Calibrating Wage Rates and Overhead

Calibrating Wage Rates

If overall labor costs seem to be significantly different between the BidMagic construction estimating software and your previous projects, even though other costs agree, adjust the wage rates until labor costs are correct.

NOTE: The wage rates we use are for theoretical 'average' skilled and unskilled workers. You may need to adjust them until they hit correctly for projects done by your own particular crew.

To adjust wage rates, follow these steps:

1. Divide the actual labor costs by the estimated labor costs from BidMagic. EXAMPLE: If actual labor costs were $42,000 and BidMagic calculated labor at $40,000, the ratio would be 1.05.
2. Multiply that number by the current skilled wage rate being used in BidMagic. EXAMPLE: If the current skilled wage rate is $18.00 per hour, multiplying it by 1.05 would give you $18.90.
3. Enter the value calculated in step 2 into the skilled wage rate field.
4. Repeat steps 1, 2 and 3 for the unskilled wage rate.

Calibrating Overhead and Soft Costs

If overall costs are too high or too low but your hard construction costs seem reasonable, you may need to adjust the overhead, profit, contingencies, or soft costs percentages in the BidMagic estimating software, so they match your actual costs (see pages 147-157).

If the BidMagic price is too high and you entered a 'markup' percentage into the Overhead & Profit card, reduce the markup percentage, or else cut back on other Soft Costs such as supervision.

BidMagic itemizes many of the 'intangible' costs that some people lump together into overhead. If you use your original number and itemize the extra costs, your bids will probably be too high!