HOW TO PRICE PREVAILING WAGE WORK.
Prevailing wage work is priced wrong more often than almost any other bid type in commercial construction. The fringe benefit requirements, the certified payroll compliance overhead, and the true all-in labor cost are all consistently underestimated. Here's the complete framework for pricing prevailing wage work correctly so you're not subsidizing every public project you win.
Three costs get missed on prevailing wage bids, and they compound. Fringes get priced at the base rate instead of the determination rate. The certified payroll administration nobody bids for gets absorbed into overhead. And the fringe election, cash versus a qualifying plan, moves payroll taxes and workers comp on every hour worked. Get all three wrong and you win the public job at a number that never covered the work, with the compliance administration donated on top of it.
WHAT IT MEANS.
The total prevailing wage is the base wage plus the fringe benefits required by the applicable wage determination, and it's the rate a prevailing wage bid has to be priced off.
WHERE IT GOES WRONG.
You're using the wrong labor rate in your bids
Prevailing wage bids have to be based on the total prevailing wage, base wage plus fringe benefits as required by the applicable wage determination. Most subcontractors price the base wage correctly and underestimate the fringe cost. Fringe benefits on prevailing wage work, meaning health, pension, vacation, annuity, and training fund, can add $8 to $20 per hour per employee above base wage depending on the wage determination and your fringe election strategy.
You're not accounting for certified payroll overhead
Certified payroll administration, meaning weekly WH-347 reports, fringe documentation, and apprenticeship ratio tracking, creates overhead that private work doesn't require. Most prevailing wage contractors never price that compliance overhead into the bid. That means providing it free to every public project owner they work for, on every job, forever.
Your fringe benefit election strategy is costing you money
Prevailing wage fringe benefits can be paid as cash added to wages or as contributions to qualifying benefit plans. The election affects your true labor cost, your certified payroll calculations, your payroll tax treatment, and your bid competitiveness. Most subcontractors default to cash fringes without working out which election method is most cost effective for their own workforce and benefits structure.
WHAT IT LOOKS LIKE IN DOLLARS.
For a journeyman electrician with a $45 base wage and $18 in fringe requirements, true all-in labor cost may run $75 to $85 per hour before overhead and profit. Price that number, not $45. The difference between the two is the whole reason prevailing wage jobs finish under bid.
THE THREE THINGS THAT FIX THE BID.
True prevailing wage labor cost equals base wage, plus fringe benefits at the wage determination rate, plus the FICA employer share, plus FUTA, plus SUTA, plus workers comp at the applicable classification rate, plus general liability allocated to labor. For a journeyman electrician with a $45 base wage and $18 in fringe requirements, true all-in labor cost may run $75 to $85 per hour before overhead and profit. Price that number, not $45.
SPM analyzes fringe benefit election strategy for prevailing wage clients, comparing cash fringe payments against qualifying benefit plan contributions to find the most cost effective approach. The right election depends on your current benefit offerings, your workforce composition, and your payroll tax exposure. The analysis is built into the ControlQore setup for prevailing wage clients, so every bid uses the correct labor cost basis.
Certified payroll administration overhead, typically 1 to 3% of prevailing wage labor cost depending on project complexity and the number of workers, belongs in prevailing wage bids either as a line item or loaded into overhead. SPM quantifies that overhead for prevailing wage clients and makes sure it reaches the bid overhead rate instead of getting absorbed silently.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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