Quotes, Quotes and more Quotes

[bce123]

I cannot spend my time estimating how much time my vendor is going to charge to engineering, or building panels, or for that matter, anything near the pricing they get.

While I do that for projects we do in house, I typically don't do systems of 30 drives, 10 PLC racks, a couple hundred starters, breakers, and all other ancillary equipment. I give a description of what a line should do, our standard electrical specification, and see what comes back.

ok if you know how many drives plcs and functions. how long does it take to enter it in to a spread sheet. dont you have to you have to know what you want to get a quote on it anyway?

 

[uptown47]

I used to work for myself and, although I also share peoples frustration with quotes when you don't get a PO for 6 months, I also found them quite a good tool for myself in order to get a real perspective on the job.

By making a quote for a customer it made me stop and think about exactly how I was going to do the job. I used to make 2 documents up, one was the quote for the customer and the other had the same job ref but was "for my eyes only".

This document contained all the info I had thought of regarding how to do the job, stuff I'd need to hire, contractors I might require, photos of the job and area, things I'd need to order in, how long (realistically) it would take me to do the job etc etc.

I found this invaluable if the customer then ordered the job 10 months later. I could reference this document and it would save me re-visiting the customer in order to 'remember' what the job was.

For quoting purposes I just made an excel sheet up that I just had to fill in the blanks ie. What plc they required, how many days onsite / offsite (different rates) etc etc and then the excel sheet spat out the price. I then put on 10% normally for FF (F... Factor) and that was that....

This system wouldn't work for more complex jobs but most of the time it was sufficient. The main thing was that I got something out of the quoting process too, it made me focus on the job and how to do it. This meant that when I did get a PO for a quote I'd done, it came in on-time and on budget.

 

[Clay B.]

Like rdrast I have been on both sides of the fence. Quoting is a nessary evil as far as I am concerned.

When I was on the end user side I used to get al kinds of things quoted. I would tell my vendor when we were trying to get an idea of the cost so they would give us a budgetary number. Then if I could show an ROI on the project and management would want to move forward with the project I would get actual quotes. I had my prefered vendors but I would always shop around. I would guess on average around 40% of my bugetary became projects and around 70% of my "hard" quotes became jobs. The 30% that didn't would be shelved for later dates or scrapped. At the end of the day capex is money available, so alot of factors go into it.


Now on the other side of the fence. I work for a OEM, not a intergrator. We build complete machines not just controls so if we get 15% of our quotes to turn into acual jobs we are real happy. So yes I spend ALOT of time on quotes. Sometimes I will redo the quote several times as the scope of work gets more defined. As I am requoting the job I get a better idea what the customer really needs and wants. This can swing all over the place. Also I can see if I need to include a PITA multiplier.

I have also worked as an intergrator and for intergrators. On that side I would say 30% quote to actual work is the average I have seen. If you get repeat customers then the whole process gets easier but in my opinion you can not use that as the basis for not doing the other ones. That is you cann't if you expect to expand your business.

I guess my point is, don't do a quote expecting the business, do the quote as a way to pass information and expect that sometimes if all the stars are lined up you may get the job. Thats when the fun starts cause now you get to see if you really understand what you quoted.

 

[bce123]

I guess my point is, don't do a quote expecting the business, do the quote as a way to pass information and expect that sometimes if all the stars are lined up you may get the job. Thats when the fun starts cause now you get to see if you really understand what you quoted.

Clay my point is that I have too much work now and dont want to expand. Therefore I dont waste time on quoting that could be used making money! I only give quotes expecting the business!!

 

[geniusintraining]

how long does it take to enter it in to a spread sheet.

I never mix beer and wine


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I guess the whole point..... because I have seen both sides now, the person requesting the quote should tell the vendor 'just for budget' or 'needs to be real'

I know that most need to have a number to get the project approved but they also are the ones to know when the plant manager is blowing smoke and says "get me a quote" knowing very well that the cheap *&(*&)%)$#@! would never spend the money unless the quote came back and said FREE

Just when you spend a few hours working on one and never hear back or ask about it and they say... what project was that, we were never going to do that it was just his dream

 

[bce123]

Its good practice to follow up on all quotes keep this in your data base. Ask questions like how much did the bid go for? if you didnt get it. and who got it? IE: know your competitor. Keep track of all the info you can if your in a compitive market. Thank god I am not anymore!

