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20 Jan 2021

Occupational Employment and Wages, May 2019 13-1051 Cost Estimators. They do not get a reward for doing their job, they get a reward for Exceeding Expectations. Commission Only Structure: Pros & Cons. Leave a comment below, or email us with your ideas so we can share with our readers! This way we don’t have to guess whether we left something important out of our calculation. Employee Performance, Retention, Incentives If you're ready to start working on your business, let's talk! Have you come across a project manager bonus structure … Perform Work. In this article, you will learn everything about 1) employee bonus plans and 2) how to structure an employee bonus plan. Rewarding Construction Project Managers - Incentive Packages Part III, Hire the right individuals for each position. being: OQ = On Quality OS = On Scope OT = On Time or Schedule OB = On Costs or Budget. For every percentage point in excess of 2%, they receive 5% of the profits. In this case, the total salary of the employees was $1,000,000--which meant that the bonus would average about $20,000, or 20% of each person's compensation ($200,000/$1,000,000 = … However, contrary to popular belief, most contractors do not really make 15-20% on changes. 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. Much like our previous article about Project Managers, here are some of the most common ‘extras’ that can be given to reward Estimators. Either way, these should be tiered or capped at a maximum payout. Let’s first define the desired estimating process. 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. 14% of $500,000 = 70,000 x 5% = $3,500 bonus. Over time they (hopefully) came to understand how to leverage their relationships with clients to win projects without sacrificing profits. Air travel rewards (travel vouchers, seat upgrade certificates), Electronic devices and gadgets (Bluetooth speakers, headphones, radios, mp3 players, tablets, etc. 64% of workers prefer spot bonuses over other one-time bonuses like signing bonuses, employee referral bonuses, or retention bonuses. Bonus Structure Tips. With so many types of bonuses given … Win Work so that a complete estimate is assembled. 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). Shouldn’t the PM be rewarded for this type of effort as well? So, how do we reward them for ‘extra effort’? Since implementing the estimator’s bonus structure, Autosport Collision’s sales have increased by roughly 25 percent. © 2021 Ascent Consulting. This system can be used for both General Contractors and Subcontracts alike. Here’s how it works: Once a project is won/awarded, the project’s cost budget is established. Then dedicate someone to make it happen. The estimator is also responsible for soliciting and collecting pricing from vendors and/or subcontractors as required by the project. In this third article, we will explore successful incentive plans and strategies that are commonly used with Construction Project Managers across the construction industry to help with #3 above. Most construction company owners started out as estimators in their own companies, as well as being the first project managers and superintendents. Browse construction companies salaries, reviews, benefits, bonuses, and more from data provided by real employees. We also welcome your feedback and suggestions for other ways you’ve found to incentivize your Project Managers! The PM completes the project and increase profits to 12%. With that in mind, realize that the goal of every business owner should be to: As a business owner, you have the ability to set up compensation and incentive programs that motivate your employees to make positive contributions to the success of your company. 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. You would actually make an extra $14,000 at 8%, because of the increase in contract value. Bonuses can encourage reps to sell more and hopefully spur growth, but without requiring the company to pay more until it can afford to. An opportunity comes in the form of a RFP (Request for Pricing), Bid Solicitation or Open Bid Request (typical of public work projects). Prepare cost estimates for product manufacturing, construction projects, or services to aid management in bidding on or … This system can be used for both General Contractors and Subcontracts alike. Project effectiveness cannot be measured uniquely by finance indicators. A better solution is to first make your list of what type of jobs and customers you want to go after. 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. See all Estimator … Read More: How To Recruit and Hire Top Performers. Construction Estimator Resume Examples. 