Price Labor, Materials, Overhead, and Profit

A. Finished-Project Specification

Quantity: one approved and formula-locked contractor pricing worksheet, tested on at least one standard service from the Chapter 6 scope library, reviewed by the estimator, field lead, bookkeeper, CPA, and management, with a documented revision and expiration procedure and a post-job feedback link to Chapter 18.

B. Component Schedule

Component	Quantity	Source	Content Required	Preparation / Purpose
Header and identification fields	1 set	Built in Section E	Scope identifier, project, customer, location, estimate type, estimator, reviewer, revision	Ties every priced estimate to a controlled scope and revision
Material cost fields	1 set	Built in Section F	Quantity, waste, purchase unit, unit price, freight, delivery, tax, return	Converts measured scope into current material cost
Labor cost fields	1 set	Built in Section F	Task, quantity, production rate, skill, crew, hours, wage, burden, workers' compensation, benefits, vehicle, small tools	Converts labor hours into fully burdened labor cost
Equipment, subcontractor, and general-condition fields	1 set	Built in Section F	Equipment rental and fuel, subcontractor and permit cost, jobsite general conditions	Captures cost outside direct labor and material
Overhead, profit, and risk fields	1 set	Built in Section G	Overhead allocation, markup or margin, named risk categories, contingency, callback and warranty treatment	Converts direct cost into an approved selling price
Summary and approval fields	1 set	Built in Section G–H	Direct cost, overhead, profit, selling price, gross margin, labor hours, cash requirement, approval thresholds	Presents the final price and protects it from unauthorized change

C. Data Takeoff

• Book 24 structure: the estimating workbook fields, cost codes, and layout this worksheet must align with, gathered before Step 1.
• Chart of accounts data: current overhead categories, payroll burden rates, and cost-code figures from Chapter 5, gathered before Section G.
• Market data: current material unit prices, freight, subcontractor quotes, and equipment rental rates for the service area, gathered before Section F.
• Historical job-cost data: at least one completed or in-progress project's actual labor hours, material cost, and gross profit, gathered before Section H testing.

D. Acceptance Standards

Check	Standard
Pricing-type coverage	The worksheet supports every pricing type — time-and-material, unit-price, fixed-price, service-call, maintenance-plan, or cost-plus — that this business actually uses
Labor cost	Every labor field resolves to a fully burdened rate, never wage alone, confirmed by the bookkeeper or CPA
Material cost	Every material field includes quantity, waste, unit price, freight, delivery, and tax from a current source
Overhead recovery	The overhead formula is built from actual accounting data and does not duplicate cost already captured in labor, equipment, general conditions, or subcontractor pricing
Markup and margin	Markup and margin are calculated with the company's approved method and displayed separately
Risk and contingency	Every contingency field names its specific uncertainty and required approval authority; no field covers known unmeasured work
Testing	The worksheet has been tested on at least one standard service and compared against historical job cost, current quotes, and market position, with differences investigated rather than forced
Review and approval	The estimator, field lead, bookkeeper, CPA, and management have reviewed the worksheet and their comments are recorded and addressed before formulas are locked

E. Worksheet Structure and Identification

1. Import the Book 24 estimating workbook structure and the current company chart of accounts and cost codes. Confirm the worksheet's categories and field names align with both before any formula is built.
2. Define whether the worksheet supports time-and-material, unit-price, fixed-price, service-call, maintenance-plan, or cost-plus work. Record the approved pricing types this business uses and build a separate calculation path for each.
3. Identify the approved pricing date, market, service area, tax treatment, and validity period. Record these on the worksheet header and set an expiration rule.
4. Create fields for scope identifier, project, customer, location, estimate type, estimator, reviewer, and revision. Link the scope identifier field directly to the Chapter 6 scope library.