 

[Clay B.]

I guess the whole point..... because I have seen both sides now, the person requesting the quote should tell the vendor 'just for budget' or 'needs to be real'

I know that most need to have a number to get the project approved but they also are the ones to know when the plant manager is blowing smoke and says "get me a quote" knowing very well that the cheap *&(*&)%)$#@! would never spend the money unless the quote came back and said FREE

General rule I use is if this a new customer then the first quote is always budgetary. Go with you gut and do not get to specific with the details. When/If they come back they should have a more defind scope and you should then start looking at doing a more accurate quote. If they say just requote again without more details, just hit them with the budgetary again.

Also on my budgetary I always go high, in other words I pad the heck out of it. When things get serious it is always easier on your end user to ask for less than more from the bean counters.

In a perfect world people alwys know exactly what they want and need, in reality that rarely happens.

One other thing I used to do alot, I would ask how much they expected to spend on this project. Most medium to large company's have to justify any project with a ROI so they know what thye can spend or expect to spend. If you come in over this then the project is almost always scrapped.

An example I can remeber was on injection mold machines I used to deal with at a previous employer. We knew that a .10 second decrease in cycle time was worth 20,000 to 30,000 anually. So when we did an ROI (our standard ROI was 18 months) that the job could not excede 30,000 to 45,000 depending on the product line per .10th cycle saved. If it was a bit over we may review and try to get "creative" with the numbers but in most cases we would scrap the project before it even stated.

Usually if I gave a bugetary number and heard nothing back I would call and ask, "did I come in to high for your budget". Usually I would then hear how much was the maxium they could spend. Or they would say the project was more than they expected. Your average plant/project engineer has no clue what it costs to build/modify controls. They generally as a rule underestimate it.

Where I am at now we hide part of the contol cost in the mech side because of the fact most end users underestimate the cost of controls.

My pet peeve is when a customer decides that we are to expensive on the controls so they are going to roll their own but want you to basically design it for them free and explain/fix whatever they screw up. This is generally the time I become "unavailable".


Not saying you do Genious, but alot of people forget that unless the project makes money for the end user there really is no point doing it.

 

[Tom Jenkins]

An amazing amount of interest in this topic, and an amazing amount of business naivete.

Every business is different. If you are like Peter and have a well defined niche of technical superiority with a well defined customer base you can afford to treat quotations to customers as a service to them. If you are a panel shop with no particularly unique expertise then you will be out there with the whores and pimps quoting everthing you can and playing percentages. Most businesses fall in between somewhere.

I've been in on the entire process, quoting customers, getting quotes from suppliers, selling, purchasing, and producing. A few comments from my perspective:

Be in it for the long haul. Sometimes you have to go to the dance many times before you get out on the floor. You may not get a PO the first few times, but if it is a good prospect and within your desginated market area keep qouting. Customers need to build confidence in vendors, and that takes time. One thing is sure - you won't get the project if you don't quote. Furhter, you won't be asked to quote the next one if you don't qoute this one.

Quoting is a cost of doing business - just like paying the electric bill. Trim your process to suit your business model and your customers, just like you trim the electric bill as much as you can without trying to work in the dark.

Don't sell yourself short. Price your services to make a good profit. If that is more than the market will bear then change your services or change your market. If a "prospect" is obvioulsy just using you to keep their main vendor honest explain to him openly that you don't have time to do that and take him from the category of prospect to past acquainence.

Don't get greedy if you have earned the inside track with a customer by past performance. As someone once explained the stock market to me, "Bears make money, and bulls make money, but pigs get slaughtered."

