Replies

1. 
   davidmeiland | May 03, 2007 04:07am | #1

   You need to put together a list of what items are costs, and what items are not. That needs to be agreed between you and the owner, it needs to be very clearly laid out. You add your percentage to all costs, as far as I'm concerned.

2. 
   FastEddie | May 03, 2007 04:25am | #2

   If the owner balks, let him provide some items at his expense.  Dumpster is one item that would qualify.

   "Put your creed in your deed."   Emerson

   "When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it."  T. Roosevelt

3. 
   JerraldHayes | May 03, 2007 04:43am | #3

   luckyjeff when you say you're entering into your "first cost plus fixed percentage contract" do you have a particular contract form or format that you we're planning on using? Usually in the standard contract forms for CPFF that I seen they make an effort to define just what the Costs To Be Reimbursed (to which the fee is attached or applied to) and the Costs Not To Be Reimbursed are defined in some way. If you don't have a standard contract in hand you might want to pick up Gary Ransone's The Contractor's Legal Kit : The Complete User-Friendly Legal Guide for Home Builders and Remodelers. In the Cost plus Fixed fee Agreement that appears in it he has a section entitled Costs To Be Reimbursed that includes stuff like:

   • Labor Costs: The rate schedule for what is defined as COST for the GC-CMs own company personnel working on the project. In Ransone's agreement template he spells out that this is clearly "the gross amount to be charged for each worker (any and all applicable labor burden, medical and retirement benefits, bonuses, etc. Have been factored into these rates)" Workers Comp is recovered here as part of a Labor Cost Burden factored into the rate schedule. While Ransone doesn't say so I think General Liability depending on whether your insurance company figures it based on payroll or total sales may or may not be figured in and recovered here. That all depends and needs to be figured out what works best for the GC-CM. If it based on total sales then it might be better recovered for as part of the FEE. And also in Ransone's agreement he smartly recommends including a rate for the "clerical time spent preparing payment applications."
   • Contractor's Supervisory Personnel: To explain how supervisory personnel will be compensated for for both on-site and off site activities.
   • Cost of Time Spent Picking Up Materials And Mobilizing Job: This is often an area not even considered by homeowner customers and sometimes they may be reluctant to pay for it (especially if they see excessive trips out to get materials and supplies).
   • Subcontract Costs: Sort of obvious but still should be clearly described and included.
   • Cost of Materials Incorporated Into The Project: The cost of materials and equipment and the applicable sales tax, freight, or delivery charges plus how unused material is going to be credited or accounted for.
   • Costs of Other Materials, Equipment, Temporary Equipment, Taxes, Security, And Related Items: Monthly utility fees, port a-potty, scaffolding, refuse removal etc.
   • Emergency Repairs And Precautions: Things like temporary fencing to protect the public or workers and stuff like work to protect the project from the hurricane or a blizzard that might come through.

   Then his agreement goes on to explain the Costs Not To Be Reimbursed which can be assumed to be covered by the FEE. Things like:

   • "Any general insurance costs and state and federal taxes of contractor (e.g., Worker's compensation, comprehensive general liability insurance, auto insurance, health insurance, or labor burden expenses, such as state and federal employer taxes, etc.). Contractor has factored these costs into the rate schedule for contractor's personnel in the Labor Cost section above, or these costs will be paid out of contractor's profit and overhead percentage."
   • Travel time to and from the job site for contractor and his employees.
   • Costs to purchase, repair, and maintain contractor's tools, vehicles, and equipment.
   • Cellular phone charges (unless specifically agreed to in writing by owner and contractor).
   • And while Ransone doesn't mention it in his agreement it's also a good idea to spell out that the salaries of your general office personnel are not reimbursable since they can be applied to all the projects the GM-GC has going and generally not specifically by any single project except perhaps in the preparation of the work records mentioned above.
   • And as an extension of that your office or shop rent or costs of office equipment is generally not reimbursable since it can't be specifically allocated to specific projects. It's recovered and paid for as part of that FEE. For instance a contractor doing a project would not be giving him a bill for the monthly lease payment on a computer or the monthly phone & electric bill

   What makes the book so good is that in addition to the blank contract forms he has in it he also presents a sample one filled out that he then annotates and explains. That alone makes the book well worth the investment.

   "Would the garbage bin rental and disposal be an item I can add my percentage on?"

   Using the description I just described above the dumpster and the cost to empty it are direct job costs and would be subject to reimbursement and the fee.

   "I was also wondering if my percentage is added before or after taxes?"

   If you are talking about the taxes you get charged on materials or subcontracted labor servives you purchase the tax on them is again a direct job cost.

   You had also better be get some insight too as to whether the labor you charge, your fee is subject to tax too. That varies in different states in the union so maybe you should ask your accountant on that one.

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4. 
   Piffin | May 03, 2007 01:05pm | #4

   The garbage bin is a cost, right?

    

    

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5. 
   FastEddie | May 04, 2007 12:32am | #5

   Everything is negotiable.  Just get it in writing before you start.

   "Put your creed in your deed."   Emerson

   "When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it."  T. Roosevelt