I expect that this question is going to tick off some (maybe most) of the pros, but that really is not my intention. I’m just trying to understand…
In a detailed cost bid, we’ve got a percentage of the total that covers the construction mgr, then there is a general admin and overhead pct. for the builder and then a pct. profit as well. These are all figured off the grand total. When there are subs involved, presumably they have already factored in their own admin, OH, and profit, as well. I can understand why the construction mgr pct is figured off the whole total, becuase he’s the guy that schedules the subs and works directly with them. But I’m not sure what I’m paying for when I’m paying 25% of admin/OH and profit on the cost of a sub. So that $15K to the HVAC guy, which already includes his own profit and OH, costs me an extra $3750 to the builder. I’m already paying $1200 or so to the construction mgr for dealing with the sub. What am I getting for that $3750?
Thanks.
Replies
I'm not sure if I'm interpreting what you wrote correctly but I would probably categorize the 25% ($3750) as the fee your GC/PM company is charging you to administer and supervise the $15,000 worth of work the HVAC guy is doing. But then you say " I'm already paying $1200 or so to the construction mgr for dealing with the sub" and I have no idea where that came from. Are you saying that in addition to the 25%/$3750 fee that you are paying to the GC/PM company you are also paying the salary of a "construction mgr" too? I might be inclined to say that sounds like double dipping if that is the case but it really depends upon what you agreed to in your contract.
What kind of contract are you operating this project under? What does the language say?
If it says a 25% fee plus the cost of the manager in the field then that's what you have agreed to. That brings the construction management cost ($3750 + $1200 = $4950) to 33% which while on the high side for construction management is still something you sometimes see on some projects, especially the smaller ones.
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PS:
JP_NC - "When there are subs involved, presumably they have already factored in their own admin, OH, and profit, as well. I can understand why the construction mgr pct is figured off the whole total, becuase he's the guy that schedules the subs and works directly with them. But I'm not sure what I'm paying for when I'm paying 25% of admin/OH and profit on the cost of a sub. "
While the subcontracting company's Overhead and Profit are figured for somewhere within that $15,000 cost that they are billing the GC/PM that's different animal from the Overhead and Profit for the GC/PM firm. They have their own distinct Overhead and Profit costs. They are seperate and different companies.
If that $1200 is the "cost" of a onsite Supervisor unless that onsite Supervisor was only there for a couple of hours that $1200 only represented his or her wage for a week and didn't account for the company's O & P which are recovered for in that %25 fee. The company that provides the Supervisor still has to make money too. They don't just provide him or her at cost unless it's charity.
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'cause subs need info ... that's the first part.
then ...
'cause sub's got questions that need answered fast ... that's the second part.
Jeff
Buck Construction
Artistry in Carpentry
Pgh, PA
Good example - something I'm dealing with now.
I am remo which is more expensive on the admin side than new construction but ...
This AC is high velocity here
My time
Meet with bidders from three subs to acquire best price and performance availavle for owner five hours
introduce the installers to job when they showed up one hour
The insulators had to hit an area before the ac guys . I had to arrange that with an hour of phone calls. insulators supposed to be there monday and AC guys thursday. Both showed up to work same place same time on wednesday. Play traffic cop three hours
Make adjustments in plan for delicery due to structural concerns one hour
Next day, differnt install crew. Go over changes due to structural concerns One hour.
Bang my head against the wall Ten minutes
Recovery from banging head aainst wall - take a drive, one hour
Next day, install crew aasks same questions all over again. One hour
The finally get it right
Next day after they are gone I notice something. one area that was a structrual concern - I had told them, "Just cut thru this plate, it is doing nothing"
They had cut thru four studs to re-route instead, and turned structural studs into cripple nailers for SR is all.
AAARAGH!
Reframe wall and move their duct four hours
phone call to bitch out owner of company half hour
phone call to get more info for final phase of install to make it righter next time around. half hour.
