July, 2008

Deck Math

Part I of a 3-part series on making more money on decking.

By Bob Heidenreich

Over the past 30 years, I’ve learned a lot of shortcuts and tips that can make my crews and I more efficient when we’re building decks. In almost every case, these tricks fit under an umbrella term that I’ve come to call “deck math.”

Deck math encompasses estimating, job costing, and installation—in short, every single part of selling and building decks. If you, as a lumber dealer, can teach your decking contractors how to create their own cheat-sheet bidding formulas and installation shortcuts, you’ll help them make more money, and gather both loyalty and more sales.

In the lumber side of our business, deck contactors come in every day who have just met with a potential customer, and now want us to estimate all of the costs for them to do that deck, plus price out multiple alternate combinations of materials. And what happens is, in the meantime, another deck contractor who is a little bit smarter and a little bit more efficient has met with that same potential customer, and given that person an estimate on the spot. (They also took that sale right out from under the first contractor.)

We as LBM dealers should teach our deck contractors that every time they do a job, they must add up every receipt at the end of the project. That’s a first step to successfully estimating future, similar jobs, and it’s different than just a rough “guesstimate” of what a job cost, because that doesn’t account for miscuts on the job, changes to the project, or even personal building style.

The way to get a real number is to log every receipt, add in labor time, and then divide that number by the square feet of the finished deck. Pretty soon, you discover some very consistent numbers.

Decks have a lot of consistency, whether you believe it or not. In our area of the Midwest, the average deck is 350 sq. ft., and no matter what you do, you can only consume so much in materials in that amount of space.

As an example, for a cedar deck, using a formula like this, a deck contractor might take an average 350 sq. ft. deck, multiply that by $36, which is what he charges to install it, and then multiply that number by .40 to estimate what he expects to pay for materials.

You can also refine these formulas tremendously. For instance, you start to know your labor percentage, your lumber percentage, and so on. Now when the deck contractor gives a bid, he can add up the square footage of a deck and give a customer a bid right on the spot. And if the customer changes their mind and wants a different material, there’s a formula for that, too. (For us, for a composite deck, we’d take our number for a wood deck and multiply that by 1.6 to convert the
bid to a composite deck.)

Here’s a couple of other tips:

If a deck contractor is going to benefit from these types of formulas, he needs to think and bid in terms of standardized decks. That means a 10x10 deck equals 100 sq. ft., but a 9x9 deck is also 100 sq. ft. (You can’t buy 9-ft. boards, so bids have to be based on square areas.)

Or if a contractor consistently builds 12-ft decks and 16-ft. decks, he’ll find his costs will be higher than a contractor who builds 10-ft. and 14-ft. decks.

Lumber isn’t like composite, which is priced the same per foot whatever size you need. With wood, any time someone builds in numbers that aren’t divisible by 16, it tends to lower their costs since those pieces of lumber cost less. (I’ll go into this in detail next issue, explaining how deck contractors can save money by applying decking diagonally, using shorter pieces of lumber.)

Teach your deck contractors how to create their own estimate cheat sheets. They’ll save a ton of time not having to drive around and ask what things cost— and they’ll also get more jobs.

BOB HEIDENREICH is the owner of the 30- employee Deck and Door Co., in Apple Valley, Minn. He has been selling decking and home improvement projects for 26 years.