HUGE general contractor overrun...educate the rest of us

erinb007September 10, 2013

Ashe's post makes my head throb and makes me want to eat a whole bag of salt and vinegar chips. I am just getting bids for a house I just bought for a gutted kitchen and bath, all new windows, removing several walls and building a master bath from scratch. This post makes me think that it might be simpler to assign different companies different tasks. I am already planning on using a basement guy to fix the water in the basement because I only trust him to do this. I am using a local window company, as I trust them. It makes me wonder, is it possibly a better deal to shop around for individual people to do each job? I.e, instead of a general contractor "managing" it all and marking up costs and probably juts making me nuts? Get a bathroom company to do the bathroom (found one on angies list. Great ratings, all they do is baths). Get my cabs at IKEA, hire an local guy to install my IKEA cabs (his specialty). You alrerady use the granite place to install counters. Then maybe hire a handyman to do little things like install appliances, put down floor etc. It seems like the more things to do on one team�s plate, the more likely things are to get lost in the shuffle? What am I missing here? I am sure coordinating it all would be stressful, but might not be moreso than a huge surprise bill. The bigger the total job for one company the bigger potential for a big OVERAGE.

On another note. I am more confused than ever after reading Ashe�s delima about if you do hire one GC to sub out the work, what the hell kind of contract is best/how do you avoid her situation? Can someone please make a list of things they learned about "managing" this whole process? Someone suggested weekly meetings.. I LIKE that. Taking it a step further, maybe you have them sign off that they are on budget each week? What else????????????????

Also, my contractor keeps saying he can get me "deals" but it sounds like others think they just mark up the prices? Couldn�t going directly to the source and getting my own deals (i.e. negotiating prices at a major granite shop, negotiating window prices, etc. work just as well. ? I would think there would be one less hand out to pay in the deal/middleman.

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General Contractors make their money by marking up prices ... they mark up the materials, and then they mark up the subcontractors prices. Then they charge for their own labor and for their own guys to work on the project, too. But they do have construction knowledge (or at least they should), whereas many homeowners do not. That doesn't mean you can't do just as good a job of managing your own project, as long as you hire good, competent subs.

Yes, if you act as your own GC, you can try to negotiate for better prices on materials. Subcontractors often pay lower prices for some of their materials and they may pass some or all of that savings on to you if you ask ... for instance, a tile contractor can usually get a better price on tile.

I would let the appliance company install the appliances rather than hiring a handyman to do it ... that way if there are any problems the merchant can help you take care of it.

Personally, I would not trust Angie's List or any other online referral place. I would ask for references and then look at the contractor's work. I would also get multiple bids for things like a bathroom remodel.

If I ever did hire a GC (and I wouldn't) I would never sign a time and materials contract. I might do time and materials for some small portion of a job, but certainly not the whole project ... there are just too many ways for that arrangement to go south.

Oh, and if a contractor gives you a contract that appears to favor the contractor more than it favors you, it is perfectly okay to request things be added or deleted. If it is important to you, make sure it is in the contract.

This post was edited by jellytoast on Tue, Sep 10, 13 at 22:47

    Bookmark   September 10, 2013 at 10:34PM
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One thing to consider is the flow of work and tradesmen. A GC "should" schedule his people one after the other to keep the flow moving forward. We've been our own subcontractor (and done a great deal of the work ourselves) and we spent a lot of time waiting for the subcons to finish work elsewhere and get back to our job.

I put the "should" in quotes because not all GCs do a great job with this.

    Bookmark   September 11, 2013 at 6:13AM
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Sure, you can act as the GC on your job! If you've got the time to do all of the legwork and research and running around pulling your hair out. It's a full time job!. And if you've got the knowledge to be able to understand the order of operations, and to perform the coordination of jobs that require multiple trades, and to be the problem solver when something comes up. And the third thing you need to be able to be your own GC is the ability to take responsibility for the job as a whole. The subs work for you, and you tell them what to do. If you don't know enough to be able to tell them that the window guy shows up before the drywall guy, then you hire the drywall guy again. The other element to that is quality control. Do you know enough to be able to say that your new shower was constructed correctly? Plumb and level? The correct order of waterproofing? The tile done properly from a technical standpoint.

If you don't feel that you have enough time to spend on doing this full time, aren't sure about the order of operations, and aren't willing to own the problems on the job, then you aren't a good candidate for being the GC. BTW, don't think it will "save" you much money. It takes longer, and trades don't give homeowners GC pricing because they won't give them repeat business like a GC will. The GC also gets priority on scheduling the jobs. There's also the element of "we're saving so much money GCing this ourself that we might as well upgrade the materials." You can upgrade yourself into a much bigger overage than if you had handed it over to a slow time and materials contractor!