Put effort into a quote proportional to the size of a project, the fit with your business, and the stage of the project. I put together a spreadsheet that would let me crank out budget pricing in a few minutes. I used a different spreadsheet to provide an actual propoposal against a set of detailed specs.

You can't get them all. Accept it, get as much feedback as you can on why you got or didn't get a job, and them move on to the next opportunity.

Be in it for the long haul. I know I said it before, but that is really important!

 

[bce123]

Not saying you do Genious, but alot of people forget that unless the project makes money for the end user there really is no point doing it.

agree
and unless you can make a profit there really is no point doing it

Quoting is a cost of doing business

Every quote /bid I do has 3 things in it:
1 takeoff/BOM (acutal cost of doing job)
2 Profit
3 Overhead( caculated by acutal cost employes ,bennifets,bldg,gas.utilites.mgt.insurance ect.. I know my cost by the hour and by the day)
This is where good accounting software is a must and i dont mean Quick books!!! I know my acutal job cost at the end of each day! and keep these records for comparing jobs. It helps to know to where to put your numbers for budget amounts.
Look at estimating like a control loop you need feed back to adj your process and good tuning will give you good results.
Best regards. Steve

 

[I is a noob]

I work for a corparation. In my local field, have always done the automation, order end devices, and built panel in house. We are now getting away from that. We send a request for end devices and another person issues the PO, order the plc parts from one supplier and have someone else build the panels. The programming is still done at the local level but they want that to go away as well....If you can’t program or at least understand it, then how can you trouble shoot? Well at least i don’t have to call and get prices anymore to submit for approval......

 

[bce123]

The programming is still done at the local level but they want that to go away as well....If you can’t program or at least understand it, then how can you trouble shoot?

Make sure your vendor supplies all docs,coppies of programs,and no password protection or hidden code before he gets paid!!!!!
also training if that applies

 

[I is a noob]

Programming is done by an automation company. .that has a contract that they like with my employer. Lots of money to be made , dont think they want to lose it with shifty programs...

 

[Clay B.]

agree
3 Overhead( caculated by acutal cost employes ,bennifets,bldg,gas.utilites.mgt.insurance ect.. I know my cost by the hour and by the day)
This is where good accounting software is a must and i dont mean Quick books!!! I know my acutal job cost at the end of each day! and keep these records for comparing jobs. It helps to know to where to put your numbers for budget amounts.
Look at estimating like a control loop you need feed back to adj your process and good tuning will give you good results.
Best regards. Steve

Excellent point. Overhead is one of those complete things that gets really overlooked. When I went to work for myself years ago I complained to a buddy how I was not making as much as I thought. He pointed out that I was probably not accuratly taking into account my overhead. The problem was when I quoted a job I would look at the direct costs like hardware and labor but would not take into account indirect costs. This would cause my margins to suffer since I would end up paying the indirect out of my margins.

Always keep excelent records of each job you do. I have a BOM spreadsheet for each job. I include labor as well as parts on this spread sheet and I also include any indirect that play a roll in the total costs.

Next time you need to quote you will have something to start from and after the job is done you can see the accuracy of your quote and where things changed.

 

[Lancie1]

In order to be accurate on that request, I need accurate pricing from my suppliers.

There is no such thing in existance right now in the US. Anyone that tells you different is a bit fat liar. Prices cannot be determined for many items like copper, fuel, shipping costs, metal costs, labor costs. They are all changing rapidly. A price this hour is simply a snapshot of something that is guaranteed to be different 1 day from now.

The economy has changed, money is becoming more worthless each hour, the value of companies is dropping like a stone, jobs are disappearing, unemployment lines are getting longer, crime is increasing, and illegal immigrants are running across the borders.

We are using old stone axes to kill fast-running economic snakes.

And you just want an "accurate quote"????

HA! You better change that to a "ball-park guess", and it better be on the high side unless the project is going to be done next week.

 

[bce123]

A price this hour is simply a snapshot of something that is guaranteed to be different 1 day from now.

I get a price update every night for every electrical part you can imagine!
I would post it here but its a 2.3 meg .XLS file, thats a lot of changes per night!!!