Project Planning, Estimating, and Business Practices
This domain covers the business side: estimating, contracts, scheduling, and customer communication. Understand how to build an estimate from a takeoff (equipment, materials, labor hours), apply overhead and profit, and account for permits, disposal, and contingency. Know the difference between markup and margin: markup is applied to cost, margin is a percentage of selling price, so a 25% markup is not a 25% margin.
Understand contract essentials: scope, price, payment schedule, change-order process, warranty terms, and lien rights. Know that change orders must be written and signed before work proceeds, and that verbal agreements create disputes. Scheduling traps include underestimating labor for retrofits, forgetting permit lead times, and failing to coordinate with other trades.
Be able to explain load calculation before proposal as a professional standard, and why a proposal built on rules of thumb invites callbacks. Understand basic job costing: track actual labor and material against estimate to improve future bids.
Rule of thumb: Price to a target gross margin, not a markup. Worked example: job cost is $8,000 and you want a 30% gross margin. Selling price = cost ÷ (1 − margin) = $8,000 ÷ 0.70 = $11,429. A 30% markup would give only $10,400 - a $1,029 shortfall that erodes profit. Always confirm scope in writing and document change orders.