Sub Contracting: Calculating Risk


Sub Contractors have the added headache of making good and wise calculated risk. Sometimes a big part of your success comes from pure luck. No matter how far ahead you have planned, something might go wrong to catch you on the wrong foot.

Never have the believe that you have covered everything and every angle when you tender for projects. Always expect the worst but hope for the best. Always bear in mind that the unexpected might happen. Make allowances for that.

Factors that can be calculated.

The weather.

When calculating your tender, always make allowances for days that works cannot be done due to the rain. We know when the rainy seasons are here. So if the project is going to start or will be ongoing during the rainy seasons, make allowances for that. For example, if you have calculated that the entire project will take 3 months to complete in good weather conditions, add in another week or maybe 10 days to that. Your workers still have to be paid if they wait out the rain.

The Price of Materials.

Do a small survey with your suppliers. See the price fluactuation progress. Nobody will know or will tell you how prices are going to be in a few months time but at least do a calculated guess. If prices of materials ore on the rise during the time you are quoting for the tender, chances are they won’t be coming down anywhere in the near future. So make allowances for price increase in materials. And of course don’t overlook the prices of petrol and diesel.

The Working Condition.

Always do a site visit before calculating the price of the project. Different locations have different working environments. Some sites are nice and level. The grounds are soft. Access roads are convenient. Getting small items needed for the job is readily available. The distance you have to travel from your office or store to the worksite. All these and more must be taken into consideration. If you see tough working conditions, like the grounds are filled with pebbles and stones, or if you have to travel miles just to buy a shovel, take that into consideration when calculating your tender.

Unforseen Happennings.

Like an accident on the site. A sudden shortage of certain materials. An unexpectedly prolonged wet days. A stop work order from the authorities. All these and more can hamper your progress.

These are only some of the events that could happen. There are many more and I am making only a few examples to give you a general idea,  but all said, everything is common sense. We shouldn’t be foolhardy and overly confident that these things won’t happen to us. There is no harm taking precautions and the best precaution that you can take is to make allowances in your tender for the unexpected to happen. Always add about 20 to 30% extra to your calculations to offset unexpected events. If everything goes smoothly, you will make a little bit extra. If problems occur, at least you won’t be loosing too much.