    Bookmark   September 11, 2013 at 7:40AM
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I think that GreenDesigns' post should have a sticky for those considering being their own GC. Yes, it can be done, but probably shouldn't be many times. We just finished a rebuild on a house partially destroyed by fire. We did have a GC whose crew did the framing and carpentry and ran the show. I was very involved, and was amazed at what I didn't know and how lost I would have been trying to schedule subs at the proper time and evaluate their work. Just the work involved getting the range hood duct to its exit point was a major disaster because of the floor joists. I think unfortunately it's just hard work to find a good, trustworthy GC.

    Bookmark   September 11, 2013 at 8:06AM
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Things I look for- I don't like allowances on remodel jobs-. So long as the sope of work is there give me the price. New construction allowances are unavoidable but can still be accurate-look for the higher ones. (I have several who come to me to price kitchens so they don't go over on that)

I prefer GC's who are up front about mark up-no matter where you buy what we charge 10-15-25%... this is most often on new builds or additions. They also give the hourly rate. Both of those scare off a lot of folks but the good ones don't mind.

T&M only on small portions and only if there are unknowns.
A schedule of start and likely completion. I like when they tell me they are booked until...means they know what they can manage.

Like when they don't cringe at:after market accessories, extended stiles, having to run dadoes rip material etc.

Do not like "can't be done" - if I designeed it I can do it-I can show you. (Not that I don't occassionally make a mistake but in general...)
On remodel I like contractors who can also do electric and light plumbing, but if there is a lot they have a sub.

I never see overruns like that except: when client makes changes after the contract, architect does that or makes mistakes.

For clients- have Everything, absolutely everything, decided. The only possible exception is backsplash and even then have samples. Guess you can leave paint color too. Want to see a job run over budget or time or habe mistakes- leave things undecided or change them after ordering cabinets or signing.

    Bookmark   September 11, 2013 at 10:07AM
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jakuvall's last point is a good one. The biggest reason for contractor overruns is the fact that the customer doesn't have sufficient level of detail regarding decisions and what they want done. (Yes there are other reasons but this is the biggest one).

    Bookmark   September 11, 2013 at 11:04AM
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I wouldn't call that an overrun. If they were still deciding on things or plans were incomplete, subject to change, when work started, they the customer knew that the estimate and scope of the work was incomplete at that point. To me an overrun means, went over budget for reasons other than change orders changes the customer makes that affect the work involved.

I have read to budget quite a bit more than you expect for a renovation, as things don't always work out as planned -- but that is not to say that the homeowner should not be advised of problems and overages along the way.

This post was edited by snookums2 on Wed, Sep 11, 13 at 14:16

    Bookmark   September 11, 2013 at 11:17AM
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Call em what you like, a lot of contractors call add-ons "golden overages".

    Bookmark   September 11, 2013 at 11:30AM
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I meant that the customer is aware that the estimate is not accurate, because they have made changes, additional charges/adjustments are expected to the original estimate. This is what is in question. People going over budget because they upgrade their counter, add some windows, find a sink hole, etc. is a different animal.

Why do they call them "golden overages"? It sounds opportunistic, once they have people over a barrel.

This post was edited by snookums2 on Wed, Sep 11, 13 at 13:30

    Bookmark   September 11, 2013 at 12:15PM
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From a consumer's stand point, I've used many GCs in the past and I've acted as my own. The latter worked because they were small scope projects that were not time critical and didn't involve any structural updates (mostly fit and finish), and someone was home to supervise. But, in general, follow GD's advice above for anything larger.

However, I do like allowances called out for decorative finishes like tile or counters for any job. This makes it very clear when comparing bids and where upgrades or tradeoffs in materials are possible. If you are not using the services of a full service designer, I think it is important to have that time and decision flexibility. My last GC (who I will use again) allowed flexibility to use materials he sourced or ones I selected, without restriction to shop or supplier. I do not appreciate contractors that restrict the purchase of materials like stone slabs and tile to particular showrooms.

At the same time, as mentioned above, don't make structural changes or leave too much in the open, or you'll be asking for overruns.

It is common practice in my area to use change overruns where unexpected situations drive a cost overrun (for example, a structural defect hidden in the ceiling).

