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What advice would you give to homeowners about choosing and working with builders, either for new construction or remodeling?
What are the most important issues (from a builder’s POV) that the uninitiated customer needs to understand before starting a project?
Pete
Replies
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That's simple.......
Talk to a lot of them, and use your best judgment on which one you feel most comfortable with. You gotta have a level of comfort with your builder or the communication is lost. Lose your communication and kiss everything goodbye.
Building can be tough. Even the best of builders run into things they didn't plan on. If you have good communication with your builder, you can understand better what's going on.
Ed. Williams
*Find a builder you're comfortable with, one with a good reputation and satisfied clients and work with him through the whole project.Having three bidders (or maybe even 2) will let you know if this guy's in the ballpark but please don't rely on price alone. Like eveything else, you really do get what you pay for.most of the problems I've had with relationships with clients have been over expectations, mine and theirs were different. It's my job to figure out what a client wants and somethimes I miss something. Be clear about what you want, give as much information as possible and ask questions even if it makes you look stupid.
*Pete,Ask plenty of questions but don't just rattle them off the top of your head. Take a few hours to write down every question you can think of about your project. After doing this you'll find that in the normal course of the conversation with the contractor most of your questions will have been answered or they should have been. Then go on to ask what has not been answered. I tell all my clients, "There is no such thing as a stupid question so go ahead and ask me anything you like without feeling the least bit foolish." Puts them and myself at ease. Just like Ed and Ryan said, the conversation is going to make you feel comfortable or uncomfortable. If it's the latter move on to someone else. Like Ed stated,you have to have a good line of open communication. With your questions written down in an orderly manner will show the contractor that you are serious and organized. Every client I had that had their questions written down made me feel comfortable with them and them with me after addressing their concerns. Remember, the meeting is a two way street. You're being interviewed also.Finally, I can not stress enough what Ryan stated, YOU GET WHAT YOU PAY FOR!!! No need to take that any further.Bill Ensley
*I would like some input into the following concept.I have heard different opinions on cost plus fixed fee contracts whereby the "builder" is paid a specific amount for his service and is reimbursed for labor and material costs versus a fixed fee minus costs contract whereby the "builder" charges one total amount and then pays for the labor and materials.The fixed fee minus cost sounds appealing from the point of view of the property owner since he has a set price.My question is how the labor and material costs are determined. It seems to me that in such a case it would be beneficial to the property owner to employ the labor and choose the material suppliers. In this way he could get the most skilled and expensive tradesmen to work on his property. It would not matter to him since essentially the "builder" would be a third party payer similar to an insurance company. It would seem that it would also be beneficial to the property owner to choose the materials and the material suppliers. In this way quality control could be maintained.When cost plus fixed fee is used, the "builder" is liable to keep accurate records of precise costs and to show receipts for actual expenditure.I think that in fixed fee minus cost contracts the reverse would be true. The property owner would be required to obtain the labor and materials and keep accurate records of their actual costs. He woukd then produce the receipts to the "builder". If the costs were greater than the fixed price, the "builder" would lose money. If the costs were less, the "builder" would make money.In addition, I think this would lead to better construction. If the "builder" were to select the tradesmen and materials under such a contract, the natural tendency would be to cut corners. The property owner would not be inclined to cut corners on his own property. Nor would he have any reason to care whether or not the "builder" made a profit. This seems like a fair way to do construction. Your thoughts please.
*You are going to get a reaction with this one. Re: your second scenario. Who in their right mind would take a gamble that they could build your house for a fixed price, and then give up control of labour and materials to the homeowner? The homeowner would have a 'natural tendency' to upgrade the builder into the poorhouse. And it is only fair (believe me, everyone here is going to say the same thing) for the builder to expect to make a fair profit for the effort and risk he takes making you a house. I can't believe you are serious in proposing your "fair way" to do construction. A good GC makes money by rigoursly controlling the process; that means working with subcontractors he trusts, using quality materials, and doing it all efficiently.He also brings years of experience and triaining to the process; as a homeowner, can you say the same, considering in your scenario you will be calling the shots? I'll say it again: the builder is taking a big RISK, and deserves a fair profit.
*Adrian is right.A good builder has your interests in mind. It's how he gets futher recommendations and the final project represents something he is proud to place his name on. It's a partnership in which both sides benefit. In your scenario, the builder is simply to be "used" and exploited for his expertise. Neither the client, nor the project I'd touch with the proverbial 10' pole. We all want to maximize our monies and get the best "deal" avialable, but to most of us, not at the expense of a "fair" deal for both. Integrity and respect is a two way street. You pick a builder because of his integrity. He in turn, expects the same in return. What you propose is a gamble for him, but a no lose situation for yourself.
*I'll leave it for everyone else to sound off on just how ridiculous and counter intuitive it would be for any builder to work under that framework for just the reasons that Adrian has pointed out. That is probably why I have never even heard of such an arrangement before now.
