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Repair or Replace? Part 2: Make your best bid

News | March 1, 2014 | By:

Don’t undersell the quality of your work in effort to win the job.

0314_f3_quotesYou’ve just landed a dozen bid requests for repair or replacement projects. Based on your estimate, it is expected that these jobs will yield a healthy profit. But how will you ensure that this healthy profit will materialize? Or that you’ve estimated or quoted correctly? How will you know if the actual costs being expended on the project are going to positively impact your bottom line?

There are key evaluations every fabricator needs to make when quoting and estimating repair or replacement bids, and while everyone handles it a bit differently, most strive for the utmost accuracy for themselves and their customers.

Charlene Clark, IFM, of Signature CanvasMakers in Hampton, Va., estimates repairs and quotes replacements. For Clark, labor is almost always the biggest factor in a repair job.

“We will also estimate repairs on the high end; we find it’s better to ‘pleasantly surprise’ the customer with a lower repair bill than the alternative,” Clark says. “Our goal is always the potential long-term business from the customer. We also prepare the customer for unanticipated discoveries, such as the backing board on a foaming pad found rotten upon disassembly, which could increase the cost.”

For Vonnie Hummert, owner of CYA Canvas in Helena, Mont., when estimating a potential repair job she asks a key question:

Will the repair restore serviceability and value proportionate to the cost of the repair versus applying the cost of the repair toward a new product?

For replacement jobs, Hummert never presumes to simply replicate a replacement top. That’s because fabrication techniques evolve and customers’ needs and expectations change.

“We always start from the beginning, asking the proper questions to determine the best fabrics and design to make the canvas work for the way the customer uses his boat,” Hummert says. “We are the experts and our job is to guide the customer through the design process so he can make an informed decision to get the best products for his needs. Even the most experienced boaters seldom have more than a superficial knowledge of the fabrics and fittings available and how minor design features can enhance their boating comfort and enjoyment.”

When quoting or estimating repair and replacement bids, Jay Hanks, owner of Allerton Harbor Canvas in Hull, Mass., makes sure repairs are charged by the actual hours and materials are written on the estimate. Allerton Harbor charges by the hour plus materials, including travel, removal and installation, if needed.

“The MFA standards [Editor’s note: See the 2014 MFA Time Standards Manual in the January/February issue] serve as a guide, but I find some of the times are light on the hours,” Hanks says. “In the case of cushions, we also include prep needed to take apart the cushions plus patterning time.”

For Hummert, adhering to the MFA time standards can help her avoid overbooking.  “If we have any concern that we could run into problems, we schedule an extra time buffer for the job,” Hummert says. “This can always be filled in with repairs if the additional time is not needed.  But we use the MFA time standards for all new work estimating. We are faster on some things, slower on others, but it gives us a benchmark to strive for.  The time standards also streamline our estimate process.”.

Challenges aplenty

Experts agree that one of the most challenging aspects of quoting and estimating bids is calculating the correct number of hours a job will take. Allerton Harbor Canvas uses QuickBooks items that are assigned with a description and cost.

“On our estimates, the labor hours and materials are listed,” Hanks says. “We break out all costs similar to an auto repair shop estimate showing labor and materials, and any other notes needed. This way, customers can see all the costs.” Hanks explains to his customers that removals, installs, travel and boat accessibility will be charged by the actual hours.

“We also try and explain all the variables—current work load, unforeseen delays, location, availability and how the weather impacts our schedules,” Hanks says. “We do stress that we will make every effort to complete their work on time.”

By referring to the MFA time standards and adjusting them to Afton (Minnesota) Marina’s particular fabrication methods, Tom Matson has come up with a fairly accurate method for estimating. “We can also track how much time a particular item has taken, and we can then adjust our time estimate accordingly,” he says.

For Hummert, giving adequate information without overwhelming her customer with too many choices is also challenging. “I can show the customer 10 colors in three fabrics and my competitor shows him two colors and gets the work,” Hummert says. “I stick with the MFA time standards and my portfolio of boats similar to my customer’s. We have far less variety of size and types of boats than our marine colleagues, so it should be easy and quick to select fabric.  We also have fewer design options on the smaller boats.”
Scheduling and deadlines can offer their own set of challenges—especially during the height of the season.

“In our shop, it is usually ‘first come, first served,’ Afton Marina’s Matson says. “We will, however, adjust our schedule for last-minute repairs, where a client might need a minor repair just to get him by for the weekend. Occasionally, we will ‘triage’ our projects, and determine who might have the greater need. We usually try to accommodate our clients as best we can.”

