining is added. • If the item type is set as Blank; Staff Profile in the related Style window, then the labour cost for machining the item is treated as a labour cost (see How StairBiz Costs Labour). • If the item is a Part then the cost is pulled from the related Parts window and can be cost per each or cost per metre/foot as shown in that window. So at this point of the job, StairBiz has the default cost of all items (per metre/foot or per each). All these item’s costs can be changed just for this job (if necessary) in the Materials window of the job. StairBiz then calculates a cutting list showing every component – including the quantity, size and length. From this StairBiz can calculate the total cost of the materials for the job (in the Materials window). This total cost is then fed into the Quote Calculation window.

Exceptions:

Some component’s sizes can be manually amended in the Design window, and therefore would be different to the original size as shown in the Components window. In these cases there are a variety of options, including Price by Area and both manual and automatic pro-rata pricing systems. See Chapter 22: Miscellaneous topics/ Sheet Material

How StairBiz Costs Labour

Overview

StairBiz breaks labour down into six main categories:

1. Preparation
2. Profiling
3. CNC
4. Assembly
5. Delivery
6. Installation Costing is then done as follows:
7. As part of your defaults setup, labour filters may be created in the Labour Filters window, and times and/or costs may be entered into these filters for each possible task in each labour category (except Turning/Machining - see below). When you start a new job, these labour filters can be selected (either by default, or manually in the Labour window) and are brought into the job. The job uses the filters to create a list of labour activities.
8. As part of your defaults setup, labour times and/or costs may also be associated with each part in the Parts window. If a part is used in a job (either specified by the Style window or by a Part Filter), StairBiz will add any labour associated with that part to the job.
9. As part of your defaults setup, times/costs for the Turning/Machining of components may be entered into the Style window for each component (providing that the style type is set Staff Profile or Contract Profile). If that style is used in a job, StairBiz adds the associated labour to the job.
10. Quick Labour (called "quick" only because it's fast to apply it) for travel time and installation can be added to the job in the job's Quote Calculation window. In the case of installation labour, if the Override checkbox is ticked the labour entered here will completely replace most other installation labour (see the Quote Calculation window).
11. Each time you change anything in the Design window of the job, StairBiz recalculates the labour, and comes up with a total cost as shown in the job’s Labour window and Labour sheet. This total is then fed into the Quote Calculation window for the job.

Two main ways of costing labour

With StairBiz you can cost labour using the Staff Method, or the Contract Method, or you can use the Staff Method for some categories of labour and the Contract Method for others. You are also able to switch methods on a job-by-job basis using the relevant buttons in the job’s Labour window.

Staff Method

If you tell StairBiz how much time it takes to do each task, and how much you pay the person doing that task, StairBiz can calculate the cost of labour. This method would lend itself to costing labour for in-house staff. Using the Staff method:

1. In the Labour Filters window, for each task in each category of labour that usually or occasionally uses in-house staff, you need to specify the average time it takes for the average worker to complete that task. This is done using TimePrepare, TimeAssemble, TimeDeliver and TimeInstall properties.
2. In the Labour Rates list in the Labour Filters window, you also need to set the wage cost for each category of labour that may use the Staff Method. This is done in the column called “Rate”.
3. Finally, you need to be sure that the relevant Contract button at the top of the window is NOT ticked.

Contract Method

If you tell StairBiz how much you pay for each task, StairBiz can calculate the cost of labour. This method would lend itself to costing labour for subcontractors on piecemeal rates. Using the Contract method:

1. In the Labour Filters window, for each task in each category of labour that usually or occasionally uses contract staff on a piecemeal basis, you need to specify the price charged by those contractors for that task. This is done using the ContractPrepare, ContractAssemble, ContractDeliver and ContractInstall properties.
2. Finally, you need to be sure that the relevant Contract button at the top of the window is ticked.