Doctor apt for more xanax two hours.
cost of xanax - priceless
and this was easy compared to the last time I had to have AC installed for someone.
so the 1200 is cheap for the on job management of the system install.
of the other 37 - that depends onteh overhead and profit requirements of the comnpany you have chiosen to do your home. A portion goes to insurance and office costs, possibly transportation overheads. Those all vary according to company and locale. Is there somebody answering calls when you dial? That person is getting paid. That money comes from someplace.
Welcome to the
Taunton University of Knowledge FHB Campus at Breaktime.
where ...
Excellence is its own reward!
Well put. Hardly any homeowners see or realize the time it takes to orchestrate a well built project.
Mark
So what did you do after lunch?
Jon Blakemore
Excellent real world description of how things seem to go!!!
Ahhhhh piffin, you only remember banging your head for ten minutes. From your description you had at least a good 30 minute session there. Just love days/weeks/projects like that.
Its sad, but I get estatic when things go the way they're planned. Ill start doing a little dance right there on the job site.
-m2akita
You forget how effective and efficient I am. I can get more head banging done in ten minuties than the average guy can in a half hour...:)
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
I'm not sure why you need to pay a contruction manager when you have allready hired a GC. Isn't that a part of what he does??
Everyones points so far are valid I think.
And I'll add this............don't lose site of the big picture. If you wish to stop and focus on things like this, you will find lot's to be upset about. Are they doing a good job and satisfying your contractual desires??
Any time you start counting the other guys money you are asking for trouble, especially if it something you have allready agreed upon.
Eric
I Love A Hand That Meets My Own,
With A Hold That Causes Some Sensation.
[email protected]
"I'm not sure why you need to pay a construction manager when you have already hired a GC. Isn't that a part of what he does?"In my 35 years I've been hired as a construction manager about 5 times. The reason is that the GC is looking out for himself 1st, and the customer 2nd. Everyone here knows of the problems many people - subs AND customers - have/have had, with GCs - both remodelers and builders. Obviously we have our share of incompetents and just plain sleaze.A construction manager is loyal to no one, and responsible to no one, except the customer. Call it hedging your bets or taking out insurance. 25 year on male or female, and single: Take a chance and let the dice roll every day, or get medical insurance. Either way, that "gambling" decision is a call the customer must kick around and make. Will hs/he become a "customer" of a construction manager or health insurance company or not?
Your post is a great example of something discussed here frequently... and that is... NOT itemizing your bids, because it leads owners to question it.
I'm tempted to ask you, do you think the overall cost of your project is fair? However, I doubt you have any real way to answer that, nothing to base your expectations on, so you start questioning the percentages and the way the pricing is structured.
None of this is intended to be critical of you... it's just so telling that you're being given a price based on percentages and it's making you uncomfortable and making you ask questions.
I've got notes on my desk from a sales call yesterday. It's a complicated and difficult job, and I'm tempted to price it cost + percentage. I think I won't...!
"NOT itemizing your bids, because it leads owners to question it."
With all due respect, Mr. Meiland, the "black box" approach only helps the person with something to hide. Why shouldn't I ask questions? It's my money I'm paying. I just want to know what I'm paying for. When I have all the information, then I can make the decision to accept it, or reject it. I'm not planning on trying to bargain with the guy. If I got a bid that was one number, just the total, for a project this size (> $100K), there is no way I'd accept it. I'd go somewhere else. I know there are potential customers who might prefer your method. That's great. More power to you. I'm just not one of them.
I don't claim to be an expert about the construction business. Far from it. But I do know the basic principles of project management and they are the same whether you are building houses, software systems, space shuttles, or oil pipelines through the jungle. Personally, I appreciate that my builder is treating me as a partner in this process, not just as the guy who's writing the checks.
To answer a question that was raised by others: the construction mgr, the onsite guy, works for the GC. Hence my question - it seems like I'm paying at least twice for a service, at least with respect to the subs.
Thanks for all the input.