At Signature CanvasMakers they have one person who, at certain times of the year, is dedicated to completing repairs, which allows the shop to provide a quick turnaround of one week or less. “New or replacement work, however, has a much longer lead time as they require a much lengthier process, including patterning, fabrication, and installation,” Clark says. “These jobs can be scheduled out on average from six to 12 weeks in advance, depending on the season. Once again, we are always up front with our customers in terms of scheduling. We believe in setting realistic expectations and striving to exceed them.”

For many shops, establishing the costs of the repair and replacement requires two different evaluation processes. For Clark, repairs are much more straightforward. “We have set prices for zipper and glass replacements, but things like restitching, patching and modifications are based on a per-hour shop rate,” Clark says. “With replacements, there are so many variables involved in quoting. Two boats may be the same make/model, but the expectations of the customers can be very different.” As a custom shop, Signature CanvasMakers works with every customer individually to determine their needs, wants and expectations.

“We do utilize the MFA time standards as a reference for determining labor, but we also need to take into account variables that could add to the time required to complete the job from both a pattern and fabrication standpoint,” Clark says. “Selection of materials can also change the quote.”

Competing bids

So how do fabricators handle situations in which the customer approaches them with competing bids?

“We ask to review the bid to assess an accurate comparison of the work as to materials, design and components,” Hummert says. “We are able to show the customer exactly where the cost differences are so he can make an informed decision. We also point out the importance of knowing the experience level and competence of the fabricator who will do the actual work. We only ask the customer if he knows who will be performing the work. Criticizing competition always says more about your character than your competitor’s ability—never do it.”

For Hanks, the competitive estimate must be “apples to apples.” “If you are quoting on the same exact specs, a great response I heard at the MFA convention is, ‘Well, they must know the value of their work,’ which usually gets the customer thinking they may not be getting the best value for their money from the competitor,” he says.

Indeed, Clark acknowledges that if the competing quote is from a shop whose quality, service and materials are comparable to her shop’s, the pricing is generally very close and they will match the bid.

“However, if the price difference is significant, we will always ask the customer to compare the materials included in the quote,” Clark says. “Quite often, a significant price discrepancy will reflect variations in the quality of the materials being used on the job—for example, .030 rolled glass versus .040 pressed polish sheet glass. We will not compromise our reputation, quality and service standards to meet a price point by utilizing inferior products.”

Hanks sometimes points out that he wants to be fair to them as well as to himself. “Importantly you may not win every bid. If you do, your pricing or calculations may not be correct,” Hanks says. “A good check is to evaluate the hours worked versus the estimated hours on a regular basis.”

Depending on his workload, Matson may adjust their prices slightly when handed a competing bid, but he won’t match their competitors’ prices.

“We know how much we need to make a profit,” Matson says. “We have a great reputation for quality work, so we usually hear ‘you guys are not the cheapest, but you’re the best,’ and we can exceed our clients’ expectations.”

Indeed, Hummert never lowers her price when a customer comes in with a competing bid because she already knows he wants her to do the work. “At that point, he is just trying to get a better deal,” Hummert says. “Otherwise he would have signed with the competitor.”

Of course, some customers are all about the lowest bid and nothing you say or do will sway them. “Fortunately, they are few,” Hummert says. “For the ones who try to get you to lower your price, start going through your bid and subtracting work to reduce the cost. Once, Hummert had a customer decide to order the aft curtain the following season rather than go with the competitor for less because he decided there was more value in Hummert’s product. “Was my canvas actually that much better than my competitor?” Hummert says. “Maybe yes, maybe no, but my customer thought so.”

Common mistakes

One of the most common mistakes fabricators make when quoting and estimating work involves offering no explanation of the work being performed. “This leads to misunderstandings of what work and materials are needed for the project,” Hanks says. “Another common mistake is not including variables such as travel, waiting for launch service, removing rusted fasteners and any time-consuming process that requires at least a warning on their estimates. It’s all about chargeable time and how it can be covered honesty and professionally.”

Clark sees others in the industry making an egregious mistake when quoting below market value and selling themselves (and the rest of the industry players) short. “We operate with the philosophy that some jobs belong in someone else’s shop,” Clark says.

Not knowing your current material costs and availability is another trap to avoid. “Maintaining contact with your suppliers is essential,” Hummert says. “We have a short boating season, so delays can kill business. Having to call your customer to tell them the job will cost more because you misquoted pricing or availability deteriorates confidence in you and opens the door for them to look more critically at your performance. You may think you are building a customer base one at a time, but it becomes exponential the longer you are in business.”

Maura Keller is a freelance writer from Plymouth, Minn.

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