F. Direct Cost, Labor, Equipment, and General Conditions

1. Create material quantity, waste, purchase unit, unit price, freight, delivery, tax, return, and total fields. Tie unit prices to a current, dated supplier quote or price list.
2. Create labor task, quantity, production rate, skill, crew, direct hours, setup, cleanup, supervision, and total-hour fields. Base production rates on historical job-cost data where available.
3. Create wage, payroll burden, workers' compensation, benefits, vehicle, small-tool, and other approved labor-cost fields. Confirm each rate with the bookkeeper or CPA before use.
4. Do not use employee wage alone as labor cost. Verify every labor total resolves through the burden fields before it reaches the cost summary.
5. Create equipment, rental, fuel, delivery, operator, consumable, and minimum-period fields. Use current rental agreements or dated quotes.
6. Create subcontractor, permit, inspection, testing, design, disposal, and specialty-service fields. Tie each to a current subcontractor or vendor quote where available.
7. Create jobsite general-condition fields for protection, sanitation, temporary utilities, supervision, travel, parking, and project administration. Base these on project duration and crew size rather than a flat estimate.

G. Overhead, Profit, Risk, and Contingency

1. Create company overhead categories from actual accounting data. Import the overhead categories directly from the Chapter 5 chart of accounts.
2. Determine the approved overhead allocation basis with the CPA and management. Record the chosen basis — such as percentage of direct cost, percentage of labor, or per-project fixed allocation — and the reviewing CPA's name and date.
3. Create formulas that recover overhead without duplicating costs already in labor, equipment, general conditions, or subcontractor pricing. Cross-check every overhead category against the direct-cost fields built in Section F to confirm no category appears twice.
4. Create a profit calculation using the approved markup or margin method. Confirm the method matches company policy before building the formula.
5. Display markup and margin separately to prevent confusion. Label each field clearly with its formula visible to the reviewer.
6. Create risk categories for scope, existing condition, customer, access, schedule, material, labor, weather, permit, and subcontractor uncertainty. List each category as its own row.
7. Create approved responses for each risk: investigate, clarify, exclude, allow, alternate, unit price, contingency, or decline. Assign one response to each risk category identified in the previous step.
8. Create contingency fields that identify the specific uncertainty and approval authority. Do not create a generic, unnamed contingency line.
9. Do not use contingency for known unmeasured work. Verify every contingency traces to a named, uncertain condition rather than an item that should instead be measured and priced directly.
10. Create callback, warranty, punch, and bad-debt cost treatment according to company policy. Record the approved treatment and its source policy document.
11. Create minimum service-call, mobilization, diagnostic, emergency, and after-hours pricing only after legal and market review. Confirm these figures with management and, where required, counsel before adding them to the worksheet.
12. Create deposit, payment schedule, retainage, financing, and cash-flow considerations without inserting unreviewed customer terms. Leave contract-specific payment language to the Chapter 9 attorney-reviewed scope of work.
13. Create sensitivity checks for labor hours, material price, schedule, and hidden conditions. Build a simple variance test that shows the effect of a defined percentage change in each input.
14. Create summary views for direct cost, overhead, profit, selling price, gross margin, labor hours, and cash requirement. Present these as one clear summary table at the top or end of the worksheet.
15. Create approval thresholds for discounts, margin reduction, contingency use, and nonstandard terms. Record the specific dollar or percentage threshold and the approving role for each.
16. Prohibit sales personnel from changing protected formulas or approving unauthorized discounts. Apply spreadsheet or software protection consistent with the Chapter 2 signing-authority matrix.

H. Testing, Review, and Approval

1. Test the worksheet on one standard service from Chapter 6. Run a complete price calculation using current data and record the resulting selling price.
2. Compare the price with historical job costs, current supplier quotes, subcontractor input, and market position. Record each comparison figure alongside the worksheet's calculated price.
3. Investigate differences rather than forcing a target price. Identify whether a difference comes from production rate, material price, overhead allocation, or an omitted cost category before adjusting the worksheet.
4. Review the worksheet with the estimator, field lead, bookkeeper, CPA, and management as applicable. Record each reviewer's name, role, comments, and date.
5. Approve the worksheet and lock formulas. Obtain the authorized manager's signature and date, then apply formula protection.
6. Create a pricing revision and expiration procedure. Record the review interval and the specific conditions — cost-code change, overhead change, market shift — that trigger an earlier revision.
7. Create a post-job feedback process from Chapter 18 to update rates and assumptions. Record how completed-project job-cost results will be routed back into this worksheet's production rates and cost data.