"I don't claim to be an expert about the construction business. Far from it."Then how in the world will you know if someone's overhead and net profit is correct or not, is a lie as shown and more built into the pricing structure, or how one even calculates markup? If not, that the breakdown as information to you means nothing because you are incapable of interpreting that information.For example if I shoot for a 10% net profit and must cover my 26% of sales overhead, what markup percentage to I use to recapture and overhead and obtain that net profit?How much time per day should be allowed to supervise subs?How much time per day should be a allowed to discuss the project with the owner?How much time per day should be allowed for administrative work?How much money should be allowed for debris removal.So if opening up the "black box" and reviewing it's contents is not possible, like me examining a sample of my blood, what can be accomplished? If I have to take my truck to a transmission repair shop, I do not want, nor do I need, to have him tell me every single part it needs, the cost of each part, the breakdown of the labor cost of installing each part, plus the labor to remove the transmission from my truck, and upon completion of repairs, the labor to reinstall the completed transmission back into my truck. I only want to know the bottom line - not a dissertation of the contents of the "black box."
If your builder presented you with a single number representing the entire cost of the job, why would it be hard for you to decide whether or not to buy?
>>With all due respect, Mr. Meiland, the "black box" approach only helps the person with something to hide.
Yeah, that's true. But we only have to hide it from guys that say things like;
I'm paying 25% of admin/OH and profit on the cost of a sub. I'm already paying $1200 or so to the construction mgr for dealing with the sub. What am I getting for that $3750?
>>I just want to know what I'm paying for.
Everything in the contract. Nothing else.
The numbers you are wanting to see (profit margin, OH, markups, etc) have no meaning out of context and their context is metrics for the man running the business.
All that being said, if the GC asked to see your tax return before submitting a bid, then I think you have the right to see his before awarding the contract.
Samt
>>With all due respect, Mr. Meiland, the "black box" approach only helps the person with something to hide.
It really is an amazing comment. Around here there are a lot of contractors legendary for building large projects T&M and going way over budget. I do fixed price with almost everyone I work for, and they appreciate knowing that there is a... FIXED PRICE... rather than a blank check. In my opinion, there's a lot more being hidden with a T&M job, such as the final cost of the work. That would scare me, especially in the $100,000+ range.
jp from nc... you're a little testy, no ?
i mean , you slapped dave meiland up the side of the head...
and yet , you've entered into a contract for CM and you don't even know the definition of the terms..
shame on you .. i bet by the end of the project , your GC/CM/PM will swear off T&M.. at least in the manner you're describing..
what in the world are you doing ?... your PM works for the GC ?
open books , huh ?
By definition, for me to be upside-head-slapped I'd have to give a dam what he was saying. I love this board, but sometimes the homeowners in here kill me. At least over at JLC we can tell them to get lost.
David, I guess we have to remember 1) that between the TV shows, Lowes and Home Depot, everything done to any house is a "snap", and 2) the only companies that have overhead and are entitled to a net profit are the companies these people work for. And they must work for someone else because if they owned their own company, they would not be asking such questions.They are the sharpies and their employers are good business people when making profits, but we're the con artists when making profits. And their employers are terrific people when giving these "employees" benefits like vacations, paid holidays, time a a half, personal time off, medical coverage, time off (aid) for prenancies, etc., all paid for by THEIR customers, but when we want the same and charge OUR customers for those bennies, again, we're con artists .Go figure how the human mind works.
Gentlemen, please!!! Or Gentlepersons, if applicable. There was no head slapping intended here (except perhaps my own for having started such a contentious thread ;-). I apologize if my "black box" comment was out of line.
I'm sure most of you wish I'd just shut up and go away by now, but...
A couple of points - I haven't signed a contract yet. I'm trying to determine if I should, with this particular builder. This is not buyer's remorse. I'm trying to prevent that.
Also, this is a fixed price bid. It's not T&M. I'm not sure where you got that idea. The bid just happens to include all the detail that makes up the price (including a line item for debris removal, since someone mentioned it)
"If your builder presented you with a single number representing the entire cost of the job, why would it be hard for you to decide whether or not to buy?"
It wouldn't be hard to decide at all. It would be very easy to make the decision "no, thank you". I'm not suggesting that you operate this way, but how would I know that he hadn't just picked a number out of the air? If he had done that, he certainly would have guessed way high to make sure he was covered, right? That only makes sense.