    Bookmark   September 11, 2013 at 12:24PM
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I have a design degree, so I at least have a pretty good idea of what is involved from the technical standpoints of a project, and I find it difficult to act as the GC on other than simple projects.

I did a bath in my old apartment that was completed from gut to finish in about a week with high-quality work, but it was done by a condo-specialist in bathrooms. He was coordinating two subs in and out per day (sometimes three). We were without a toilet for one night. Of course I paid a lot, but it was worth it.

In contrast I am doing a bath in my basement, and I have no particular timeline, but since I am working with the plumber, electrician, and carpenter all separately, and all permitted separately--it is going to take weeks,(probably months) because they are not directly coordinated with each other. Luckily my carpenter can set tile really well, or there would be a fourth, and I am painting or else there would be a fifth.

It will be much cheaper dollar-wise for the same quality build, but the time and trouble increases exponentially.

Unfortunately, my usual contractor generally does turn-key design build, and if you don't utilize them that way(I don't love their design esthetic), your contract is time and materials. (Although you are allowed to supply specific items--you also take complete responsibility for everything you supply). The project manager is an attorney, you get bills that are broken down into 15 minute increments, you pay for their parking or their parking tickets, and they are extremely expensive. The project manager terrifies-- and sometimes terrorizes-- her underlings and her clients equally.

They do a really good job, but there are some projects I just can't afford to use them for.

    Bookmark   September 11, 2013 at 12:45PM
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Here's a specific example of an issue you may deal with if you act as your own GC.

Let's say you contract one party to install cabinets, and another party to install floors. The cabinet contractor insists that cabinets have to be installed first, and the floor contractor insists the floors have to be installed first.

Let's say you actually don't know what the right answer is (e.g. there actually isn't a "right" answer, just a set of progressively-informed opinions) -- so you do a lot of research on this issue. Then you make a call to install floors first. Then, when the cabinet makers come in they drop a hammer and gouge the floor. The cabinet maker says this is what happens when you install floors first, against their recommendation, and they won't pay for a fix. The floor maker says he did his job, and won't pay for a fix. So you have to pay to fix this.

A good GC will take ownership of the situation -- they will inform you of the options, make a recommendation, and be responsible for any issues that come up if you follow that recommendation. And if it is a fixed-bid contract, they'll pay in case one of their subcontractors was the one who damaged the floor.

    Bookmark   September 11, 2013 at 1:22PM
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"Why do they call them "golden overages"? It sounds opportunistic, once they have people over a barrel. "

Yeah it does sound that way but no. The guy I first heard use the term is perhaps the fairest most up front contractor I've worked with.

All of the folks I work with will give a price and live with it no matter what- unless it had to be an allowance or completely unforeseeable like termites and such- that means that if the guy working is slow, there is a problem, they misjudged it, takes longer than they thought- they absorb it.

Add something and it is simple T & M- problems, slow worker, oops, redos, delays, extra trips- you pay- no matter what the contractor makes his ideal profit- golden.

    Bookmark   September 11, 2013 at 1:40PM
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Thanks for the explanation.

If something is added/changed, I would think most people would ask how much, in order to make their decisions. I wouldn't expect a lapse in responsibility, such as slow workers or errors then being absorbed by the customer, just because something wasn't part of the original estimate.

    Bookmark   September 11, 2013 at 2:00PM
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"Golden overages" As a general rule, I think contractors make a much higher profit percentage on change orders than on the original bid for the total job.

    Bookmark   September 11, 2013 at 2:10PM
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I wouldn't expect a lapse in responsibility, such as slow workers or errors then being absorbed by the customer

I can understand your point about errors (if they install the cabinets at a height other than what was spec'd, surely they show reinstall them without charge), but as for slow workers -- how would the consumer even know whether a worker was slow or not? Unless there was a concrete number of hours applied to each item/trade, it would be impossible.

    Bookmark   September 11, 2013 at 2:11PM
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Jakuvall mentioned slow workers. I don't know, job taking much too long for what it is or having to do things over again from being inattentive. Accounting for it could be difficult.

But if you are around on the job, you can most definitely notice slow, inefficient workers!! lol Or rework. Wow. Some of these people have it down to a science, if you have ever paid by the hour. Anything to waste time, slow the work down from getting done. Go slow tactics that up their hourly, milk the job. They obviously think we are dumb.

It sounds dreadful to accuse them of these things, but after a while, or if you are around to see, it becomes obvious.

