Material price increases after you bid: re-cost the job from your takeoff
A contractor prices materials at bid time and buys them weeks or months later. When the supplier list changes in between, the contract price usually does not. Re-cost the takeoff against the new list to see what it does to the job.
The method
- Keep the takeoff with the unit prices you bid at, by SKU. That is your baseline.
- When the new supplier list arrives, pull the current price for each takeoff line by SKU (XLOOKUP method), or run the old and new lists through the free price list compare tool to see which takeoff lines moved.
- Line cost now = quantity x current price. Material change = sum of (quantity x (current - bid)).
- Job profit now = contract value - labor - other costs - material at current prices.
- If your contract has a material escalation clause, calculate the claim the way the clause defines it. A common shape is "increase above X% of the bid material cost".
Material change for the whole takeoff, with quantity in B, bid price in C and current price in D:
=SUMPRODUCT(B2:B200,D2:D200-C2:C200)Escalation above a threshold in $H$1 (5%), as one example of how a clause might read:
=MAX(0,SUMPRODUCT(B2:B200,D2:D200)-SUMPRODUCT(B2:B200,C2:C200)*(1+$H$1))Worked example: an electrical fit-out
| Item | Qty | Bid price | Current | At bid | At current | Change |
|---|---|---|---|---|---|---|
| 3/4in EMT 10ft | 420 ea | $11.42 | $12.10 | $4,796.40 | $5,082.00 | +$285.60 |
| 12 AWG THHN 500ft | 14 roll | $84.10 | $91.60 | $1,177.40 | $1,282.40 | +$105.00 |
| 4in square box | 160 ea | $3.18 | $3.29 | $508.80 | $526.40 | +$17.60 |
| 20A single pole breaker | 48 ea | $9.80 | $10.45 | $470.40 | $501.60 | +$31.20 |
| 2x4 LED troffer | 36 ea | $88.00 | $94.50 | $3,168.00 | $3,402.00 | +$234.00 |
| Material total | $10,121.00 | $10,794.40 | +$673.40 |
Material is up 6.7%. On a $64,000.00 contract with $26,000.00 labor and $6,500.00 other costs, profit falls from $21,379.00 (33.4% of contract) to $20,705.60 (32.4%). The job loses 3.1% of its profit from a 6.7% material move.
Under a clause that pays increases above 5% of bid material cost, the claimable amount is $10,794.40 - $10,121.00 x 1.05 = $167.35. Your clause will have its own base, threshold and documentation rules; the arithmetic is the easy part once the takeoff is priced both ways.
On the next bid
Note the date of the price list you bid from on the quote, and the supplier's announced effective dates. A line that moved 8.9% between bid and purchase, like the wire here, is worth a validity window or an allowance on the next job.
Pricecheck takes the supplier's email as it arrives, PDF included, compares it with the last version and sends back only the lines that moved. $49/mo, first month free for early signups. No payment now.