Costing Travel Time

Travel time for a job is entered in the Quote Calculation window of the job as the number of minutes (or hours:minutes) of travel multiplied by the number of men travelling (i.e. total man-minutes). Alternatively, enter a dollar (contract) amount. The cost of the truck is entered manually in the Quote Calculation window.

An alternative way of costing

Many stair manufacturers currently cost stairs using a “per tread” and “per landing” etc. process. Materials, labour, overheads and profit are all bundled together. Whereas we seriously discourage this method for a variety of very good reasons, StairBiz can emulate it, as follows:

1. Set all prices in the Timbers window to zero.
2. Set the Overheads p.w. value in your Miscellaneous Defaults window to zero.
3. Create line items in your Part Filters window to price your jobs.

Simple or sophisticated

The costing of labour in StairBiz can be as simple or as sophisticated as you like. You can be as simple as an amount per tread, or you can cost down to the last nail and glue block.

Note regarding the schedule

If you use the Contract Method for costing any category, and you intend to use the Schedule, then you should ALSO specify a time (so that the Schedule knows how long your contractors are tied up for).
For example: TimeAssemble = 12 ContractAssemble = $4.50 When the above filter is run, if the mode is Staff (i.e. the Contract button is not ticked) then the 12 minutes is used and the $4.50 is ignored. If the mode is Contract, the $4.50 is used and the 12 minutes is ignored. However, in this case the 12 minutes is only ignored for the purposes of costing – it may still be used to inform the Schedule of labour durations. This can also apply to labour in the Parts window.

How StairBiz Allocates Overheads

StairBiz views overheads as being the cost of running your business (i.e. expenses) EXCEPT FOR: • the cost of materials • all costs for all labour directly associated with manufacture, delivery and installation of stairs (including overtime, holiday pay, sick leave, superannuation, tax, subcontract and contract payments etc.) • (optionally, but recommended) a portion of the costs associated with your truck(s) – the remaining portion being set on a job-by-job basis in the Quote Calculation window for the job. Overheads would include sales, administration or management labour costs, leasing, depreciation, rent on premises (or the opportunity cost thereof if you own your own premises) telephone and electricity, stationery, accounting, legal coats etc. etc. The best way to determine your company’s overheads is to check your last annual tax return; get total expenditure and exclude those materials and labour items indicated above. Your overheads are set in the Miscellaneous Defaults window.

Using overheads to go broke:

The most common method of allocating overheads is to calculate (from last year’s figures) the percentage of total overheads to total labour and materials, then apply that percentage to individual jobs. Before we talk about how StairBiz can allocate overheads, consider the following (admittedly extreme) scenario: You have a business manufacturing mouse traps. You have two models – one that uses a steel latch mechanism and one that use a titanium latch mechanism (each of which you buy in, complete, from another manufacturer). The steel mechanism costs you $1.00 and the titanium mechanism costs you $99.00. Labour to make either model is $1.00 (you simply screw the latch to the wooden base which, for the purposes of the exercise, we’ll pretend costs you nothing – you steal them from the scrap bin of the stair manufacturer next door). The total cost of labour and materials for the steel model is $2.00. The total cost of labour and materials for the titanium model is $100.00. You have set your total overheads at 25% of your total labour and materials (based on last year’s accounting figures). Overhead allocation for the steel model is 25% of $2.00 = 50c, giving a total cost of $2.50. Overhead allocation for the titanium model is 25% of $100.00 = $25, giving a total cost of $125.00. There are two questions:

1. Did you really use 50 times more of your company’s overheads to make the titanium model? (No, in fact you used about the same.)
2. Will you be able to sell any titanium models at $125 when the market is supplying them for $110, more accurately reflecting the overheads reality? (Probably not.) Note that in the above scenario you will probably sell heaps of the steel models, because a 50c overhead allocation hugely underestimates the manufacturing reality. You will also go broke. The similarity between the above mouse trap scenario and your own business is that there are timbers that might be five times more expensive than others, but you are not necessarily using five times more overheads to manufacture stairs made from them. At the end of the day all overheads need to be allocated across all mouse traps, but it needs to happen in a way that reflects manufacturing and market reality. The alternative is to reduce the importance (weighting) of materials relative to the labour - Scenario B (below) as opposed to Scenario A (below). Note that if you choose to make more PROFIT on certain jobs, that’s a different discussion (and should be dealt with in the profits allocation) – in the discussion on overheads, we are concerned only with the COST of jobs.