This post was edited by snookums2 on Wed, Sep 11, 13 at 14:47

    Bookmark   September 11, 2013 at 2:46PM
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"slow workers"-
None of the contractors I work with tolerate goldbrickers for long- screws up the schedule which costs money.

I am simply talking about the reality of dealing with human beings...
... ever had a bad day? not on the ball? went to work with a cold? just made a mistake? had to part of something over? even a small part?
- no malice, or malingering involved.
Last time you made a mistake did you go to your boss and tell him not to pay you for the time? Those of you that work and 8 hour day- do you work a full 8 hours, every single day? taking no time at all aside from lunch? no daydreaming, phone calls, texts, web, trip to the cooler, ...really?
...who's going to cast the first stone?

    Bookmark   September 11, 2013 at 3:19PM
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Jakuvall, when our workers "have a bad day," we eat it. They get paid by the hour, we get paid by the job. We give a bid and we stick to that price, regardless of what kind of day our workers are having. That's all fine ... it all works out in the wash as some days they move along at a pretty brisk pace and that hopefully makes up for the days that they don't work so fast. But when a person is paying a General Contractor time and materials, the customer is paying for all that ... all the daydreaming, phone calls, texts, trips to the cooler, colds, mistakes, etc. ... yet they have no control over managing those costs.

    Bookmark   September 11, 2013 at 3:42PM
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There are some studies that say that if you work in a medium to large corporate office fully 50% of a work day is non-productive for most workers. I get texts and calls from people from work and they wonder why I don't answer immediately, or at all. Iget Emails from people, same thing. I get paid on production (or collections) and if I don't produce, I don't get paid. I am schedule to complete x amount of work in x amount of time. My father's GP actually got fired from a practice for not being able to do so. He wasn't wasting time, he was just slow.

I think the cell phone has reduced productivity a great deal. Intantaneous communication used to be impossible and Unneccesary.

Some offices in my field now require the employees to leave their cell phones at the front desk. But I have known people who have refused to take a job in offices that do so. My cell phone is usually in the staff room when I am in the operatory.

    Bookmark   September 11, 2013 at 4:21PM
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I think Gardenweb has reduced my productivity.

I'm thinking that quote software could be helpful to get a sense of whether the bid is at least in the ballpark for standard work like drywall, hanging cabinets, etc. When I had damage from Hurricane Sandy everyone seemed to quote my work the same and it turned out they all used something called exactaquote or similar. I checked a few things on the linked site and prices seemed reasonable. It takes your zip code into account.

Here is a link that might be useful: Estimator

    Bookmark   September 11, 2013 at 4:40PM
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"I think Gardenweb has reduced my productivity."

Funniest thing I've heard all day! And so true!!!!!

    Bookmark   September 11, 2013 at 5:31PM
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I think homeowners get kind of a raw deal in these discussions sometimes. If they watch the workers like a hawk, questioning the productivity and methodology of the workers, they're being unfair and unrealistic. When they get out of the way and assume that the GC has things under control (seeing that is what the additional 25% or whatever is supposed to be for) then they're not being active consumers.

I GC'd my own reno, mostly because of these types of discussions on GW. I just couldn't understand why I'd pay a GC a premium when I'd still have to manage everything anyways and educate myself on every task well enough to direct it if not do it myself. I did allow one of my contractors to subcontract a few tasks, acting as a partial GC. Of course, those were the tasks that ended up taking twice as long as originally scheduled.

If estimates are meaningless, why provide them? I don't think anyone truly expects every moment to be a 100% productive moment, except apparently when a GC is providing the estimate. If a GC wants to provide estimates that are low and assume 100% productivity, why are they surprised when the homeowner balks at the real bill?

I have to log and track my time for work. Sometimes, my project work is billed directly to clients. In these cases, my employer is like the GC - they receive "extra" payment based on the work I do for them.

When we have to estimate time and costs, we build in enough time to account for the occasional daydream or personal call, since that reflects how project work really happens. If we complete work faster than estimated, we charge only for the time it took to complete the work. If we take more time and bill for it, we have to account for the specific reasons for the overage.

If we can't account for it based on some change order or unexpected condition (i.e., if I run over time because I'm spending too much time non-productively in ways that I cannot attribute back to the project in a legitimate fashion) my company eats the cost, and it would show up on my review. Too much of that, and I'm out the door.

