I started working for myself about 4 years ago, doing a little cabinet making work. It sort of spun into a handyman type job, which has turned into re-modeling and home repair.
Guess I’ve been doing something right, cause it’s grown to the point now where I have a larger customer base than I can posibly keep up with on my own. So, I’m starting to sub stuff out to other contractors, keeping a very close eye on them to make sure they do good work as well.
I’m still not a licenced GC yet (haven’t done anything over 30k), but I have taken the course, and should have the cash reserve soon.
Being new to all this, my question is, when a GC gives a customer an estimate to do a job, say remodel a bedroom, and the sub’s wind up charging more than the estimate, what happens then?
I’m sure there are going to be all sorts of variables to this question. Any answers greatly appriciated. Any recommended reading on this subject?
Replies
when a GC gives a customer an estimate to do a job, say remodel a bedroom, and the sub's wind up charging more than the estimate, what happens then?
A) GC loses money
B) GC does job himself
C) GC finds another sub to do the job
D) GC walks
E) GC explains the meaning of the word "estimate" to HO
F) GC takes a big deposit and an early retirement
G) GC ______________________ (fill in the blank however you want).
"he...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
when a GC gives a customer an estimate to do a job, say remodel a bedroom, and the sub's wind up charging more than the estimate, what happens then?
I am with Huck up through C.
A) GC loses money
B) GC does job himself
C) GC finds another sub to do the job
D) GC examines other phases to see if there are creative ways to make up the difference.
E) GC appeals to sub for a reduction of cost to meet budget or reduce losses. Taking the sub to lunch and the mention of other projects that he could potentially have is helpful.
F) GC forms casual conversational and cooperative partnership with subs, talks to subs about his mistake, inquires as to pricing methods, and contacts subs, doing due dilignece in pricing work prior to contract submittal.
G) GC sells his motorcycle for more cash after using it as a getaway vehicle to rob a liquor store.
I am with Huck up through C.
Hey, he just said what happens. When you've been in this business as long as I have, you'll realize that I didn't say nothin' that doesn't happen! Just ask Forrest Gump 'bout what happens!"he...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
What happens? Sometimes a lot more stuff than is mentioned here.
OK, I wuz jest tryin to tale hem wut mite be a happenin wit me.
Seen Mick in Bakersfied lately? Maybe they banned him after running all of those red lights on Sunday morning.
Edited 3/21/2006 7:36 pm ET by txlandlord
Yeah, like Huck said... no hard answer on this one.
Anything I don't feel comfortable estimating myself gets taken right to the horse's (sub's) mouth for a hard number before being presented to a customer. Experience will help with this.
I've done jobs where the sub came in higher than I anticipated. I just ate it. After all, a contract was already signed. That contract was/is my word that I will provide a the agreed upon product for the agreed upon price. I guess if you really felt comfortable with the customer then you could approach them, explain the situation, and beg for mercy. But that's quite unprofessional in my opinion.
Of course this assumes that the additional cost is strictly a result of my lack of fore sight. Unforseen/hidden conditions and change of scope are a different story.
GC meets with the Sub and reviews the scope of work. Sub gives GC a price.
GC asks a sub what their "rates" are. My electrician has a per point cost. The sheetrocker has a sqft cost as does the painter and flooring guy.
Use these cost as a guide and add a bit more for good (bad) measure + O & P. You will loose some jobs, loss money on others and then will figure it all out.
Be sure to have a clearly defined scope of work.
Get prices from more than one sub/ trade. You need to have many relatonships within each trade. That's why you're the GC. They will have dif levels of ability and availabilty.
Pay on time and you may get lower rates.
F
There he goes—one of God's own prototypes—a high powered mutant of some kind never even considered for mass production. Too weird to live and too rare to die.
—Hunter S. Thompson
from Fear And Loathing In Las Vegas
Drill down one layer here. Ask yourself for all the reasons a sub will ask for more money. Essentially, you are examining your own business skills as well as your subs.
Both your systems and their systems likely need some better documentation. Likewise your and their communication skills. If you are not defining scope clearly enough for them, or if they are not understanding you well, you are both leaving potential blowups buried.