Two Scenarios:

StairBiz needs to know your overheads to calculate an appropriate amount to add to each job, as follows: Imagine the following scenarios: Scenario A: Materials Factor as % = 100

1. You have designed a job and the labour and materials for the job total $1,000.
2. Your overheads are $12,000 for the period (see Miscellaneous Defaults window).
3. For the period (see Miscellaneous Defaults window) your total labour is $10,000 and total materials is $20,000 (so total labour and materials are $30,000). StairBiz calculates that this job’s labour and materials ($1,000) is 3.4% of total jobs for the period ($30,000), so that 3.4% of your overheads of $12,000 should be allocated to this job. The amount allocated would be $408. Scenario B: Materials Factor as % = 50
4. You have designed a job and the labour is $500 and materials is $800.
5. Your overheads are $12,000 for the period (see Miscellaneous Defaults window).
6. For the period (see Miscellaneous Defaults window) your total labour is $10,000 and total materials is $20,000 (so total labour and materials are $30,000). StairBiz will use 100% of the labour from this job ($500) and 50% of the materials ($400) to get a total NOMINAL labour and materials for the job of $900. StairBiz will use 100% of the Total Labour for the period ($10,000) and 50% of the Total Materials for the period ($10,000) to get a total NOMINAL labour and materials for the period of $20,000. StairBiz then calculates that this job (nominal $900) is 4.5% of total jobs for the period (nominal $20,000), so that 4.5% of your overheads of $12,000 should be allocated to this job. The amount allocated would be $540.

These calculations and allocation is done in the Quote Calculation window. Note that there are ways to omit certain categories of materials and/or labour for the purposes of calculating overhead (see Miscellaneous Defaults window/ Applies To). See the Quote Calculation window for a breakdown of the actual Overheads calculation.

Blank Items, Parts & Line Items

The following is only applicable to the Estimate module. Items in the Bill Of Materials of a job can be blank items, parts or both. A recap on the difference between a blank item and a part … In the following discussion, in relation to a style, we will refer to the Blank options or Part options for that style. These refer to the option buttons shown in the component’s Style window (i.e. the three blank options which determine that the component is a blank, or the two part options that determine that the component is a part). Blank items are blank pieces of wood pulled from your rack, cut to length, and (if appropriate) profiled either by staff or by contract. There is only one way a blank item can show up in the Bill Of Materials for a job – a style selected in the Components window of the job has one of the three Blank option buttons selected. Parts are items from your Parts window. There are two ways a part can show up in the Bill Of Materials for a job:

1. A style selected in the Components window has the Part Is … option selected.
2. A part filter has specified it (i.e. a part filter created in the Part Filters window and selected in the Components window of a job has found a “hit” and specified the part. See Parts and Labour filters). Additionally, both blank items and parts may be created manually as loose items in the Materials window.

Various approaches to specifying components:

All Blank items

If you take all your timber from the rack, then trim, mould or turn the components from these blanks, all your styles (in their Styles window) would have one of the three Blank options set, so no parts would be specified by any of your styles. If you did not create any part filters (in the Part Filters window) or select any of those filters (in the Components window of a job), no parts would be specified by filters. Therefore only blank items (no parts) would show up in your Bill Of Materials for the job.