The GCs percentage is not just a gimme. It assumes he or she is providing a real service, i.e., managing the project. I would really hesitate to sign a time and materials contract as it seems to insulate the GC against the risk he or she should be assuming in return for the GC's percentage. If they're paid to hire out good subs, why should the homeowner the be one to lose financially if the GC hires extraordinarily unproductive subs, or subs that break things, or subs that do not follow the installation instructions, etc.? Shouldn't the GC be responsible for the subs if the GC is making money on the premise that they are providing an expert's service in selecting and coordinating them?

This post was edited by meangoose on Wed, Sep 11, 13 at 23:58

    Bookmark   September 11, 2013 at 11:48PM
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Shouldn't the GC be responsible for the subs if the GC is making money on the premise that they are providing an expert's service in selecting and coordinating them?

They would be in a fixed price contract, which would likely be a lot higher than the estimate to account for the possibility that things will go a) sideways or b) slowly. When we did our first house reno, we could have had it either way - time and materials or a fixed price. The fixed price would have been 20% higher than the estimate. In the end, we chose time and materials and it was a mistake on our part.

    Bookmark   September 12, 2013 at 12:15PM
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Sounds like the GC is perversely incentivized to hire the very slowest, most mistake prone people possible in a time and materials contract then. If they get 15% of the labor and materials cost, they make more if they hire a sub that works only a few hours over several days and ruins materials so replacements have to be purchased and work has to be redone. If they have 3 jobs going at the same time, they have one done "right" to use as a referral/review source, and the other 2, well, they provide all the profit. Maybe I'm in the wrong business.

    Bookmark   September 12, 2013 at 1:53PM
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Your Wednesday post is very true, meangoose. It's hard to know what to do. They don't want you around or watching but so many are very irresponsible, seeming to be untrained. When we've opted to pay the overhead for someone to oversee the work, they should do just that. Being knowledgeable in construction, the trades and industry standards, to ensure a quality job.

I am afraid to have people work on my house anymore. I could always recognize sloppy but now that I am more informed about industry standards and product use, I am shocked at how lax these guys are.

I don't think it is expecting too much for them to:

#1 Do work according to industry standards. And to follow product specs.

Plumb, level and neat. Please measure accurately and within industry tolerances.

They should also be trained. And to be able to think things through, imo. Not just do stuff.

To be careful with the home and its furnishings -- not care-less.

Also to put in an honest day's work and go about it with reasonable efficiency.

And when something is wrong, be fair and ethical about it. No lying or trying to pull the wool over our eyes!

Expecting perfection is not realistic. But the above is simply expecting a conscientious, professional and quality job -- in exchange for the professional wages we are charged for the work.

And it doesn't always matter if something looks good on the surface. If the underlying prep or foundation was poor or not even done, products were not used appropriately, you did not get a quality job for the money and could be in for trouble or early replacement down the road.

This post was edited by snookums2 on Fri, Sep 13, 13 at 12:01

    Bookmark   September 12, 2013 at 3:07PM
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Great post snookums

    Bookmark   September 12, 2013 at 3:25PM
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Obviously I wish I'd never hired a GC for the whole job. I thought I did everything right in that I made the decision not to go with the cheapest bid (the next lowest was $10,000 less!) and to turn it over to a GC so that I wouldn't have to micromanage.

I checked licenses, vaguely knew his rep, called his references. But I was casual about it because I trusted him. HUGE mistake.

What I know now:

Don't hire a friend.

Don't hire the big boys for a smallish job...whatever the economy.

Use a hybrid contract with a very detailed cost breakdown of the fixed bid part for decision making and comparison purposes. Add a clause for surprises (rotted framing or whatever) with written agreement for budget increases. I fell for the 'no-one does fixed bid on remodels' line.

Have a clause that you'll be provided with time sheets if you're doing time and materials. Spot checks are awesome....I imagine. Also, check if they get paid for the ride to and from your house. I still don't know that with my GC.

Ask for evidence that they have paid their subs with each invoice, or a short time after. I asked for this on the advice of a friend, was promised it, forgot to follow up. An unpaid subcontractor can put a lien on your house, too.

Consider using a contractor for part of the job only, with his agreement. If I'd asked mine to do the tear-out, construction changes (windows!) and power and plumbing only, while I did the floors and cabinets, we might not be in this pickle. Obviously that could take more time. Some will refuse. Some will be relieved because they hate finicky stuff like cabinets or painting.

Communicate and have a proper plan of action. If my guy had sat down at the beginning of the job and said this is what we do when, and this is what I need from you and when, again, maybe there'd have been fewer problems. As it was, I had said to the GC before hiring him that I might have to hold off on floors for a few months depending on the budget. Half way through, the guy doing the job said that was a horrible idea and why...and made sense. So I had to mull through it all and start getting bids when it was about time to do it.