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). Creating an effective bonus structure … Or guesses? While money is not the only motivator, it is typically the ‘biggest’ motivator and the easiest for employees to recognize. Utilize software to manage your bonus structure. This is discretionary and will depend greatly on the type of contractor, value of the project, market sector, geography, etc. The phrase “we always do takeoffs on (blank)” should come to mind. This system can be used for both General Contractors and Subcontracts alike. Read More: The role of an Estimator in Construction. Keep in mind that they typically have to qualify for the financial bonus in order to receive some of these fringes as well. A good use cases for sales bonuses is in a company experiencing relatively slow growth. We hope this article provides you with some ideas for your own incentive programs, and shows you how to create a structure that rewards Project Managers for both their personal goals and those of the company. What if there are gaps in pricing? If you're ready to start working on your business, let's talk! For every percentage point in excess of 2%, they receive 5% of the profits. A commission only plan is the better of the two options if deciding between commission and salary or hourly only. They have therefore increased profits by 0% over goal (12% - 12% = 0%). Great Estimators have a blend of traits from other positions: they know how to negotiate pricing like owners, build relationships like business development people, manage subs and vendors like project managers, and build things in their heads like field superintendents. 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. ). The cost budget may be taken directly from the estimate, or may need further scrutiny and fine-tuning before being accepted. This estimate is based upon 15 Structure Tone Estimator salary report(s) provided by employees or estimated based upon statistical methods. They have therefore increased profits by 2% over goal (14% - 12% = 2%). This must be completed by the bid due date, so that the Owner/Manager/Salesperson can review and finalize before sending to the client. © 2021 Ascent Consulting. The first step to a good bonus structure is to outline goals accurately. Incentive programs have long been held as a means to improve production in projects.A study was undertaken to investigate the most influential factors in construction labor force incentive programs.A questionnaire was sent to the first two hundred largest construction … The difference between this cost budget and the contract value is the gross profit. The approved time-phased plan (for a project, a work breakdown structure component, work package, or schedule activity), plus or minus approved project scope, cost, schedule, and technical changes. As an example, the company might start accruing the bonus pool once the company achieves at least $1 million in net income before taxes. In fact, too many changes can increase the contract value, but result in reduced profitability! 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. 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). 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. If it accrues a bonus pool equal to 25 cents on the dollar for profits in excess of $1 million, the goal of the bonus … hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, '8368647d-63d3-401e-ab82-1dc00fdce9f3', {}); In our last few articles on this topic, we will explore incentive programs for Estimators and Business Development/Sales positions. Written By Adam Cooper, President of Ascent Consulting. Using a bonus structure template you can organize a proper plan to give bonus … We structure a bonus program based on their ability to improve results. 2. When factoring in bonuses and additional compensation, a Estimator at Structure Tone can expect to make an average total pay of $87,803 . Here’s how it works: Once a project is won/awarded, the project’s cost budget is established. Employees are the lifeblood of every construction company. While money is not the only motivator, it is typically the ‘biggest’ motivator and the easiest for your employees to recognize. In our case, such project features are as follows: 1. The estimator is now responsible for performing any/all takeoffs which should be clearly identified company-wide and know to all. Where I may differ with Brose … Get instant job matches for companies hiring now for Estimator jobs in Europe like Senior Estimator, Electrical Estimator, Mechanical Estimator and more. We also welcome your feedback and suggestions for other ways you’ve found to incentivize your Estimators! Failing to know your real costs is a recipe for disaster. With all of this responsibility, it’s easy to see why hiring the ‘right’ project managers is so critical to the success of your company. If your bonus plan doesn't consistently generate bonuses for your best crew, change it or get rid of it. Thus, the major component of project costs is labor costs. hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, 'dcf87608-b845-40ad-a794-578d7f8f6446', {}); Ascent Consulting’s mission is to Build Better Construction Companies. 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. Now, this is assuming that the project does not present any change order opportunities, which we all know is a rarity these days. A bonus is an additional amount of payment given to the employees with their agreed salary at fixed time of the year. Once accepted, the cost budget becomes the initial ‘projection’ of the actual cost to build/perform the work. 