Hi every one
I have been in the remodeling business for 20 years I have just run up against a new delema for me. I have a client who wants major remodeling done on a house they will be closing on the 1st of Aug. As of now the plans are no where complete. He wants to use some subs he has a relationship with but still wants me to act as GC We both agree time and materials is too much of a pain. It has been suggested that I act as GC and the subs bill him directly. I estimate and bill him the work my employees do. I am not sure this can work but I have set the time aside for the job and I have worked for his family and friends. Does any one have any suggestions or answers to the following.
What % fee should be added to the subs for my management of them.
Is this generaly a bad idea???
should we set up a method where both the owner and I go over and approve all bills.
Any advice or suggestions will be greatly apprieciated
Thanks
Replies
I ain't a contractor, but this sounds a bit fishy to me. My thoughts would be:
1. Make sure you get paid for ALL the time you spend managing the project.
2. If you aren't making anything off the subs' work, you're not responsible for it either.
Seems to me you're more of a construction manager than a GC in this case.
Snowmobiles: Natural selection at its finest.
I'll echo Boss Hog, I don't like the sound of this arrangement. I would look
really long and hard at it. However there is a contractual arrangement that
covers the conditions you are talking about. You should look in to Standard
Form of Construction Management Agreement Between Owner and Construction Manager
(Where the Construction Manager is the Owner's Agent and The Owner Enters Into
All Trade Contractor Agreements) (AGC 510). It was developed by The Associated
General Contractors of America and you can get it through them http://www.agc.org.
It's really used by Construction Management firms for multi-million dollar projects
but you could modify it for your purposes which I did once back in 1993 for
a fast track design-build exhibit project we did (built an environment in the
Meadowlands Convention Center for a display of 25 of those full sized robot
dinosaurs at the time Jurassic Park came out). Haven't done a Time and Materials
project since then.
Generally speaking the figure used by R.S. Means and the other companies that
produce estimating data Construction Management Fees are listed as
I interpret that data to mean that's the COST of construction
management and it doesn't account for profit (in my mind eye) so I adjust
the figure up from that for profit. It's purely subjective on my part but
depending upon the difficulty of the project I calculate for management of
external work (trades not performed by us) at 15% to 30%.
"Should we set up a method where
both the owner and I go over and approve all bills." I believe
how that is done is covered by language in the contract I mentioned above
but I'll have to find a copy and refresh my memory.
"Any advice or suggestions will be
greatly apprieciated". Think twice about this and then think again
Profit is like oxygen,
food, water, and blood for the body; they are
not the point of life, but without
them there is no life. —Jim Collins
& Jerry Poras—Built to Last
I think in any relationship it's fair for both (all) parties to understand two things when a request is made by one party -
#1 - "What's in it for you? Why are you asking me to do this?"
#2 - "What's in it for me? Why would I do this?"
If you can't answer both those questions to your satisfaction, you shouldn't enter into agreement with the other party(s).
I'll give you the quick version of how I do it.
This is what I tell my clients:
If you have a friend or family member who is in the construction business and you want to have your friend / relative complete a portion of the work as a cost savings to yourself this should not be a problem.
Your friend / relative will have to sign a contract w/ myself as the general contractor just as all the other subcontractors do. For two main reasons:
1. For insurance purposes.
2. So I can can remain in control of the construction schedule.
The cost of the particular trade or material will need to be included in the Owner / Contractor contract at fair market price. This is for several reasons:
1. Failure to perform.
2. Failure to adhere to quality standards.
The unused portion of the allotted monies will be refunded to the homeowner via negative change order, at the time of acceptance of the work or material by the contractor.
The preferred subcontractor will need to meet all requirements set forth to any subcontractor by the general contractor, within the same field. These items will include but are not limited to: insurance, written contract, signed lien waiver prior to payment, etc. This can only be construed as good business practice on the general contractors part.
dl
This CAN work!
BuT...
I see relationships like this all the time, not that I like them but it happens. Usually the homeowner has found a sub that he likes and who knows the house. For instance, on this island it is hard to get plumbers and electricians. Plumbers do the heating too and turn on/off the water for the seasonal residences. That house in their 'turf'. Bring in another plumber or heating guy to add to the system and you jeopardize the relationship the owner has with him. I work with any of them but it is made clear that I am not responsible for costs or damages to structure, finish, or timeline caused by the subs chosen by the owner. My time to manage them is an extra charge. I make no percentage off their work so it becomes more of a management job than a GC.
I shouldn't have said that I work with any of them though. There are some that I'll only work with once...
Excellence is its own reward!
Edited 7/16/2002 8:48:24 PM ET by piffin
We have worked with variations of this arrangement many times. It is construction management. It has a lot of pitfalls but if you have time to be flexible, it can work perfectly well. As Piffin pointed out, there are some subs that I won't work with but usually the owner wants my input as to the competence of various subs.
What would concern me a lot more than this is the fact that the owner wants (expects) a major remodel to be done in two weeks and the plans are not completely set. If you don't have a problem with this, we should all be asking you for advice, because that seems to be completely impossible.
"a major remodel to be done in two weeks"
The way I read it they will be closing on the purchase in 2 weeks and that would be the earliest they can start work - not to have it completed in 2 weeks.
But starting on a job that has incomplete plans can definitely cause more headaches than the contract arrangement. How can you write a contract to do suchandsuch when soandso hasn't deliniated the suchandsuch details.
Time and materials plus a management fee might be the better way to do this, given the time allotted to planning so far.
Excellence is its own reward!
Thanks for the input gentlemen The remodel will be starting in 2 weeks not complete in two I may be a little crazy but not compleately nuts. If the whole project gets done it will be several months they have one piece they want done asap ( the master bed room and bath ) the rest they say can be done as time permits . you have given me things to think about If any one else has any thoughts feel free. Thanks