Regarding the truck transmission example, I don't need the level of detail that you describe either, but a better example might be to consider when you bought the truck. Did you look at the price and composition of the different option packages, and decide which ones you wanted and which you didn't? And when you saw that $495 on the sticker for "special paint protector" applied by the dealer, even though it was already clear coated at the factory, did you ask what that was for, and decide whether you thought it was worth the price? I'm sure you didn't just think, "I don't know the truck business, but I'm sure the dealer had a good reason for putting that charge on there. I'd better just pay it and not ask any questions." Maybe it's just me, but where I come from, asking questions is a sign of respect, not disrespect. "Seek first to understand", as the saying goes.
Anyway, looking back at my original question, I guess I should have known better than to ask a question about the cost of doing business. Talking about money always sets people on edge, often with good reason.
I just had this discussion with my GC today. On my estimate (about to become the contract) there are line items for "supervision", OH and profit. OH is 10% of overall estimate and profit is 10% of total including OH.
This is a >200 project (SF Bay area, paranoid engineers due to rapacious lawyers, high cost of living impacts everyone - the carps need to live here too, yada yada yada) so yea that OH and profit is a big chunk of change.
The supervision is on-site time spent by the lead doing supervision-type work (as opposed to actual building, which he will also do) and is a fixed number (not a %).
The answer my GC gave for charging OH and profit on all the sub's work was very well covered by Piffin. Also, at least in CA the liability (or some portion of it) for the subs is covered in the GS's insurance. Ultimately, the GC is responsible for the overall quality of the finished product so deserves to profit from his work ensuring the subs deliver as expected.
Another thing to consider is all the time spent by the GC developing the bid and project plan. That's a frequent source of discussion here. Im not talking the initial estimate but the detailed costing of a complex project. No matter how good your estimating skills are and how many times you've done similar projects there are always wrinkles that make each project unique and require time to plan properly.
In my job I get paid for that planning time, and my company understands the value of quality planning before starting a project. I fully expect my GC to be compensated in the same way.
For me it came down to understanding - once he explained it all it made sense. Now, I'm willing to bet that most clients don't have the experience and point of view (former builder, former project manager) to swallow those numbers so for those of you disinclined to lay out all the numbers I understand your POV.
Still, like JP NC I want to see and understand everything in the bid. For me it's all part of building that trusting relationship to make the project successful. So, as part of the discussion we removed the gas fireplace and granite from the bid. I bought and will install the fireplace so there is no expection on the GC to ensure quality. The granite I will have to pick out and work with the fabricator on the cuts to get the pattern I want. No involvement by the GC there. We did leave in the fabrication labor because there is coordination and associated costs there.
Fellas, remember, the #1, and I mean #1 reason for disputes between builder/remodeler and owner is due to a lack of supervision of all staff including the GC's own staff.Someone must be the orchestrator of the piece that is about to be played my many different musicians. In the mind of some people like myself, that supervison is important person #1, for without him, chaos occurs. My son pays his Super well over $150K and his Project Managera about $75K or more, they are that important, and not a single one of them misses any details, coordination, documentation - nothing! It matters not if you hire the most expensive sub in the state, or the cheapest sub in the state, without that PM, chaos will still occur.And those car options are over and above the basic $20,000 price of that car, right?
I have been following this thread and just reread your inititial post. My conclusion is that either you are looking for responses you can argue against and therefore "prove" the legitimacy of your point/ perspective, or you are a ####ing Idiot!I find it curious that you don't have any issue with accepting a % added to material cost or fixture costs - both of which include O&P for the manufacturer and supplier, each of which adds a value - but are reluctant to accept a value added % for the GC to the subs $.My conclusion is you feel that since you are dealing with "Joe Contractor" personally - unlike your dealings with American Standard, Kohler, Georgia-Pacific, Dow-Corning, GE, Home Depot... - everything in JC's budget/ cost estimate is up for negotiation. Shame on you. Does your desire to "save" a buck extend to stealing a line item cost? You know better than that. Otherwise you would not have anticipated us reacting the way we have.Suck it up or cut your wish list down to something you can afford. I know quite a few people like you and you all make me sick. You're all a bunch of parasites.G' Night,Frankie
Now THAT'S a slap upside the head
Comments like this, and many others on this board (As well as past experience) is why I, and many other home-owners, do not trust most contractors as far as we can throw them. Dave - Total Newby from Hiram GA
How does retaining control of your propietary information translate into deceit?There's a lot of contractors that shouldn't be trusted, but that same could be said for a lot of clients.
