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Markup on GC's own labor?
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Posted by ericf (My Page) on Fri, Oct 2, 09 at 10:26
| I'm evaluating bids for a major remodel. The one I'm most interested in has several things subbed out to specialists. But the remaining work would be done by the GC's own crew and there is a labor allocation for that.
The whole project is then marked up by a % for "profit and overhead" for the general contractor.
I certainly understand why that's there for the subcontractors -- the general has to earn his piece for coordinating their work. But is a profit/overhead addition for the parts that he's doing himself standard practice? Seems like two bites at the same apple.... |
Follow-Up Postings:
RE: Markup on GC's own labor?
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| For his own efforts, there's still overhead of him figuring materials, picking them up or setting up delivery, tool maintenance, vehicle wear and tear, etc. in order for him to make the hourly wage that is figured into the job. |
RE: Markup on GC's own labor?
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| I guess I'm surprised to see it represented in this way. The subs all have the costs you mention rolled into their bids. But perhaps it's irrelevant. If the labor cost is $10K and there's 10% overhead (to use round numbers), it doesn't much matter if it's presented as $11K with no overhead or $10K that is then rolled into the rest of the project with the same multiplier. Either way, it's a thousand dollars. |
RE: Markup on GC's own labor?
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| Your interested in the bid - because you like the way the GC represented himself, and his bid price. Questions on the cotract are fine... A possibly more serious question - a max amount price. A CAP on what you would pay? Some bids have percentages, and a non fixed total price... some bids have a fixed total price... and some bids can have a CAP on the total cost. You also need to be certain this individual is reputable. The GC can hire specialists - and you are not required to pay them... But if something happens - and the GC did not pay the specialists - those contractors can put a lien on your house. Those liens can cause you major headaches later on... So make sure whom your dealing with. Also - some contractors routinely put a lien on a house - when they start work on it.... Sometimes they then forget to remove the lien. So know his work pratices, and his reputation. |
RE: Markup on GC's own labor?
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| Don't understand why you have an issue with this? Let's say, the work is "framing". I'm the GC. I can sub out framing for $5000 or pay my crew $4000-5000. You get the framing done. I get to make a bit if I use my own crew, but more importantly, I know them better...can control quality and scheduling. You get the framing done. BTW, you only want a fixed price contract. It doesn't matter how he is presenting this to you, meaning breaking down costs and showing you the markup. You want a fixed price--bottom line. Then, spell out in the contract, how change orders are handled. |
RE: Markup on GC's own labor?
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| What kind of contract is it? Why would a GC be breaking down his bid in this manner for a Fixed Sum contract? Are you bidding the fee on a Cost of the Work project or even a GMP? |
RE: Markup on GC's own labor?
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| If the contractor has shown his "actual cost" for his own forces then he should definitely add a markup for OH&P just like he would a sub, however, none of this should be your concern unless this is a budget proposal for a Cost of the Work contract where this information would be appropriate at this stage. It is not wise for a bidder in a Fixed Sum contract to reveal this kind of information because it opens the possibility that the owner will begin fiddling with his takeoff numbers. He should bid one price and say what his markup would be for any increase in the scope of work. |
RE: Markup on GC's own labor?
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| Always ask for a lien wavier from GC and subs before final payments are made, tell that to GC and subs ahead of time, maybe even in writing in contract, final payment will be made when all lien waviers are received from GC and Subs. Personal experience with problem, now I put in contract. |
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