*There are many different contract forms which try to shift the inherent tendencies of the owner and builder to either skimp on the quality of the construction or run up the costs. We have used them all at one time or another. You may think that you are gaining an advantage by specifying one type of contract over another but I am afraid that you are just deluding yourself. The only really crucial element in the agreement that you reach with a builder is the trust that it is based on and which will allow you to resolve future conflicts. You had better care that your builder can make a profit on your job. You don't want anybody working on your house who can't. If you do not understand this, you should not be building a house. There are plenty of good houses on the market, ready for occupancy, with no risk and no headaches.
*Steve; are you sure you aren't thinking of project management, where you take responsibility for labour and materials (acting as the GC), and the builder provides management expertise for a fee? Otherwise, I'm still at a loss to figure out where you are coming from.
*Thank you for the input. However, one of the critical issues was not addressed in the responses so far.One of my original concerns was how, under a fixed fee minus cost contract, the cost of labor and materials are to be determined. Who determines how much the carpenters, painters, etc. get paid. Also, who determines the price of lumber, paint, etc.I don't think the material supplier really cares if the "builder" makes a profit under a fixed fee minus cost contract. Nor does it seem to me that the tradesmen furnishing the labor would care whether the "builder" makes a profit.Could anybody please address the issue of how the labor and materials would be contracted for. Does the "builder" in such a scenario simply tell the carpenter that he can only have a certain amount of money because otherwise he would not make a profit. Ditto for the lumber supplier?
*SteveYour question is intrigueing. After all, under a fixed fee minus costs contract, those who furnish the labor and materials (the costs) are third parties to a contract between two other parties (the property owner and the builder).A question that I have and a problem that I foresee concerns the rights and duties of the third parties. These parties did not ask to be made parties to the contract between the property owner and the builder. Should the builder have control over the workmen? It would certainly seem that the builder would like to but is it morally ethical and legally feasible for the builder to exercise dominion over a person who was innocently made a third party to a contract. Does the workman owe a duty to the builder in such a case?As I see it, under a fixed fee minus costs contract, the workmen and material suppliers owe no duty to the builder. A workman owes a duty to himself, his trade, and society at large to perform his trade with skill and integrity. I disagree with some of the respondents on the right to profit. The claim has been made that the builder takes a risk and therefore is entitled to profit. Under that logic there is no risk. Under that logic profit is guaranteed. Real risk assumes that there could be a loss. I don't see the risk in one man telling another man 'if you give me a certain sum of money, I will give a lesser amount to someone else and the difference will be my profit.' Adios amigo.
*Assuming the contract between the owner and builder is fixed fee minus costs, the contract itself tells us the builder is not furnishing the labor or materials since these are the "costs". In light of such a contract it is perfectly clear that the builder should not have any say in the price of labor or materials or any say as to how they are incorporated into the building.Any person in the position of builder in such a situation would simply demand that all the tradesmen work for less than he charged so that he could make a profit. But any such agreement would be null and void. In effect the builder would be telling the tradesmen that they had to pay a fee to work at their trade. The fee would be the difference between what he charged for labor and what he is willing to pay for labor.For those who claim that a builder in such a situation cares for the owner and puts the interests of the owner ahead of his own bottom line, you people are living in a dream world.The better solution would be for the builder to just charge for the work that he does and not try to incorporate labor and materials into his contract.If the builder is not going to perform the labor and furnish the materials, then instead of a fixed fee minus costs contract he should just charge a fixed fee and leave the costs of labor and materials to the owner.
*Here's some advice I know try to leave with each potential customer. Definitely needed in remodeling, and probably new const. too. Come up with a working budget....then either borrow/scrape and steal 15% more, or trim it by 15% and keep it handy. There almost always are cost over-runs/change orders/up grades/unforeseen conditions and while we're at it's. I can't tell what's inside the walls and you aren't sure what ya want. A slush fund helps to keep everyone friendly at the end. Jeff
*I'll tell you what I think; I think Steve, Caesar, and William (none of 'em with email addresses) , are all Robert Haugen flogging a dead horse, again.
*I couldn't agree with you more Adrian....What a bunch of crap....Too near the stream,ajGet a shovel and clean it up!
*well.. my inclination is to think that someone just invented ((fixed fee minus costs))) because they will never present an example of such a thing...in construction magmnt.. the closest to that concetp would be the GMP developed after the final design documents have beeen accepted by the owner..so yes.. robert is back... and he still doesn't want to carry his burden of providing good jobs for other tradesmen... hah, hah ,hah...
*'The property owner would not be inclined to cut corners on his own property.' Wait a sec, Steve. If the property owner (Steve) 'KNOWS' quality and 'KNOWS' how a house should be properly built (This being a requirement to insure no corners are cut).............What does he (Steve) need a builder for? Sounds like one of those damn late night info-mercials on how to get rich quick in Real Estate. POBM
*This thread is way more confusing than any part of day to day work....."Fo-get-a-bout-it," I say....near the stream and fogged in too!aj
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What advice would you give to homeowners about choosing and working with builders, either for new construction or remodeling?
What are the most important issues (from a builder's POV) that the uninitiated customer needs to understand before starting a project?
Pete