Jon Blakemore
It is readily acknowledged on this board that there are numerous bad contractors out there. But let me be the first to inform you that every contractor on this board can name numerous home owners that spend a lot of time trying to screw someone, someone that is trying to repair or remodel their homes.
You can probably name 2-5 bad contractors while I can name at least 20 crooked home owners. Lets call it a draw. You as the homeowner undoubtably feel you owe a contractor nothing if he hasn't done work for you that merits copensation. Guess what? Sometimes we feel the same about you. DanT
Dave - Total Newby from Hiram GA, JP_NC and any other HO’s thinking of agreeing with them –I have broken down JP_NC’s initial post to clarify the issue(s). JP. please correct me if I haven’t understood you accurately. I have taken out some of the words for brevity and added some (always in parentheses) for clarity. All capitals are MY doing.Post #1In a detailed cost bid, we've got 1. a percentage of the total that covers the construction mgr (NOT management).
2. a general admin and overhead %.
3. a % profit for the builder. These are all figured off the grand total. When there are subs involved: 1. They have already factored in THEIR OWN admin, OH, and profit. I understand why the construction mgr% (NOT management) is figured off the whole total. I'm not sure what I'm paying for when I'm paying 25% [for]:
1. Admin
2. OH
3. Profit.
on the cost of a sub.I'm already paying $ to the construction mgr for dealing with the sub. What am I getting for that $3750?Simple answer: MANAGEMENT. The Construction Manager is just a MANAGER. He/ She has a support staff back at the office, a vehicle, a telephone – cell and in the office – office rent, and office furniture just to name a few things, which comprise administration and overhead, required for proper management.Or, to use your terms – “because he's the guy that schedules the subs and works directly with them.†However “the guyâ€, in reality, includes a support staff and the other components I mentioned above.Frankie
Edited 4/24/2005 9:58 pm ET by Frankie
I'm not sure why I'm bothering to reply to you, Frankie, after you called me a “####ing Idiot!" I have to think that you have already made up your mind about me and, regardless of what I say, you won't change it. Am I wrong about that? I guess we’ll see. But, perhaps because your second post was more reasonable, I'm going to try once more to clarify the situation.<!----><!---->
Let's start with where you were right.<!---->
You were correct that there were several answers given in posts 2 -11 that actually answered my question. Some others provided useful info in later posts, as did you in your reasonable explanation. I'm paying for additional management and all the other costs of running a business. Conducting the orchestra, as someone nicely put it. Okay, I can accept that. Maybe it wasn't such a great question. Would a better question have been "is it common practice to do things this way?" That’s more to the point, anyway.<!---->
However, referring to post #2, and I quote none other than the estimable Jerrald Hayes,<!---->
"...But then you say " I'm already paying $1200 or so to the construction mgr for dealing with the sub" and I have no idea where that came from. Are you saying that in addition to the 25%/$3750 fee that you are paying to the GC/PM company you are also paying the salary of a "construction mgr" too? I might be inclined to say that sounds like double dipping if that is the case..."<!---->
That tells me that the situation I asked about is not entirely standard. Refer to other posts such as #9 for similar thoughts. In my particular situation, the construction mgr works for the builder, so maybe that explains things, or maybe not. But I gather that my question was not entirely stupid, since some of you questioned the setup, just like I did.<!---->
Anyway, I just wanted an explanation, and I got one. As far as I'm concerned, we could have stopped after post #11. But I got oh so much more, as well. And that's where the problem started. <!---->
"Instead you dug in your heels and proved you were looking for support rather than an education. "<!---->
Not true, and I'll tell you why. Several folks, including you, made incorrect assumptions about the reason for my questions, and also made incorrect assumptions about what I was going to do with the info if I got it. Some people seem to have trouble differentiating between asking questions and arguing. I am not looking to screw anyone out of anything. I am not trying to get things for free that I should reasonably be paying for. <!---->
I even agree with your comment, "To tell a Builder, or any professional you do business with, HOW they should arrive at their fee or WHAT their fee should be is just plain arrogant and rude." BECUASE THAT'S NOT THE REASON FOR MY QUESTION! I wouldn't dream of doing such a thing. I refer you to my post #13, "I'm not planning on trying to bargain with the guy." I’m certainly not planning on arguing with him either. I hate arguing. I'm very conflict averse, to tell the truth. I’m asking questions, and he and I are discussing, not arguing. <!---->