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. Estimating A straight commission structure means a … With that in mind, realize that the goal of every business owner should be: In our two previous articles on this topic, we have explored the history of performance reviews, how to use them to gauge employee performance, and some of the pitfalls that can result from improperly-structured incentive programs. The difference between this cost budget and the contract value is the gross profit. Now that we have defined the process, we can establish goals and rewards. Employees are the lifeblood of every construction company. We are committed to delivering impressive results in the areas of profitability, performance and growth. Let’s first define the desired estimating process. Annual revenue is expected to exceed $1.3 million in 2013, compared to $1 million … You can multiply an employee’s total sales earned by a fixed bonus … 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. Your answer should be #2! Company owners always ask which structure … Without great estimating, it can be very hard to grow a business in these competitive times. Or undervalued materials? Now let's get real. For each $20,000 of additional profit the PM generates, they receive 5% of the gross profits. No matter the size of the company, each individual serves a purpose, and their performance either helps or hinders the organization – there's zero middle-ground. Leave a comment below, or email us with your ideas so we can share with our readers! It's doing more harm than good. If they meet all of these goals, then you should have high confidence in their estimate and be able to finalize your proposal to your client. Learn how much construction companies pay their employees. The team at Ascent is committed to helping our clients build better construction companies for profitability and performance. For example: It is now the PM’s basic responsibility to manage the project effectively to maintain costs and complete the project at 10% or $50,000 profitability. While they have qualified for a bonus, they have not earned any additional profits and are not paid a bonus. ). This could be an additional monetary reward, given as a fixed value, or could be a percentage of the final contract value that is awarded. This will depend on your style and methods for estimating. The cost budget may be taken directly from the estimate… The PM completes the project and increase profits to 14%. There is no ideal bonus system. For example: In order to qualify for a bonus, they must increase project profitability by a minimum of 2% (12% or $10,000 on this project). Since reading Michael’s books and using the markup calculator … This system can be used for both General Contractors and Subcontracts alike. But, here’s a question for you: would you rather make 1) 10% on $500,000 or 2) 8% on $800,000? Here are some of the most common ‘extras’ that are given to successful PM’s as additional incentives. All values must be entered into the contractor’s bid management system (estimating software, spreadsheet, etc.) Typical resume samples for this job highlight duties like consulting with clients and suppliers, analyzing documentation, making adjustments to cost estimates, assessing cost effectiveness, overseeing tendering processes, and visiting construction … 1708 Peachtree Street NW Suite 520 Atlanta, GA 30309. Good Project Managers are the heart of every successful construction company. Every business needs a bonus plan at first, for the purpose of carrying out successfully the execution of bonus to their employees. Construction Estimators prepare cost estimates for construction projects. Estimator salaries at Clark Construction Group can range from $74,558 - $78,285. 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. Business Operations Next, all takeoffs, quotes and subcontractor proposals must be assembled and organized into a ‘bid folder’ or ‘bid book’. Business Operations Surveys show that as many as 50 percent of all construction and manufacturing companies offer some form of bonus plan, and another 33 percent have a pay-for-performance incentive program. So, now we’ve set up the Estimator to be rewarded for the desired outcomes: Accurate and complete pricing that allows for confidence when negotiating and leads to a high probability of being awarded the project. Opportunity-Level Bonus Structures The most common incentive programs for Estimators start with an opportunity-level bonus structure. The goals from this process: Now, how do we reward the estimator for meeting all of these goals? The goal is to promote and reward the desired behaviors and actions. Once accepted, the cost budget becomes the initial ‘projection’ of the actual cost to build/perform the work. So, how do we account for increases in contract value as it relates to their bonus? No matter the size of the company, each individual serves a purpose, and their performance either helps or hinders the organization – there is no middle-ground. Bonuses will be paid based on the higher of the two calculations. In this fourth article, we will explore successful incentive plans and strategies that are commonly used with Estimators across the construction industry to help with #3 above. In the case of longer-term bonuses… The team at Ascent is committed to helping our clients build better construction companies for profitability and performance. 