Don't rely on Angie's List, Yelp, the BBB, Peopleclaim, Google, Yahoo or YellowPages reviews or any other single source. Use ALL of them...figure out who pays for the site and where bias might exist...and don't forget to check the filtered reviews on Yelp. I read one guy's blog about his furniture mover and how all the filtered reviews were exactly his (bad) experience--it was almost as painful as my thread.

Also, ask detailed questions here before making decisions. Wow, what a helpful and knowledgeable bunch of people.

We're hoping to build a house in a year or so--it may be, despite my lengthy whining (sorry!) that $8,000 and many sleepless nights made for a relatively cheap lesson.

    Bookmark   September 12, 2013 at 10:38PM
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Another great post, which will be particularly helpful to me as we negotiate the contract with our contractor this weekend. There are so many unknowns in our project. It's a small project, but in an old converted industrial building with concrete floors. This morning our contractor proposed using a hybrid - time and materials, but with a cap. I'll be sure to discuss commute times and change orders/unknown field conditions with him before we sign. He's already told us one thing we were planning is going to cost a lot more than we anticipated (plumbing) so he recommends not doing it -- move in a different direction. That's good - he's not just spending our money with abandon.

    Bookmark   September 13, 2013 at 11:50AM
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As far as caps and estimates, I am willing to pay for what it honestly takes to get the job done. I don't think it's fair if they get stuck with absorbing costs for my home's expenses if something was underestimated or unforeseen things came up. Those things happen. Although I haven't had a contractor feel uncomfortable charging extra and have only once (ha!) had one reduce the charges because it was less than estimated. Basically, that never happens, lol, and they try to cover themselves for the unforeseen with the estimate. I think that's wrong and couldn't do it myself. Charge for what it took. Overcharging is a real good way to build distrust.

I also do not want them hurrying or taking shortcuts to make the mark for the pre-estimated costs.

Unfortunately, if you're dealing with those who bid low just to get the job, or milk it, or an inexperienced contractor (not actually particularly competent; he needs to absorb the cost of his own learning curves), etc., is what makes it difficult in what is fair to the homeowner and what is not.

They do need to keep the HO advised along the way though. I think an automatic 10% built-in some have referred to, that does not require accounting for, is not a good or fair business practice, which makes it easy for them to overcharge or be less than careful with expenses along the way. They have to estimate high anyway, to cover themselves.

This post was edited by snookums2 on Fri, Sep 13, 13 at 12:25

    Bookmark   September 13, 2013 at 12:20PM
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"Don't hire the big boys for a smallish job...whatever the economy. "

That may be the most important piece of advice I've seen in this thread.

In my reno I had three bids on my job. One was from a GC used to doing very large projects. His bid came in almost three times the price of the bid which I ultimately went with.

I don't think the GC with the high bid was trying to rip me off. He's just set up to do very large projects, builds in more project overhead, hires subs who charge a higher hourly rate, etc. If I went with him I might have thought he was ripping me off, but the more important lesson is to pick the GC that's best suited for the job at hand.

    Bookmark   September 13, 2013 at 12:26PM
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Honestly, if Ashe had hired one of the "big boys", a "real" big boy with reputable projects under their belt, I don't think she would have experienced the type of problems she had, or the crazy billing numbers.

But over (or under) hiring is still a good point.

    Bookmark   September 13, 2013 at 1:05PM
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snookums, I also am willing to pay for the work done, but I do think an estimate/cap vs. straight time-and-materials gives the contractor not so much an incentive to cut corners (if you hire a reputable contractor) but an incentive not to be slow, or a perfectionist where perfection isn't necessary, etc. I think it serves both parties to the contract.

    Bookmark   September 13, 2013 at 1:14PM
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I agree on the T&M. We did this two times that I remember and both times were ridiculous. It should be a fair deal but these people did not have much integrity, although I think the first one might have had a bit of ADD going on. Even so, he was not stupid so it was still not right the way he worked (not) and charged.

Estimates are all we have to work with, I'm just saying if things don't work out as expected, it's not really fair to make them pay for your house renos. It will only make estimates go higher anyway, to cover, and rarely does anyone reduce them after the fact to meet the true costs. Multiple estimates can help there.

This post was edited by snookums2 on Fri, Sep 13, 13 at 13:27

    Bookmark   September 13, 2013 at 1:22PM
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Actually I did hire one of the big boys...not one of the REAL big boys, but one who usually builds high end homes.