I guess I got kind of ticked off when the posts turned from "here's what you are paying for" to "how dare you ask such a stupid question", which is how I interpreted post #12. Maybe I overreacted, but what's done is done. I've already apologized for the "black box" comment. <!---->
I blame it all on not having computer access from 4/16 till 4/21. ;-) Had I been able to read, and respond to, the posts up till Saturday evening, for example, I would have had my answer, thanked all for their help, and gone away. But Mr. Meiland's post #12 was the first thing I read when I logged on on Thursday, and, well, we all know what happened next. I had a bad day, as I guess you did, Frankie, when you called me a ####ing idiot. You're not always so hostile, are you?<!---->
After that, things went downhill fast. For what it's worth, I don't agree with Dave - Total Newby. I know there are crooks out there, but I've had mostly good experiences with the tradesmen (plumbers, electricians, slate roof specialists, and even painters, when I had a big job that I needed to have done in a hurry) that I've worked with in the past. I've always done the carpentry and trim work myself, as well as tile, paint, flooring, that kind of thing. I've done electrical and plumbing, too, but I know when I need a pro. This project is my first experience working with a builder/GC, and I'm not entirely sure what to expect. Also, I don't just pick people out of the phone book; I get referrals from people and places I trust. Standard, common sense. No news flash there. I'm sure this accounts, in large part, for my good experiences. But this is a big job, and it's a lot of money for me, and I'm a little nervous. So sue me. Maryland Mike hit it dead on, I now realize, with his post #26, “if you like the guy, and the price, then hire him and let him do business the way he needs to do it.†That’s what I plan to do. (We’re signing the contract later this week.)<!---->
Wow this is a long post. Sorry, to any of you still reading. I’m almost done. <!---->
So, Frankie, you, and others, seem to think you've got me all pegged, based on few, maybe several, sentences, as a bad guy, but I'm telling you that you got it wrong. I've tried to explain why you got it wrong. If you take my comments at face value, and don’t read ulterior motives into them, I hope you’ll see that this is what I like to call a misunderstanding; that “what we got here is…failure to communicate†(said in my best Strother Martin voice, which probably isn’t that good). <!---->
Well, whaddaya think? If this didn't clear things up, I guess I'm stuck being thought an a$$, because I am out of energy by now.<!---->
<!----> <!---->
I don't know when you read my post #32, but it originally was much longer and a bit/ lots more critical. I edited it this afternoon and am happier for it.So, I think we are approaching the same page. I still think you are hoping to find an/ the answer that will save you money but am happy to hear that you recognize, on this larger project, you need and will benefit from the assistance of a Pro. I also think you intuitively know that a great deal of a project’s success depends on the quality of the relationship between all parties involved. It is frequently recommended on this site that Ho's hire people they get along with rather than who is the cheapest. As for the Jerrald Hayes' Post #2 and Eric Paulson's post #9: They misunderstood your initial post. They interpreted that you were hiring a Construction Management Company in addition to the General Contractor. The question of are both needed gets posted on this site regularly.O&P % amount and method of calculation is an ongoing topic of discussion. An upshot of these discussions, which pertains to your issue, is – the HO is charged directly for all expenses incurred due to their project. These are costs the GC would not have if the project did not exist. This means HOs are charged for the materials, carpenters, plumbers, electricians, laborers, carting, site power, site telephone and construction manager. Other costs, which are not directly related to their project - such as office rent, insurances, truck/ vehicle upkeep, gasoline, office staff, company cell phones - fall into the overhead category and can be billed/ charged on a % of Project Total basis.From your initial post, it sounded as though you did not feel you should be charged for the GC’s O&P since the subs were already charging their own O&P, and the GC’s line item cost for the CM was enough. You will find in the coming months that there is a great deal of work and planning that goes on behind the scenes and the tasks you did for free in your previous projects, you are now paying someone to do. IMO, it’s money well spent.Good luck with your project and I hope you continue to update us on your progress and feel comfortable enough to return to BT with more questions without having to change your screen name – HA!Frankie
Yes, Frankie, I did read your longer, more critical post #32 before you edited it, but I chose not to reply directly to a lot of it. I think my last post was long enough without having gone into all that, don't you? ;-) I like your edited version better too.