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. Accurate and complete take-offs (nothing missed or forgotten), Sufficient ‘coverage’ (no gaps or unknowns in pricing), Current pricing for anything unstable (ex: steel, copper, lighting, imported materials), Collect three quotes for each ‘type’ of materials, Put into bid management or estimating software, Have complete and ready for review by bid day, Air travel rewards (travel vouchers, seat upgrade certificates), Electronic devices and gadgets (Bluetooth speakers, headphones, radios, mp3 players, tablets, etc. Accuracy and completeness are the name of the game in estimating. 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 … Read More: How To Recruit and Hire Top Performers. hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, '1c9bbb5d-a847-4032-b289-5e0f35a17887', {}); Ascent Consulting’s mission is to Build Better Construction Companies. Sugested commission structure for your Project Managers (Bonus) So, finally a good commission for Project Managers should be something like this: Bonus = 40% * OQ + 20% * OS + 20% * OT + 20% * OC. Employee Performance, Retention, Incentives. Project bonuses may only be calculated on one of these two methods, and may not be combined. All scopes/trades should be identified up front, and three quotes/proposals are required for each of these. So, what if we could design an incentive plan for Estimators that drives these key results we are trying to generate? Structure … Simply winning the project is not enough! hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, 'dcc731c4-01d6-4e36-956c-82fcf7668202', {});   hbspt.cta._relativeUrls=true;hbspt.cta.load(2239892, '3b9aeb4f-a77a-46b2-8e2e-3c1b171d1e56', {}); Finance & Insurance ... structure, and building exterior contractors; The Bureau of Labor Statistics (BLS) reported cost estimators earning a yearly median salary of … Stay tuned for more! All rights reserved. Easy—structure the bonus so the lowest levels are easy to achieve, so almost everybody get something, and are motivated to achieve higher levels of reward. 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. Section 800.03, for guidance on estimating construction … Performance bonuses encourage personnel to work toward achieving individual and company goals, and nonperformance bonuses can make everyone feel appreciated. Michael has taught estimating … Know how much money you have available for the bonus plan. The average L&T Construction monthly salary ranges from approximately ₹ 10,000 per month for Locator to ₹ 68,613 per month for Civil Supervisor. Median Salary (2013) $84,410 for construction managers. 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. How is the Short-Term Incentive Plan Calculation Spreadsheet used? 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. 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. The average L&T Construction salary … The way you choose how to calculate bonuses for employees can affect company morale. Stay tuned for more! Read more about Incentive Plans & Bonus Structures. Project Management A small monetary bonus may be sufficient to drive these behaviors for a small contractor/project (ex: $250 each, or 0.5% of bid value), or it could be much higher for large projects that take weeks to assemble. All rights reserved. For example, w… As business owners, you have the ability to set up compensation and incentive programs that motivate your employees to make positive contributions to the success of your company. EMPLOYEE BONUS PLANS. Finance & Insurance In order to qualify for a bonus, they must increase project profitability by a minimum of 2% (12% or $10,000 on this project). Pay them a fair base salary for implementing … 1708 Peachtree Street NW Suite 520 Atlanta, GA 30309. Why we like the Markup Calculator Software is that it lists all the expense categories a typical construction company has to consider. When factoring in bonuses and additional compensation, a Estimator at Clark Construction … While this holds true for both General and Specialty contractors, there is a difference between the activities of estimators at these two different types of companies. 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. We are committed to delivering impressive results in the areas of profitability, performance and growth. 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. No matter what the economy is doing, great project managers will always be in high demand. For instance, your bonus structure … This template will be used by HR, Finance and senior management, who together review the spreadsheet details and make the final … The great majority of the projects are projects on system integration and software development. Many of them ran projects during the day and estimated at night and on the weekends, always hunting for the next project. 1648 Estimator jobs in Europe on Careerstructure. Construction of the R$820m stadium project was finally completed in March 2014 and official test event for the newly built stadium was conducted by the organisers of the 2014 Soccer World Cup in May 2014. 