No matter how small the scope, if it is worth subbing out, it deserves to be put together as a package of written information. Drawings, specs, product and material selections, allowances, sketches, questions, a definition of possible unknowns, all kinds of stuff.
Before you get too deeply committed to some customers and get your GC ticket, check with your Liability Insurance carrier/agent and determine what your premiums will be.
I'm not being negative. But subs will drive up your premiums dramatically, as will employees, ad nauseum.
You need that info up front (just like you need bids from your subs upfront, at least until you get comfortable with them) so you proceed in a positive direction and have all the pieces of your overhead calculated in to the mix.
Just a heads up.
Have fun.
Like has been said - if you estimated the plumber to come in under 800 and his tab winds up being 1,000 - and you've given the clients a fixed price - you eat it. Unless there were 'unforseeable' circumstances.
Even if you suspect the plumber has upped his usual charge because his employee let burst a 1/2" line and his boss has to eat the repairs. Don't ask me how I know this.
If I recall from an earlier post of yours you are in the Raleigh area. I'm here too, and winding down my business, which I know doesn't help you find a sub, and the last thing you may need are more clients, but I would like to talk to you to see if you could be someone I could refer to my loyal clients who don't want me to leave.
I passed the GC exam here about a year and a half ago, it's a challenge.
My name is Garfield and my cell is 539-1371. If you wish you may view my website at gdcarpenterinc.com to see the kind of work I have done.
Let's not confuse the issue with facts!
The problem is your use of the word estimate.
An estimate is just that - an estimate of the cost of a job. Make sure, if you're discussing estimates, that the customer knows you're talking estimates. And if so, it helps your case if you try to explain what you have covered, and what you think are the nasties that might arise.
What you should be working with are quotations. Based on a detailed scope of work, and therefore you get quotations from your subs. I know that in reno work, it's hard to do a firm quotation, so make sure that you have firm prices from your subs, based on the most accurate scope of work you can come up with, and then make sure that you provide the customer either a firm quote based on a detailed scope of work, or an estimate with a detail of the factors that may change; ie, ":this estimate is based on the understanding that no blasting will be required for the footing", or "this estimate is based on the understanding that there is no rot or water damage in the structure"
What does a GC's do when subs charge less then expected?
What does a GC's do when subs charge less then expected?
Splits the savings between his insurance agent and the IRS, with a note promising to pay the rest as soon as possible."he...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
LOL... aw man, yer killing me. View Image
That was funny Huck. Thanks for the laff.
blue
most GC's I've known try to beat the sub down ...
then get mad at them when they insist on feeding their family at their going rates ...
then ... the try to prove their point by not calling them back and bad mouthing them to all the other subs ...
which .. really ain't such a good idea!
I've been both complained "to" and complained "about".
if U are thinking about using subs ... call them early and call them often. And ... not sure why this is so hard for everyone else ... actually believe their numbers.
Then ... be ready for them ... don't lie ... don't hope ... don't pretend. Just be ready ... and ... if you are supposed to supply materials ... actually supply them. A day early never hurts ... and having all the materials on hand really helps speed up the process.
Now ... keep in mind ... all this requires some actual thot and planning.
I know ... sounds simple ... it's what I do when I sub stuff out ...
But ... can't say it's the norm when I'm the sub.
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
First off, this response does not apply to hidden items or changes to the original scope.
If there is something binding, like a contract or a binding quotation, or even a firm handshake where your integrity is involved, then you eat your mistake. Call the extra cost "tuition" and hopefully learn from your mistake.
Asking subs, or anybody else, to pay for your mistake is like asking the lumberyard for an extra 2x4 for free because you miscalculated and cut one too short (but on a larger scale.)
I am amazed at the propensity of GC's to beat up their subs on price because of the GC's error. The promise of "more work in the future to make up for it" is a red flag to me. Why would I want MORE work with this GC who is already digging into my pockets?
Pete Duffy, Handyman
I've always laughed at the "more work" promise.
Now I'm making them...LOL...it works!
blue