I’m a small residential builder/remodelor in a rural town in GA. I am helping oversee the renovation of my church. We are looking at close to $ 3 million for the renovation and repairs to existing structures.
The commercial outfit that we are considering have priced the job considerably higher than our budget. I know that this is always the case with pretty much any job. It always cost more than you think.
I would like to have someway to tell how reasonable their prices are. I intend to get a few bids myself for some portions of the work to compare to their prices.
What should I expect as a normal and acceptable markup for a commercial contractor? The contractor is not local, so per diems are part of the price as well.
Thanks for any help or advice.
Chris Calhoun
Blackstone Builders
“our worst addiction is addiction to self” …..John Piper
Replies
Get multiple bids from reputable firms.
Without Detailed specs and plans no-one here will be able say what is reasonable
make sure you are comparing apples to apples.
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"After the laws of Physics, everything else is opinion"
-Neil deGrasse Tyson
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If Pasta and Antipasta meet is it the end of the Universe???
Typical overhead and profit is around 25%. Your company/architect should have estimated the job before anything was put out for bid.
Edited 11/1/2008 12:53 pm by gb93433
typical says who?
and how many architects that you know can accurately estimate a project?
Edited 11/1/2008 2:35 pm ET by CAGIV
typical says who? and how many architects that you know can accurately estimate a project?
typical among professional licensed contractors who have been in business awhile - meaning some variation will occur, but a typical markup is what is generally encountered as necessary to stay in business.
architects should have some general idea of square foot pricing based on their track record of similar projects - not a firm price by any means, but a ballpark budget number.View Image “Good work costs much more than poor imitation or factory product†– Charles GreeneCaliforniaRemodelingContractor.com
typical among professional licensed contractors who have been in business awhile
CAG's right. "Typlical" ... means absolutely nothing.
means pretty much the same thing as comparing "mark up".
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
"Typlical" ... means absolutely nothing
you're right - its not even in my dictionary!View Image “Good work costs much more than poor imitation or factory product†– Charles GreeneCaliforniaRemodelingContractor.com
so..... look what the cat dragged in
promise to be nice ???????Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
"promise to be nice ???????"
in the Biz Section ... ?
Nope ... but honest as always. Nice has nothing to do with Business.
I've been allowed in the non-Tavern folders the whole time, haven't left.
my time out in the Tavern ended on the 27th .... and I still can't post or get a reply email telling me why. Robyn seems to have lost my email or forgot how to reply.
and Cath is on "read only" ... with no explanation as to why she's on bad terms aside from being married to me ... and I think that should be punishment enough.
Hey .. while I got U here ... last time I bought U Outback Bucks ... I bought me some too. We spent them tonight. So ... thanks ... ?
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
have you tried the rack of lamb yet ?
that's what i'm gonna get after the stillers meet their doomMike Hussein Smith Rhode Island : Design / Build / Repair / Restore
I didn't know you had been on vacation
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Overhead and profit on municipal projects (public buildings, schools, hospitals) are typically limited by state law to some maximum amount, 25% is pretty typical. I don't know if that applies to churches, though. On the municipal projects I work on, we (engineers and architects) can usually get within +/- 20% on the construction cost estimate, but that of course depends on how well we prepare our plans and specs. I would imagine on residential work the drawings usually aren't as complete.
That figure depends on where you are and only applies to public bid projects. What most folks dont realize is the overhead numbers tend to be pretty heavy on a large firm vs. a small firm. "this dog may be old but he ain't cold. And he still knows how to bury a bone."
Lattimore
http://www.rehmodeling.com
RS Means
I wouldn't rely to much on RS Means. I know for the NY market if I ever refer to them I triple the number."We don't throw the first punch, but we'll throw the last" Barack Obama Oct.2008
That is the reason most companies develop their own database.
If they are good they can. They must be able to design a building within a budget. There are design programs that have a database and will give a price as one designs a building.
Edited 11/1/2008 7:50 pm by gb93433
I deal with architects and budgets everyday. Yes there are many who know more about building than the builders, but there are also many who don't have a clue to what things cost. Just depends on the individual, much like tradesmen, some are good, some are not."We don't throw the first punch, but we'll throw the last" Barack Obama Oct.2008
"how many architects that you know can accurately estimate a project?"It is more common than you might think in commercial to be in the right neighborhood
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
First what defines mark-ups: does it include General Conditions, O&P, Bond and Insurance? Of the thousands of estimates I have prepared and reviewed I would agree that 25% seems like a good average, but may be a bit low for a small commercial project like you have described.
I have regularly seen total cumulative mark-ups on large projects $100M + from 40% - 50% all out. Clients are amazed at what they spend for non direct costs (bricks & sticks).
"We don't throw the first punch, but we'll throw the last" Barack Obama Oct.2008
Edited 11/1/2008 7:23 pm ET by TGNY
Do you know how much their per diem estimate is adding to their "considerably higher" price? Did the $3M budget include per diems?
Depending on the locations, I've seen per diem add as much as 50% to the labor cost on some engineering jobs I've been involved in.
Your fly in the ointment may be that mention various repair jobs as well as the new renovation job. That gets you into a lot more complications and distractions that this firm may be ill-equiped to perform. I would at least address the question to them whether those variables is driving costs inappropriately. You could phrase it tactfully by leading with, what if we handled these adjacent repairs in-house, or are they intimately a part of the job?
Welcome to the
Taunton University of Knowledge FHB Campus at Breaktime.
where ...
Excellence is its own reward!
Depends on the contractor.
My experience is most shoot for 10/10 on profit/overhead, BUT they generally have large contingency amounts as well.
Then you get into those contractors who employ PM's whose sole job is to study the contract documents not to see what is included but rather what ISN'T included in scope of work and specifications.
They will bid a lower initial amount and know in advance where they can make money during the "Buy Out Phase" by beating subs up, cutting corners and making less expensive but adequate (or not) substitutions. and through change orders.
oversee the renovation of my church
Watch out what you critisize about the archy, builder <>G
But to show what 'can' be done, 1979 did a small renovation for our church, closed in and roofed a 20 ft by 50 foot area. New floor, caprpet, electrical, heat, etc in that area.
Bids were in the $150 K area (1979 $$). Some of the pros here will probably doubt the following figures.
Both archy and builder informed the church council they could not work with someone like me on building committee who questioned them so much.
Ends up I draw all the plans, get permits, recruit about 5 other good workers in the congregation - we did the ENTIRE job of just over $4,000, yes $4K, not $40K.
Obviously labor not included, and build very GREEN (lots of recycled materials).
Just looked at some old records, March 13th start to May 19th total finish, avg about 45 hours per week (got down to just 2 of us working Sat and Sunday afternoon, do not count on a great deal of volunteer labor) say 1000 hours*. Good wage at the time was $20 hour. So Say $20,000 in straight labor, another $20K in overhead for WC, taxes, tools, etc for someone in the business, costs which we did not have to cover as all equipment used was personal property, no WC, etc. Previous labor in stockpiling surplus lumber maybe about another $10K equivalent.
So, that leaves close to $100K 'markup' on $150 K job.
Probably could have done it even cheaper if could have had access to ponytl's warehouse materials at his cost, but think he was just starting then, and I had a maybe a bigger surplus stock back then??
*edited, just looked back at the job log and who showed up when, looks like about 1000 total man hours over the 2 months, used that for;the $20k labor.
Edited 11/2/2008 1:24 pm ET by junkhound