Estimates, Bids, and Time and Materials (T&M)

Estimates, bids, and time and materials (T&M). I often hear people in the community using these words interchangeably, but in truth these words mean quite different things to the business person who is contracting for services to the public.

Estimates: These are usually given if the potential client wants a price very quickly—just to see if it is within their ball park budget. It is just that, an estimate, and a contractor does not expect to have the client hold them to this price or to the price range. Often, we will give a low and high number as a range to the estimate. This is particularly done if there are a number of unknown challenges or risks involved to implement the task. An example of a common unknown challenge is when one has a break or multiple breaks in an irrigation system due to an accident or severe freezing. We do not have X-ray vision to know how many breaks there are and how many pipes or heads must be dug up and replaced to get the system to work successfully again.

T&M (Time and Materials): Occasionally, after giving an estimate to a client, the client wants to go ahead and have work accomplished. We try to make the client aware of what is included in a T&M job. Normally this does not include a contract. The first step is to sleuth out what needs to be done on site. This time is billed to the job. There may be some cleanup needed with removals involved, this will include labor for a trip to and from the recycle or dump site which is also billed. If a challenge is encountered during the job which needs special tools or equipment, there will be time to travel to purchase the equipment or to return to the shop to fetch it, if we own it, and this time is billed as well. Often, clients will not understand this situation because they want to pay only for the time that they see our employees on their site.

Bid: Most often we offer a bid for a job. This involves a contract which states what is included in the bid. We do our best to include the removals, the trips to and from the dump, the shop, the store and how many days and hours of labor it will require. If something is encountered during the job which is entirely outside of the contract, we will need to stop and give the client a bed price to perform the “additional to contract” work.

In a T&M job, the client takes on the risks of what might happen on the job. In a Bid job, the contractor takes on the risks of what might happen on the job and charges for it. Often it is less expensive for the client to work as a T&M job unless there is something unearthed which is unusually expensive. Most clients prefer a bid for their work as they then have a firm price to expect at the end of the job and they might feel that they do not know the contractor well enough to trust him/her, so they would rather take the risk of paying more for the product, rather than trusting the unknown or unfamiliar business person.

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