Replies

1. 
   Dave45 | Nov 14, 2006 05:24pm | #1

   Fixed price work can be just fine as long as you have a very detailed work scope - and very clear language describing how scope changes will be handled and priced.

2. 
   davidmeiland | Nov 14, 2006 05:48pm | #2

   Sounds like a fixed fee for construction management. It's fairly common, especially in commercial work. The main problems I see are (1) the subs and suppliers answer to the owner since he's paying, and not you. That dilutes your control of the situation. And (2) how are changes in scope handled? What if the owner changes from a $400K house to a $600K house with guesthouse and all of a sudden your job is a lot larger. I would have a lawyer draw up the specifics, or check with the NAHB or AIA and see if they have good docs you can rent.

   Personally I would be hesitant to do it. I would do Cost + Fixed Fee, meaning I hire all the subs and buy all the materials. Then I deal with the owner in the usual manner and maintain the control I want. The fixed fee part doesn't bother me as long as the scope of the job is stable. The owner will appreciate the difference from the usual T&M arrangement, where the contractor has no incentive to control costs.

1. 
   aztimber | Nov 15, 2006 04:00am | #3

   Thnx for the help.  I feel better and will discuss your concerns with my boss.  He's very open to suggestions so it will work itself out. 

1. 
   IdahoDon | Nov 15, 2006 05:32am | #4

   My hesitations are the same as David's.  We have run projects where the clients pay subs directly and it seemed to get screwed up to some degree 8 out of 10 times when out of our direct control.

   When clients decide on electrical, hvac or plumbing issues without me being in the loop it causes all sorts of problems that really drive me crazy. 

   Clients shouldn't have any problem-solving or decision making contact with subs.

   Stupid client tricks:

   "I talked to Joe DipSchit about the location of the HVAC and he convinced me that moving it down two floors and making fake columns to hide the ducts as they come back up would be the best place for it."

   "The plumber and I talked and we're moving the east wall of the bathroom to make room for a larger shower."

   Client tells drywall sub that a "normal" finish is ok.  Then gets pissed that "normal" doesn't include the high #4 or 5 smooth finish that was planned. 

     

   Beer was created so carpenters wouldn't rule the world.

3. 
   ponytl | Nov 15, 2006 05:37am | #5

   if the plans are in hand for the house.... I don't see a downside...  seems more you are a consultant and giving the HO access to your contacts...

   i think there is more risk for the HO  than there is for you....  ie... you call your regular sub to bid... I see no reason for you to question his price, this could be the place you let him make a little since he went to bat for you on the last project... ect... not that you'd ask or want him to add anything just no reason to hold his feet to the fire on "this" project..

   I see very low risk for you guys... you know what you'll make on the deal on the front end... what i do see is you being in the middle when it's time for HO to write checks... I would hope HO has a very good idea what he'll spend... if everything works out well HO might save a few $$  your boss has very limited risk and known reward which might be less than if he was doing it on a cost plus... but with less risk...

   in all things there must be balance HO expects to save a few $$$  your boss expects to make $75k with far less risk and exposure...  might call for more people skills than is the norm

   p

4. 
   IdahoDon | Nov 15, 2006 05:39am | #6

   When clients are paying suppliers directly they all the sudden decide to change things to "save money."  Clients just don't understand how small changes can cause problems off all kinds.

   It sounds good to shop around for the best prices, but when studs show up that are crap, or a load of concrete is changed without anyone knowing, any small savings just ended up costing the clients more money and causing a bunch of stress on all the carpenters.

   Clients shouldn't have direct contact with the suppliers or control of which suppliers are used, which is hard to do if their name is on the account. 

    

   Beer was created so carpenters wouldn't rule the world.