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A builder subcontracts out most or all of the specific work that goes into a project, including stucco. First the builder provides plans and details about the job and then solicits bids from subcontractors. Ultimately, they enter into a contract with one of them, sometimes the low-bidder, sometimes not. Though the stucco subcontractor submits a single dollar price for performing the work, this bid is determined based on a price per square foot.
Determine fixed costs. The fixed costs for stucco work include labor, sand and the stucco itself. Thus a contractor must know from experience how much material is needed (which depends on thickness and number of coats), and the supplier's price. The contractor must also know how much work a crew can perform in a day and how much they must be paid. Some minor additional costs, like insurance, scaffold rental, gasoline to run a mixer, or bonding agent and other stucco additives, can also be included in fixed costs.
Calculate cost per square foot. The sum total of the fixed costs to run a stucco crew for a day divided by the number of square feet they plaster yields the crew's cost per square foot. This is the break even price per square foot for the contractor.
Determine square footage. Using the plans and details of the project being bid on, the stucco contractor must calculate how many total square feet of stucco are required for the job. This figure will determine how much time and material it will take to perform the job, the fixed costs of which have already been calculated.
Multiply. The number of square feet of stucco work on a project multiplied by the stucco contractor's fixed cost per square foot yields the break even bid price for the whole job.
Add profits. Naturally, the stucco contractor wants to do better than break even. So, to the break even bid price, add the desired profit margin to yield the actual total bid price.
Price large projects by models. Large residential developments often have several different models that the buyers can choose. In these projects, the contractor takes the actual bid price and divides it by the square footage to return to a bid price per square foot. The bid then goes in with this format so it can be applied as necessary to the various models.
Builders often value dependability and reputation in a contractor, as well as personal relationship. When bids are comparable, these other factors usually prevail over the absolute low figure.
Labor is a major cost for the stucco contractor. Unfortunately, to stay competitive, most are forced to rely on illegal immigrants or other questionable accounting practices to keep costs and bids low.
Joseph Nicholson is an independent analyst whose publishing achievements include a cover feature for "Futures Magazine" and a recurring column in the monthly newsletter of a private mint. He received a Bachelor of Arts in English from the University of Florida and is currently attending law school in San Francisco.