I contacted you today with my state contractor’s license, all required insurance and quality crews and equipment to get your job done that is behind schedule, over budget and understaffed. You politely listened and handed my a contact list for your sub contractors and told me I could go and work as a sub for one of them.
I have reviewed your list and contacted your prime contractors and requested pricing from them to review. Having been in the industry for many years and doing quality work with quality crews I know what it takes to complete the job.
I received the pricing from your prime contractor and here is what I have found. Just a year or two ago prime contractors would be awarded there bid on a project and they would do the following price breakdown to there crews.
Employees; The prime usually takes 60% to 65% off the top for overhead and liabilities such as workers comp insurance, benefits and profit and the remaining 40% would be the employee payout.
Subs; The prime contractor would take 30% to 40% off the top to cover overhead and profit (usually around 16% to 20%) and the remaining 60% to 70% would be the sub pricing where the sub contractor would take out 20% to 30% for overhead and liabilities such as workers comp, insurance and profit (usually 6% to 10%) leaving 40% of the pricing for employee pay. You know the crews who actually do the work.
This created an even playing field and a guy could make 50k to 100k per year depending on his skill. I know, I here you saying what 100k per year???? Well remember he only sees his family 4 to 8 days per month at best and has travel, meal and hotel expenses out of that. So they are actually making 30k to 60k take home to never see there home family and friends.
Well after reviewing the sub pricing out there today it appears that your prime is taking 60% off the top and offering me 40%. Then I still have operating expenses of 20% to 30% let’s say 30% because fuel prices have gone up 300% in the last two years and every thing else is through the roof as well. This leaves 10% for me to pay my employees. You know the guys that actually do the work.
So when you are paying your prime for a tap location you will pay around 35.00 to splice the tap, 25.00 to set the tap ped. This takes around 40min then you have time to the next location and cleanup and setup so that’s $60 bucks per hr. that sounds good. But hold on that is the prime price. Once they take there 60% off the top that leaves the sub $36.00 of that I have to take off 30% to run the business that’s $10.80 per hr for a skilled splicer.
That is $22,464 -26% = $16,623 income tax’s per year but the splicer still has expenses. And then food $75 per week lest deduct $3900 per year. Then there is travel home twice a month to see his kids for two days per week that’s $400 per month if scheduled weeks in advance so let’s deduct another $4800.00
22464
- 3900
-4800
7923.00 per year that’s $3.80 per hr. For a Quality Splicer. So lets se how can I make this work????? Can’t hire illegals???
Well I get 30% Lets see what that is. $18 per hr…. That’s $3600 per month. I have the splicer’s hotel I have him in a cheap hotel for $35 per night that’s $1050 and then I have fuel that has gone up 300% in the last two years that $300 per week $1500 per month. Then I have his workers comp Auto ins. Liability Ins. That’s another $300 per month per employee. That’s $750 per month from 10 employees $7500.00
Of that I need to pay.
Office rent $1500
Utility’s $400
Internet $35
Office Admin $1700
Cell Phone $150
That leaves $3715 per month to pay me and any truck repairs, equipment repairs and other expenses. So I’m not making money and if any thing brakes I’m loosing money.
As I see it I have 2 options.
Option 1; Hire illegal’s and pay them $3 per hr and not pay taxes, worker comp or insurance and just get buy as a business if I don’t get caught.
Option 2; work as the prime. After all I am the one with the crews and equipment to do the job…….
