Replies

1. 
   Nick_Pitz | Oct 21, 1999 05:04pm | #1

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   John -

   Think about doing it for a flat fee plus a pecentage of the amount it comes in under budget ( if it does). Say your 5% plus 25% of the amount less than 300k that the job costs. This way you get your fee no matter what but the customer knows you are motivated to get the job done under budget and not drag it out.

1. 
   Randy_Rust | Oct 21, 1999 11:44pm | #2

   *John, The rule of thumb that I use is: 8% of total labor hours(100 hrs of labor=8 hours PM), or a more logical choice in your situation would be 4 % of material,equip rentals and all labor! so your 300k scenario in my book would be 12k !! looks good to me!Are you the Finish Carpenter John Eaton, who has been featured on HGtv renovations in the NE us area?= )Randy

1. 
   John_Eaton | Oct 23, 1999 04:15am | #3

   *Randy;no,unfortunately I'm not that John Eaton.I did get mentioned in article in This Old House Magazine last spring,I was described as being "fussy and slow".I'll take that as a compliment,I guess.

1. 
   Mike_Guertin | Oct 25, 1999 02:59am | #4

   *I've been doing the CM thing on new construction for a while. The amount you charge will be influenced by many factors. Nick's proposal has merit but I've never tied compensation to savings and flat fee.I do flat fee or by the hour for management time.New construction fee = 8 to 15 % flat fee based on initial project cost out I produce. If I project 300000 project then I'd charge around 30,000.For remodeling I figure 15 to 30%. This reflects the increased management time I've found it takes to run remodeling projects.Or if client wants an 'a la carte' choice if they intend on being more involved in project, then I'll charge by the hour at $75.I find these numbers put the service on par with genral contractors but offer clients service and flexibility especially if project scope isn't defined (or even definable as is the case with some remodeling).

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   jim_"crazy_legs"_blodg | Oct 26, 1999 07:04pm | #5

   *Could someone please explain "construction management"? Are you employed by the owner to coordinate the work of other trades, but the owner pays them? Do you hire them, or just supervise? Are you responsible to the owner for the subs work? If you are doing some of the work yourself do you charge for the time you spend supervising or coordinating other folks? Thanks - jb

2. 
   Joel_Greer | May 25, 2000 07:31am | #6

   *Wow! Having been a builder for new home construction, your dollar figures are shocking. Most new home companies pay their builders $30k-$40k base with bonus. The projected income is $40k to $60k. Maybe a little more after a few years with the company.These guys are building 10 to 25 new houses at once with all the attendant headaches for a fraction of what you charge. I didn't realize I was so qualified that I could charge $75 to $125 AN HOUR! Where do you find people willing to pay this kind of money for a skillset available for 1/10 the price? I guess it must be a little hype that gets you by. Call it "Construction Management" and market yourself as some high-powered consultant when you are providing no more service than a "builder".Thanks for the eye opener, I'm getting some new business cards and tripling my prices today!

3. 
   Rick_Ritivoy | May 27, 2000 01:21pm | #7

   *The common problem amoung builders and general contractors is under estimating your own value. This is why I don't charge or sell jobs based on labor hours. It never comes out to enough. You have a skill that you have developed through research, schooling and experience charge for it. Take 2 licensed builders, one is doing his 3rd house the other is on his 325th. A client choosing between the two will recognize the benefits of dealing with an experienced builder that will make the process much smoother and be better prepared to maintain an accurate budget. The client will pay more for the peace of mind and reduced stress of dealing with the second builder provided the builder knows how to market his/her experience. You become an expert and a consultant. Why do architects make such a high percentage of the project budget? Most have never held a hammer (funny, neither have I) They pull off predrawn sections and standard sross sections to save time. They are reuses the experience of others. They rarely if ever show up on a job site. Their plans are always flawed and they get paid upfront.Architects have a license, so do builders. Contractors have to change their own level of self esteem in order to change the public view of a contractor.I have an incredible rolodex. It contains the name and numbers of the best trades in my area. How much would a client pay to have a proven expert work on their job? So far in 19 years...at least double. [email protected]

4. 
   Dan_Dear | May 27, 2000 05:35pm | #8

   *Joel, let's examine as statement you used in your post - actually a word: "skillset".Most remodelers, builders, plumbers, painters, tiel setters, etc., thinking in terms as "technicians" - Equate their skills with money. In other words, painters are "worth" so much. Good framers are "worth" so much. Good trim carpenters are "worth" so much. Auto mechanics are "worth" so much. By "so much", I mean to the client, perhaps also to an employer also. Those tecnicians "lump" their skills into one pot - called painters, trimmers, etd. After all, that's what those "skills" are "worth" to the purchaser of those skills right? Why, because all they do are frame, trim, fix cars and trucks, paint, set tile, etc.Now let's translate the above "concept" to other industries.Cars, vans and pickups do what? They transport people and "things" from point A to point B. Therefore, all cars are worth $12,000 like an Escort. All pick ups are worth $15,000 like an S10.Continuing, all lawyers are "worth" $75 per hour. All CPAs are "worth" $65 per hour.All hambergers are "worth"79 cents - McDonalds.All clothing suits are "worth" $65.00.All houses of the same size and the same lot area are "worth" $150,000.All hammers are "worth" $3.95.Get the point. Obvioulsy ther is a difference between hammers, hamburgers, lawyers, etc., and that goes for carpenters, painters, builders, remoldelers - virtually everything that exists in our world, inanimate objects, people and skills.The difference is what the potential purchaser "experiences" when buying or hiring one form one extreme to the other extreme. It's not quality. It's not capability. It's not workmanship. It is not expertise. It's not what the above offer indivudually. It is all of the above. And the "all" of the above is translated into only one word - "experience" - the experience that the "purchaser" enjoys or does not enjoy during and after that "purchase" has been made. Think about that for a minute.What's the difference between buying a cup of coffee at McDonalds for 63 cents and buying a cup of coffee at a cafe like Starbucks at $2.00 - triple the cost? What's the difference between an Escort at $12,000 and a Cadillac at $32,000? The difference is what the buyer "experiences" during and after their purchase. More important, the buyers "perception" of their experience(s).To learn how to determine what they are, and how to provide those "experiences" you must stop thinking in terms of technician mentality and start thinking in terms of sales, PR, marketing and a business mentality.Now go to your local book store and buy "The Experience Economy". Only after reading it, then buy Rick's book. Read them both and dramatically change your world, and the world of your clients.As buyers, we pay for only one thing - experiences.

2. 
   John_Eaton | May 27, 2000 05:35pm | #9

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   We are renovating and adding on to a burnt out federal,subs to do alot of the work,us to do the more critical bits,(demo,reconstruction,trim,etc.) I am also managing the job,with no specs on the plan,lots of "hand holding". The question is ,what should I charge for construction management? The budget is 300,000,with our labor t&m,since we have no specs.I was thinking a flat fee of 15,000 might work.That way theres no incentive to run the job up. any opinions?