All Parts

If all styles (in their Styles window) have one of the two Part options set, then no blanks are used. Either StairBiz specifies the part (if the Part Is … option is set) or you specify it according to your part filters (if the Part From Filters option is set). Therefore only parts (no blank items) would show up in your Bill Of Materials for the job.

Parts and Blank items

Generally most companies use a combination of the above methods. For example they could use balustrading components which they buy in pre-profiled (parts), and treads, strings etc. from the rack (blank items). Additionally they may have part filters specify hardware (handrail bolts etc.) – this is the only way to specify hardware (with the exception of wallbrackets).

Line items

Line items may also show up in the BOM. A line item is neither a blank item nor a part, but rather something a little less tangible. For example, some clients price stairs based on a certain price per tread/rise/string combination. This tread/rise/string combination could be generated in the part filter as a line item (it doesn’t exist in your parts window). Line items are more about pricing than they are about specifying materials.

Bill of Materials (BOM)

The following is only applicable to the Estimate module. Including or excluding items with $0.00 value

Materials Cost sheet

If you don’t want to see materials or parts with a zero dollar value in the Materials Cost sheet, in the Miscellaneous Defaults window (View Sheets category), set “Mat Cost; Don’t Show $0.00 Items” to Y (yes).

Custom Sheet BOM

When you have BOM lists in Custom Sheets, you can choose whether that BOM shows only items with a non-zero dollar value, only items with a zero dollar value, or all items. In the Custom Editor open the sheet containing the BOM list. Select “BOM List Type” from the File menu, and set to: 1= show only items with non-zero $; 2= show only items with zero $; 0= show all items. This may be useful where your job pricing is not based directly on the components in the stair, in which case your pricing items can be listed separately from your component items. It can only apply on a whole-sheet basis (i.e. you can’t have different types of BOM lists within the one custom sheet).

Export to Excel

Various View sheets (Mat Cost, Mat List, BOM and Labour Cost) can be exported to Excel - click the ‘Export’ button at the bottom/right of the sheet. When you open the Excel spreadsheet, if you get a message that starts "The file you are trying to open", simply click "Yes" to continue opening it.

Pricing Refresh

All prices, and the settings that impact pricing, are saved with each job (with the exception of parts and labour filters, where only the names of the current filters are saved with each job, not the filters themselves). There may be times when you create and save a job, then change the pricing in your defaults, and then want that job to refresh to those defaults. For this purpose there is a "Refresh" button in both the Components window and the Labour Cost window of the job. There are also times when you open an old job, then do a "Save As" to create a new job, or you create a new job from a Job Template (both from the project menu). Once again, the prices held in that job may be old (i.e. you may have changed your pricing since the original job or template was saved). In both cases, on creating the duplicate job, you will be asked whether you want to refresh all pricing using you current Defaults. If you say yes, it is the same as clicking the "Refresh" button in both the Components window and the Labour window of the job.

Filter check

On opening a job, StairBiz will check to see that all filters current at the time the job was saved are still available; see Chapter 22 : Filter check on opening job

What is refreshed?

From the Components window

It refreshes the properties of the styles selected in your Components window (i.e. everything you see when you open the Style window), the properties and prices of any timbers selected, the values and wastage in the Extra Lengths window, the settings used to calculate overheads, and your ‘Applies To’ settings (see the ‘Applies To’ category of the Defaults/Miscellaneous window).. It does not affect the Part filters, which are never saved with the job so are always the most current regardless. It does not change your Part filter selections.

From the Labour Cost window

It refreshes all values in the Labour Cost window to those from your current Defaults database (e.g. labour rates, minimum charges etc.). It does not affect the Labour filters, which are never saved with the job so are always the most current regardless. It does not change your labour filter selections. It does not impact your loose items.

From "Save As" or Job Template

Clicking "Yes" to the prompt will refresh all the above.

Quote Locked

Note that if you have the Quote Calculation window in Lock mode, you may need to (even just temporarily) un-tick this mode to regenerate the quotation based on the refreshed values..