Page 91 - Paulisms: Gold Nuggets for Small Business

This is for those in the contracting game. Whether it’s a small or a large job you have quoted, you quote and win the job and carry out the work.
Often, we quote ‘cost plus margin’; for example, the cost of a product plus, say, a 30% margin (divide costs by 0.7). Remember: not mark-up, but margin or gross profit. Then we add our hourly rate of hours we will spend on the job – say, $70/hour plus GST (includes a margin on cost).
What we don’t often consider is the work involved in managing this project: the travel, the ordering goods, the site meetings, administration, chasing delayed goods, sorting out issues that go wrong (more site visits), payments and claims, organising subcontractors... its endless. These all come under the heading of Preliminary and General, or P&Gs. If you are quoting for a job, you need to allow for P&Gs. Sometimes on projects you can quote this as a specific cost, but otherwise you have to add it on in your price.
Here’s an example.