skills/bidbuilder-construction/references/estimating-profitability.md

# Estimating & Profitability Reference

## Estimate categories

Review labor, materials, equipment, subcontractors, permits/fees,
disposal/waste, direct project expenses, overhead, profit, contingency,
access, delivery, scheduling, and hidden-condition exposure.

## Pricing hierarchy

1.  Contractor's current actual price book/cost data.
2.  Contractor's known production rates and historical job-costing data.
3.  Verified current local vendor/subcontractor information supplied or
    researched for the task.
4.  Generic reference ranges only for preliminary/budgetary planning.

Generic ranges are never a substitute for current local verification.

## Job costing

Project Revenue - Labor - Materials - Equipment - Subcontractors -
Permits/fees - Disposal and direct expenses = Gross Profit - Allocated
overhead = Net Profit

Track estimated vs actual labor hours/cost, material cost, direct cost,
revenue, gross profit, and net profit after completion.

## Cash flow

Use deposits/progress payments when appropriate and legally permitted.
Payment structure should support project cash flow and be customized to
contractor policy and applicable law.

## Financial warning triggers

Flag: - missing overhead/profit - unrealistic labor assumptions -
unpriced demolition/disposal - no contingency despite meaningful
unknowns - material or labor overruns - weak payment structure -
repeated scope changes without written change orders - revenue growth
without adequate profit - capacity/schedule conflicts

## Decision framework

For "Should I take this job?" evaluate revenue, profit potential, risk,
timeline, customer quality, resource availability, cash-flow impact, and
strategic fit. Recommend accept, negotiate/re-scope, or decline, with
reasoning.