That, I think, was one of the problems. His flooring contractor of choice is used to bidding for high end homes that have a/c. Most homes here don't have it (mountains, lots of trees). Wide width boards are a bad idea in high humidity--which the contractor also should have known and advised me about when I asked about the wisdom of random width. Something else that I found frustrating: no response.

Which is another question to ask:

Do you see any special things to consider in my home when I'm picking out flooring, lighting, etc? How many homes LIKE THIS have you worked on?

    Bookmark   September 13, 2013 at 1:50PM
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Lighting is another mess for people doing renovations. I've realized that contractors, electricians, and lighting stores -- low end to high end -- do not have the latest in lighting technology, are uninformed about the best products, and are trained to sell you whatever they have on hand & tell you it's best, without doing basic research to determine whether they're right. And if you decide to pick the best lighting products, you'll probably need to buy them online because they aren't generally well-stocked anywhere. And if you wait too late to make the decision, you'll be in a bind because contractors can't wait the lead times needed to get some of the products.

The best advice I have for lighting is to read some of the threads in the Lighting forum and especially look through comments from davidtay.

    Bookmark   September 13, 2013 at 2:43PM
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I am not understanding this whole time and materials thing. Why in the world can't a GC give you a fixed bid for all of the "knowns" in the project? A tile guy will give you a fixed bid, a drywall guy will give you a fixed bid, a cabinet installer will give you a fixed bid, a flooring guy will give you a fixed bid etc. The contract simply says "this is what we are going to do for this much money." If things are discovered along the way, or if things are added by the Homeowner, those things can also get fixed bids at that time. So why can't GC's give a fixed bid for the parts of the project that are KNOWN? I can understand not being able to see wood rot behind a wall, but it is ridiculous to have the entire project on the GC's end be time and materials. If he has been in business long enough, he should know how much time something is REASONABLY going to take. And he should bid accordingly. Time and materials with a "cap"??? Why not just give a fixed bid ?

    Bookmark   September 13, 2013 at 4:21PM
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I only ever see allowances on new construction or complicated renovations-and then not often unless things are not specified (demo plan, electric plan, new struucture, cabinet plan, layout, elevations, detail drawings, backsplash, and scope of work spelled out) I don't ever see overages except...
The only time I see T&M is changes or add ons. Then they may give you a price, may do TM- not both-not with a cap. Take the price and they take the risk, go TM and you take it.

    Bookmark   September 13, 2013 at 6:25PM
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"Take the price and they take the risk, go TM and you take it. "

I don't understand why T&M should be a risk. It should be the true cost of the project, and fairest arrangement for all. It's not a gambling game or lottery. Now when they estimate, they are going to build in padding to make sure they've got themselves covered. They don't typically correct at the end, to reimburse us; but will add on if there was a problem or something that affects their end.

The problem with "estimates" is that if things get tight, they will take shortcuts, skip things, rush and get sloppy, miss details.

I don't agree that all projects are the same, so that estimating costs is not a problem.

This post was edited by snookums2 on Sat, Sep 14, 13 at 1:14

    Bookmark   September 13, 2013 at 11:28PM
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Sure-T & M can be the fairest. You pay for how long it takes and contractor gets paid for their time. I say risk because if there is a problem of any sort or the contractors estimate of time is low you still pay for it. I've never seen anyone willing to do T&M with a cap.
It should be easy to estimate how long something takes , they do it all the time,right? No.
How often in a week do you not manage to get what you had planned done? I have a lot of experience dealing with craftsman and estimating- they are notoriously optimistic (as are most people)

Remember my point was to avoid addons or changes to avoid overages.

I personally avoid T&M, rarely permit "allowances" on bids for my clients, and never negotiate price down with anyone. I state that up front, give me your price. I also will not accept a rebid from anyone. IF this is what it costs for you to do the work as expected then a rebid with a lower price means either- you were fudging the price or the work will suffer. I don't want to find out which. I will ask what we have to change to alter a price, for myself or clients.

    Bookmark   September 14, 2013 at 9:53AM
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" I also will not accept a rebid from anyone. IF this is what it costs for you to do the work as expected then a rebid with a lower price means either- you were fudging the price or the work will suffer."

I completely disagree with this. Sometimes a price reduction is what it takes to get the job and a contractor might need that job. It does not mean that the work WILL suffer. It only means that you will be doing it for less of a profit. And contractors ARE entitled to make a profit.

