Bidding an Office Fit-Out and Pricing a Change Order
A Connecticut electrical contractor is bidding a 1,600 sq ft office tenant fit-out against a hard cost cap. The takeoff is 42 duplex receptacles, 16 switches, 18 recessed 2x4 troffers, 6 exit/emergency units, 240 ft of 3/4 in. EMT, 1,900 ft of 12 AWG THHN, and one 200 A panelboard. The company's historical labor units are 1.2 hr per receptacle, 1.0 hr per switch, 1.5 hr per troffer, 2.0 hr per exit unit, 0.15 hr per ft of EMT, 0.008 hr per ft of wire, and 16 hr for the panel. Add 8% for layout, cleanup, and punch list. The burdened labor rate is $92/hr, material is $14,800, the fire alarm subcontract is $4,200, overhead is 12%, and profit is 10%.
1. Compute the labor hours and the total bid price.
Read the worked answer
Labor hours:
| Item | Qty | Unit hrs | Hours |
|---|---|---|---|
| Duplex receptacles | 42 | 1.2 | 50.4 |
| Switches | 16 | 1.0 | 16.0 |
| 2x4 troffers | 18 | 1.5 | 27.0 |
| Exit/emergency | 6 | 2.0 | 12.0 |
| 3/4 in. EMT | 240 ft | 0.15 | 36.0 |
| 12 AWG THHN | 1,900 ft | 0.008 | 15.2 |
| 200 A panelboard | 1 | 16.0 | 16.0 |
| Subtotal | 172.6 | ||
| Layout, cleanup, punch list (+8%) | 13.8 | ||
| Total labor | 186.4 hr |
Costs:
- Labor: 186.4 × $92 = $17,150
- Material: $14,800
- Fire alarm sub: $4,200
- Direct cost = $36,150
Markups (applied sequentially, which is the company's stated method):
- Overhead 12%: $36,150 × 0.12 = $4,338 → subtotal $40,488
- Profit 10%: $40,488 × 0.10 = $4,049
- Bid = $44,537 (round to $44,500)
Note on method: Applying profit on top of overhead (rather than on direct cost only) is the correct reading of '12% overhead, 10% profit' as written in the estimate. If profit were taken on direct cost only, the bid would be about $40,500 - a $4,000 swing. Agree on the convention before the bid goes out.
2. The general contractor issues a change order for 8 additional receptacles in finished drywall walls. How should it be priced, and why doesn't the original unit rate apply?
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Why the base rate does not apply: The 1.2 hr/receptacle unit was built on new construction with open walls - rough-in, box, and trim in sequence. A retrofit in a finished wall means locating the circuit, cutting drywall, fishing through insulated cavities, protecting the finish, patching, and coordinating with the drywall/paint trades. The labor is two to three times higher and there is finish-damage risk that the base takeoff never carried.
Pricing:
- Labor: 2.5 hr each × 8 = 20 hr × $92 = $1,840
- Material: 8 × $38 = $304
- Drywall patching allowance (by others or subcontracted): $450
- Direct cost = $2,594
- Overhead 12%: $2,594 × 1.12 = $2,905
- Profit 10%: $2,905 × 1.10 = $3,196
Process notes:
- Issue a written change order with the scope, price, and schedule impact, signed before any work begins. Never proceed on a verbal.
- State clearly what is excluded: painting, fire caulking if a rated wall is penetrated, and any panel or circuit upgrade if the existing circuits are full.
- Confirm whether the added devices affect the permit drawings - if the plan set must be revised, that is a separate cost and the AHJ may require a re-submittal.
- Since the walls are already closed, verify that adding these receptacles does not push a circuit past its calculated load or require AFCI/GFCI protection the original design omitted.
3. The GC says the bid is 12% high and asks you to match the low number. What is the professional response?
Read the worked answer
Do not cut the number by cutting hidden scope. Instead:
- Compare scope, not price. Ask for the competing scope sheet. A 12% gap almost always comes from a different scope, not a different labor rate: missing the fire alarm sub, excluding the panel, using a lower grade of fixture, or excluding permits, temporary power, and patching.
- Issue written qualifications and exclusions with the bid: permit fees, temporary power, patching and painting, fire alarm programming, asbestos/lead survey, owner-supplied fixtures, and overtime beyond a normal 40-hour week.
- Verify quantities against the drawings with an RFI instead of absorbing a guess as a contingency. A missed device count is a quantity issue, not a negotiation.
- Reduce price only by reducing scope. Offer value-engineering options with the price effect stated (e.g., alternate fixture package, alternate wire method, phased schedule).
- Protect the labor unit. One percent of labor on a job this size is about $170; a 12% reduction ($5,300) is roughly 58 hours, which is a third of the job. You cannot absorb that in productivity assumptions.
If the GC cannot close the gap with scope, walk away. Winning a job below cost only converts a lost bid into a lost job.