When I pulled up to the site where I was to build a boathouse pavilion and saw eight telephone poles - the foundation for the structure - sticking 40 feet out of the water, I wondered, What in the hell have I gotten into now?
Projects of that scale can be intimidating to residential deck builders. A lot of experience is needed to estimate, design, and engineer them, and it can be hard to find labor qualified to build them. But the payoff is worth it.
I've worked on many large decking projects, both residential and commercial, including jobs for UPS, Nortel Networks, Atlanta Botanical Gardens, the Centers for Disease Control, and Omni Hotels. I've also done numerous midrange swim- and tennis-club pavilions and decks. The residential jobs I've done have ranged up to $347,000 and included a deck for Bernie Marcus, one of the founders of Home Depot. Others that I've bid but not built have priced out at over $2 million.
Large vs. Small
As far as the bottom line is concerned, it doesn't matter whether you complete many small jobs or a few large ones, as long as you hit your annual sales and profit-margin goals. But the two business models do have different approaches.
Specializing in small jobs requires effective systems for mobilization, processing, and production. If you're doing $500,000 worth of decks a year at an average of $10,000 each, you have to move on and off 50 projects, not to mention pull permits, generate HOA letters and material takeoffs, and order Dumpsters and portable toilets for all of them. This approach works for a lot of deck builders - which also means dealing with a lot of competition.
Large projects, with higher average revenues, work in the opposite way. It takes fewer large projects to hit that $500,000 mark, so you deal with fewer permits and HOA letters, and you don't have as many mobilization chores, as the crews move from job to job less frequently.
There's a difference in risk between the two models too. Small, simple projects are unlikely to have unexpected cost overruns, or slippage, that erode profits, and you usually know within a few dollars what labor and materials will cost, as well as what your profit will be. With a larger, more complicated project, there are more details to miss when you're bidding, and more that can go wrong on site. Plus, if you gross $500,000 in a year, a $100,000 project that ends up being unprofitable will have a huge effect on your annual margin. You'll have used up 20 percent of your production capacity for the year and unless you hit abnormally high margins on your remaining jobs, it won't average out.
On the other hand, bidding such a job correctly could make your year. A big job that ends up more profitable than expected by only a few margin points can protect you from margin slippage on other projects or provide an overall surplus for your company.
The best advice I can give someone bidding large projects is that a little fear is healthy. It's usually better to bid too high and miss the job than bid too low. Underbidding a really large project could put you out of business.
My company commonly builds residential deck projects in the $25,000 to $80,000 range, and others go well beyond these amounts. In some ways, the larger decks are just bigger versions of the smaller ones, and my pricing models make 90 percent of the estimating quick and easy (see "Creating Models").
However, the complexity of large jobs skews my pricing models. Anything outside them I estimate based on my costs for time and materials, then add in the margin that I'd like to make. For a large but simple project, this approach will likely result in a smooth process from beginning to end, but if it's a more complex mission, I make allowances, and I carefully monitor and manage the construction process. For example, for a site with steep slopes that might slow framing or require extra time for footings, I'll add time and dollar allowances to my estimate, or if material has to be carried farther than normal, I'll build in money to cover it.
With large projects, I take the position that nothing will go my way unless I push it in that direction. It's harder to turn a large boat than a small one, and mistakes or wrong turns on big jobs can have larger, costlier consequences than mistakes on a typical smaller project. A lot comes down to good planning and coordination. I build a schedule listing the subs and the window of time for each, and I meet with my lead guys to review what's going to be expected of them and when.