The start of the New Year prompts many people to scrutinize their finances and evaluate their expenditures. At Taylor Studios, we try to be as transparent as possible in educating our clients about exhibit budgeting. Today, we take a closer look at exhibit firms’ hourly rates: how they are calculated, what they include—and how they compare across the industry.

We are often asked to include hourly rates for key processes in our proposals, and we sometimes wonder whether these rates are really being analyzed and considered.

Analyzing Efficiency

This chart shows a bid scenario that includes hourly rates.

Hourly rates vary among comparable exhibit firms across the industry. We recently proposed on a design/build project similar to the above chart. Surprisingly, the firm with the highest hourly rate was awarded the project. All companies that submitted proposals were similar in portfolio, experience and qualifications. Was the hourly rate really considered in evaluating the bids?

As a result of varying hourly rates, you can easily see that the number of hours worked on your project also varies widely among firms. If a firm bids half as many hours as another firm, you do you think you’ll get the same product and service from each of them? How likely is it that one firm can produce 50% faster—or even 20% faster—than another firm of similar experience and stature in the industry?

Is Quality Important to You?

When you review a firm’s portfolio can you tell the difference in the quality details they provide?  Hourly rates may impact the time required to add quality details to your project; does the hourly rate quoted allow time for these? Some differences we have noticed in the industry include:

• Exposed hardware

• Exposed wires (not enclosed)

• Lack of durability in graphic edges that cause peeling over time: not wrapped, painted, etc.

• Less durable materials used

• Less biological detail

• Fewer total exhibit components

• Difficulty in accessing requirements for post-installation maintenance or no consideration of future maintenance needed

• Flip doors that pinch visitors

• Individually keyed components (as opposed to a single master key for all components, which simplifies maintenance)

• No client reviews/approvals during fabrication(for example: models being painted during installation versus getting client approval prior)

• Lack of consideration of ADA requirements

• Lack of service after the installation when things break

• Insubstantial substructures (it’s hard to see this quality detail once it’s installed)

Here are some other questions you might want to consider when evaluating hourly rates within a proposal: Do proposed budgets for the portfolio examples vary by a lot? If so, Are you really comparing “apples to apples”? If a higher hourly rate means fewer total hours spent on your project, what are you sacrificing? Are adequate hours being allowed for collaboration?

It can be difficult to understand quality differences when buying exhibits,as they are custom and are not an everyday purchase. You won’t find comparative information at Consumer Reports like you would for buying a Ford Pinto versus a Lexus. Yet, for such an important buying decision, isn’t it worth the due diligence to carefully analyze the quality and service differences?

Calculating Hourly Rates

Hourly rates are generally a conglomerate of pay levels,overhead, and profit, but companies define these various components differently. Does it include billable time by administrative staff for purchasing project-related materials, or executive management time if needed to resolve a higher-level issue? How much mark-up is included? What is applied to cost of goods sold versus general and administrative expenses of the company? Are the hours spent on your project diligently tracked? All of these variables will affect what you are actually getting for the proposed hourly rate.

You may be able to get an idea of how much overhead a firm is applying to the hourly rate by investigating the company. Do they seem to spend a lot of money on their building? Are they geographically located in an expensive area? Do they have a lot of administrative staff? If you visit, you can look for efficiency in their processes. Do they have a visual workplace,which can mean an emphasis on good internal communication? Do they seem frugal or extravagant in their spending? This can help tell you how much exhibit you will get for your budget.

Design/Build

I recently put a barn for my farm out to bid, including general details on size and design. I put each bid I received into a spreadsheet and analyzed the detail differences like the quality of steel to be used, how they would back fill, gutters, footers and the like. I chose the firm that provided the most details; I also had a better sense of trust because of those details. That contractor told me it is normal for firms to throw out the lowest price possible because buyers don’t usually consider the details or the service; they just look at total cost. In our industry, it’s a little more difficult to get those details because you are not buying a standard product. Still, more details than you think can be found between the lines of a proposal. Isn’t your project worth looking for them?

Does The Lowest Win?

The price point is often a big part of the proposal evaluation score. Accepting Low price on a design/build project without considering hourly rates and other factors makes little sense. If it’s a fabrication-only project and each company is providing a like product and service, low price might make sense. Yet, we have seen that there may be drastic differences in quality and service that may not be apparent in a low-price proposal. One additional factor may be even more important than the ones already mentioned: do you trust them, and would you enjoy working with them?An exhibit is a long-term purchase, and a lot of hours will be spent working together with the selected firm. Does their product come with any guarantees?  If so, you could be in a relationship with the company for decades.

Remember: make sure you ask for the right criteria in your request for proposals, and be diligent about analyzing between the lines and numbers to get the result you both deserve and expect.