I am engaging with a builder where I am asking only him to bid on some work. He has come up with a price that feels higher then I expected. Right now it is one big number >$500k. I do not feel comfortable with him saying that is the price and is unsure how to show me more detail. We are currently on a compressed schedule and I am debating on just slowing down and send this thing out to bid. Sending it out to bid would cause heartburn for my wife so I rather not do it.
What do I ask for to get a better feeling about the price. Do I ask to see the estimating model with mark ups? Ask to see a further break down in the price (by room? material?). What advice would you give me before /during/after contracting?
Thanks – John
Replies
I do some work as a "sole source" and in those cases there is complete transparency on the financial side. My current client has copies of the estimates created in the early stages, which include labor hours, materials costs, sub costs, other costs, my compensation, overhead costs, profit, etc. It's a spreadsheet about 13 pages long. They are now getting copies of every employee timesheet, material invoice, sub invoice, etc. as part of the biweekly billing.
The thing that a lot of people get hung up on is overhead and profit percentage. If the two of you agree on that, as well as what is included as a job cost (and what is not), then it should work fine.
We had some recent discussion on the job about rental equipment vs. owned equipment. We had a reach forklift on the job for a month at a cost of $2000. I defined it as a job cost because I only know one guy who owns one (locally) and everyone else rents them. We now have a lot of scaffolding on the job, and I bought that, because a lot of guys I know own scaffolding. I have heard owners complain when the contractor rents a lot of stuff he maybe should own, and charges it to the job.
Edited 12/11/2007 5:08 pm by davidmeiland
I think the OP should solve the heartburn issue before he gets started!Should you be billing the equipment that you own at the same rates as a rental firm? Bob's next test date: 12/10/07
Does he have good references? Are you comfortable being around him? Feel free to discuss your concerns with the contractor, but you should be talking about possible alternates to lower ther cost, not trying to get him to reduce his prices. And ask if he has any allowances or contingencies built in that could possibly be resolved up front.
"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
Get the wife some zantac and do the job right. Interest rates are in your favor.
Personally, I wouldn't be talking sole source with anyone on a $500k project! My wife could learn to live on Tums.
If you really have to go this way, though, I would have a heart-to-heart talk with the builder and tell him that you need some breakdown of that "lump sum" price. At the very least, you need to know what he expects for a payment schedule and what the benchmarks are for each payment.
How is seeing his estimate/bid breakdown going to change anything. The way I see it, his price is his price. That is what he bid. He may be making a huge profit off of you, or he may be just breaking even. How he comes up with his priceing really isnt any of your business.
If his price is to high, talk to him, see what can be done to bring it down ( it may entail leaving somethings off the project, or maybe he'll give you a lower total bid).
Are you comfortable with this contractor? Do you trust them? Do you have a history with them?
Are you the same guy with another thread asking how to write a homeowner contract to protect your self?
Spreading half the problem, over tow different posts obscures things, makes it harder for us to tget the full picture, and draws less complete advice from the guys here on the forum.
I get an entirely different picture from this post than from the other one you started. There, I got the impression that you had already progressed to the point that you had vetted him, and were happy with the price and were just down to detailing the contract. This thread presents a situation where there is a lack of communication between yourself and the contractor. If that is the case, you need to work on that before going further.
So how did this come about that you have a sole source guy?
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