Anyway, I hope we've resolved this issue. Of course I'm looking to save money, but only if it's warranted. That's why I'm doing some of this project myself, (demo, trim, tile and paint, mostly) to get it down into the affordable range. I was initially concerned that I might be paying double for something, but now I know that I'm not. As you said, I'm paying someone else for the "planning that goes on behind the scenes and the tasks you did for free in your previous projects" I imagine I'll consider it money well spent as well, by the time we are finished.
Case closed, I hope. Thank you.
Just my two cents.I am one of those contractor's (fool or genius, depending on your point of view) who breaks out costs and shows O&P to the client.Doing it this way helps me build trust with my clients and more easily value engineer the project during the planning stage.This planning stage is only arrived at after the client has interviewed me and maybe a few other contractors, and after they have looked at some of my jobs and met with some of my past clients.By this point, I am assuming that the client feels pretty good about hiring me, or things are not going to move forward. Questioning my O&P would give me a clue that there is not as much of a comfort level as I would like.Hard job costs + overhead + profit = what I am going to charge you to do that job. If that number fits your budget, great. If it doesn't, then we need to think of reducing the scope of work so that it does.I would need to ask myself what you could realistically expect to gain by questioning my numbers. Different contractors account for O&P in different ways. Some dump it all into their job labor costs, some spread it out equally over every line item, some weight certain things more heavily than others, and some, like me, dump in a line item, plain as day, at the end of the estimate. None of these ways is right or wrong. They are just different ways of accounting for the money, above and beyond hard costs, that we need to make. As well, some folks pad their hard costs a few points in order to show less O&P on the bottom line. Lotsa' different ways to skin that cat.
For that reason, I don't think those numbers mean anything other than what they do to the final price. As I said, I put those numbers at the end so that I can more easily work with real numbers on the hard cost lines, but that's just me.What matters most in a fixed price agreement is:1. Do you like the person's attitude?
2. Have you seen and do you like the quality of their work?
3. Have their past clients said good things about them?
4. Is the price something you can deal with?Kinda' long winded, but bottom line.......if you like the guy, and the price, then hire him and let him do business the way he needs to do it. Edited 4/23/2005 9:40 am ET by Maryland Mike
Edited 4/23/2005 9:42 am ET by Maryland Mike
" Did you look at the price and composition of the different option packages, and decide which ones you wanted and which you didn't? And when you saw that $495 on the sticker for "special paint protector" applied by the dealer, even though it was already clear coated at the factory, did you ask what that was for, and decide whether you thought it was worth the price?"
So if your contractor gave you a bid of say 90k for the job in the "black box" but in a seperate column put 2k for the hot tub that would make it ok to argue the hot tub but not the base cost of the remodel? Is that what you are saying because the paint protector has nothing to do with the base cost of the vehical. You can't negotiate the cost of the transmission that is already in a new vehical.
"Maybe it's just me, but where I come from, asking questions is a sign of respect, not disrespect. "
Are you from India per chance? They seem to read from that same book. DanT