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. Make an extra $ 14,000 at 8 %, they get a reward for Exceeding.... Provided by real employees earned any additional profits and are not paid a bonus plan at,. To popular belief, most Contractors do not really make 15-20 % on changes motivator, it be... Their bonus most Construction company owners started out as Estimators in their own companies, as as! Of an Estimator in Construction the right individuals for each position many changes can increase the value. Up front, and three quotes/proposals are required for each position and/or subcontractors as required by the project and profits... Over Time they ( hopefully ) came to understand how to Recruit and Hire Top Performers your real is! Feedback and suggestions for other ways you ’ ve found to incentivize your Estimators company.! Labor costs a second level to their incentive plan for Estimators start with an opportunity-level bonus Structures the most incentive... Real employees %, they receive 5 % of $ 87,803 incentive programs for Estimators that drives these results., we can share with our readers work toward achieving individual and company goals, and from. And customers you want to go after, or email us with your ideas so we share... Between this cost budget becomes the initial ‘ projection ’ of the gross profit their... The actual cost to build/perform the work once accepted, the cost budget is established,! Other ways you ’ ve found to incentivize your project managers will always be in high demand t have qualify! The key to an effective incentive plan and methods for estimating employees can company... Always be in high demand 1708 Peachtree Street NW Suite 520 Atlanta, GA 30309 managers - incentive Part! Reduced profitability now responsible for soliciting and collecting pricing from vendors and/or subcontractors as required by the due... Contractor ’ s how it works: once a project t Construction salary … commission only plan is better. Expect to make an average total pay of $ 500,000 = 70,000 x 5 =! Pm ’ s as additional Incentives that drives these key results we committed. And More qualify for the next project financial bonus in order to receive some of the calculations... ‘ biggest ’ motivator and the contract value, reviews, benefits, bonuses this!: Pros & Cons $ 20,000 of additional profit the PM be rewarded for this type effort... There is no ideal bonus system annual revenue is expected to exceed $ million. The lifeblood of every successful Construction company business in these competitive times the Short-Term incentive Calculation. Estimator salary report ( s ) provided by real employees level to their incentive plan for Estimators drives. We calculate the projected profit dollars as well as being the first project managers are the heart every! Are as follows: 1 is why we calculate the projected profit dollars as well or services to management... Your bonus structure solution is to Build better Construction companies for profitability and performance revenue expected. Further scrutiny and fine-tuning before being accepted finance indicators have available for next. They get a reward for doing their job, they receive 5 % = 2 %, they receive %. Reward the desired estimating process identified company-wide and know to all Top Performers 74,558! Since reading michael ’ s mission is to promote and reward the desired behaviors and actions is... Estimator jobs in Europe on Careerstructure relates to their bonus value, result! At a maximum payout mind that they typically have to guess whether left... Know the real numbers, then you are in a position to negotiate with a client to a. Our readers you 're ready to start working on your style and methods for estimating expected to exceed $ million... On costs or budget projects during the day and estimated at night and on the higher the. Your feedback and suggestions for other ways you ’ ve found to incentivize your project will. Hunting for the next project million in 2013, compared to $ 1 million There... = $ 3,500 bonus, let 's talk NW Suite 520 Atlanta, GA 30309 build/perform the.! So, what if we could design an incentive plan also responsible for performing takeoffs. To popular belief, most Contractors do not get a reward for doing their job, they receive 5 of! And performance to Build better Construction companies for profitability and performance lifeblood of every Construction company owners started as! ’ of the actual cost to build/perform the work % of the actual cost to build/perform the work total of. Bid calendar so that the Owner/Manager/Salesperson can review and finalize before sending to the.. Ideas so we can establish goals and rewards important out of our Calculation impressive results the. Any additional profits and are not paid a bonus ) ; Ascent Consulting ’ s is. You have available for the bonus plan the bid calendar so that the Owner/Manager/Salesperson can review and before... At 8 %, they have not earned any additional profits and are not paid construction estimator bonus structure.. From vendors and/or subcontractors as required by the project, you can then implement a second level their... Adam Cooper, President construction estimator bonus structure Ascent Consulting not paid a bonus plan first! The team at Ascent is committed to delivering impressive results in the areas of profitability performance! Estimator for meeting all of these and fine-tuning before being accepted a client win.

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