    Bookmark   September 14, 2013 at 12:15PM
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Although I've had a pretty steep learning curve on this, I'm really even more baffled than I was before.

A seasoned contractor should know what it takes, for instance, to replace a window or frame a wall. If they bid too low, they'll have learned for next time. I've often had people say 'usually I charge x for this job, but 'y' manufactured product is harder to fix so I'll have to charge more." They'd obviously found that out the hard way, as we all do, in any profession.

My job was not complex--replace windows, tear out walls (and we knew what was inside them, except for the darn wiring that WAS obvious in retrospect; if they hadn't seen it from the basement they should have seen it from the attic). Drywall, power and plumbing. Frame around pipe. Floors. Cabinets, trim. What in that list would have been so hard to calculate? The plumber, electrician and drywaller gave pretty accurate estimates.

I can break it down fairly easily and did think about coordinating it myself, but decided I didn't have time and worried in case there was any problem I wouldn't be able to spot.

I don't mind people making a profit if they're honest about it. As a consumer, I'd still have a problem with worrying that they were cutting corners on a too-skimpy fixed bid or having leisurely texting sessions on a T&M (actually they did do that!). A fixed bid SHOULD motivate a contractor to keep an eye on things a little better.

    Bookmark   September 15, 2013 at 3:09PM
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Maybe I'm not the norm, but I have a BUDGET, with remodeling, and with most everything else. An $8,000 extra charge would have been very hard for me to absorb, especially if I was presented with it at the end of the project after all avenues of possible ways to save money have been closed. If a contractor runs into extras that are running up the budget, it is his JOB to let the customer know so that the budget can be adjusted accordingly. If you had known about the increasing cost, you might have chosen to do one or two things differently in the interest of saving money.

And you are correct, a fixed bid DOES motivate a contractor to keep and eye on project management. He can still cover himself against the possibility of a "too-skimpy" bid by having the contract cover only what is in the contract, with any unforeseen problems to be addressed if and when they are discovered. The whole idea behind getting multiple bids for a project is to help the homeowner make a more informed decision regarding the correct price to do the job. An estimate is worthless if the contractor is not required to work within it and to stay within the budget.

    Bookmark   September 15, 2013 at 4:42PM
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My advice, based on experience as a homeowner:

When comparing bids, be sure you're comparing apples to apples. Looking back now, we chose our GC for other factors in addition to price, but he definitely low-balled his original bid to look more appealing. A common tactic, but one that's often not realized by consumers until after the fact. (We did go into this project knowing this, but I believe it's worth repeating here. Again.)

Meangoose summed up my feelings precisely:

"I think homeowners get kind of a raw deal in these discussions sometimes. If they watch the workers like a hawk, questioning the productivity and methodology of the workers, they're being unfair and unrealistic. When they get out of the way and assume that the GC has things under control (seeing that is what the additional 25% or whatever is supposed to be for) then they're not being active consumers."
"I GC'd my own reno, mostly because of these types of discussions on GW. I just couldn't understand why I'd pay a GC a premium when I'd still have to manage everything anyways and educate myself on every task well enough to direct it if not do it myself."

I work from home, and my GC doesn't realize how much money I SAVED (and I will emphasize again: SAVED) him by pointing out to his subs along the way when they were doing things wrong, like installing the wrong type of electrical switches, or stopping a caulking project because they were doing such a messy job on my brand new cabinets with 1/8 gaps in the trim, that I'd rather do it myself. I can give example after example... crooked backsplash, trim that didn't match... and so on. I checked on the work periodically throughout the day while the subs could fix legitimate errors on their parts while they were here--and the errors were fixable. Had I worked outside the house, and come home each evening to the errors that were made during the day, they would have been more costly to my GC to fix.

Admittedly, I'm writing this with some bitterness, facing a 10% change order increase when we had written into our contract that all change orders needed to be in writing (and we had only received written notice of change orders for less than 5%). Not the end of the world, but this is my second experience with a GC, both were researched and recommended. And it's my last experience. I'm done being duped. I managed the day-to-day of this project, not my GC. I acknowledged and paid for each time I cost him more money; but I should have kept notes along the way of when I saved him money.

So, my main piece of advice: If you work outside the home and cannot be there, in person, when work is being done in your home, you must thoroughly, completely trust your GC and each one of his/her subs. Or, you must be flexible and accept subpar work along the way because it is up in the air who pays for things to be done right.

This post was edited by peony4 on Thu, Oct 3, 13 at 21:25

    Bookmark   October 3, 2013 at 9:04PM
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