Consultants will tell you that it’s smart business to find out what a client’s budget is before spending time on an estimate. For the last few years when I meet a client to pick up plans or look at a remodel job I’ve been asking them what they have to spend and, with very few exceptions, they hemm and haw about “well, it depends on how we go about it…” or, “umm, I can get what I need to do this job…” Then when the estimate comes in they say “I don’t have that much to spend on this project…I’ll have to re-think it.”
Has anybody come up with the tactics to surmount the hesitance to put a number on a budget up front? I understand that they may be afraid that if they say “I’ve got sixty thousand to spend on this house,” that the forty-thousand dollar job will become a sixty, but how many times would we be able to save them (and ourselves) a bunch of time by saying “No way is this addition going to cost that.” We’d be able to let them know that the oak windows have to go, the wine closet will have to be finished later, and, while we’re at it, the “shabby-chic” custom paint job will have to be one-color Swiss Coffee.
Any ideas?
-Ben Carnes
Replies
I probably have more questions/thoughts than answers on this.
I agree that knowing a clients budget (I usually call it expectations) can greatly save both parties time and money.
If clients tell me they are getting several bids, I don't have a problem asking what the budget is. Since I may be bidding against five others my chances go down right off the bat. If there budget seems realistic, they still have my interest. If it is unrealistic, they are trying to find a contractor who will make a bid error, or soon will be when they get six bids above budget.
On the other hand, if you get the impression you are first one contacted or one of a few, this may label you as the pushy arrogant contractor.
If they are tire kickers or very early in the process, this could be a good time to discuss whether they have an arch's $ or Banks $. If not, this is a good time to discuss ballpark budgets.
Still learning the finesse and tact of this art.
i usually have my "job photo" book with me... and instead of quoting prices or ballparks... i point to a past project and say... this one was so & so.. and they spent about $$$$$$...
it's a good reality check for everyone.. being an optimist .. i usually think we can do things for less time and money than we really can...
quoting what things have cost in the recent past brings us all back to reality..
you have to establish their comfort range .. if you proceed blindly, one of the two parties is going to be disappointed..
you have to know what your company is capable of.. can you deliver to thier expectations or should you pass.. or sub some of it out
Mike Smith Rhode Island : Design / Build / Repair / Restore
Right up front, "Before we get too deeply involved in this project, I need to know if you have the budget available to cover it. I don't want to design ytou something that you cannot afford and I don't want top design something that fails to meet your expectations for quality."
In a case like yours, when they are hesitant to p[rovide a number, you could throw one out. "If I came in with a price of $X_____, what would be ytour reaction?"
be prepared to follow that up with "Of course it might be higher or lower..." or with CPR...but watch their face for reactiuon regardlewss of what they say.
Excellence is its own reward!
"In a case like yours, when they are hesitant to p[rovide a number, you could throw one out. "If I came in with a price of $X_____, what would be ytour reaction?""
I don't like that AT ALL. It sounds too much like a bad car salesman that is just trying to get you to say yes and will keep working the deal until he gets it. "If the payments where $300 a month can we do the deal right now".
The problem is that the client often has no idea about what a project will cost either.
I think that you need to start with educating them. Like Mike does or you could start something like an addition of this size usauall runs $35-70,000 depending the level of flooring and other materials that are selected and depending all of the specifics of the job.
They ask if that is in their range. If they say yes then start asking a few questions to narrow down the type of details taht they want.
As a homeowner I can tell you that there seems to be a perception that some remodelers have padded the job fit the budget. Remodeling is a scarey outlay of money and we've all heard the horror stories. When people are scared they tend to play it close to the vest.
My DH and I have never remodeled and so we have been very upfront about what have to spend because frankly we don't know what we can afford to do but the fear has been at the back of my mind (okay, with our budget it's less a fear of padding than a fear of wonder bra-ing).
I think maybe you could talk about ranges--like for X amount you can get this level of remodel--or make it modular like this level of paint with that level of flooring. We also use Improvenet which checks out the credentials & history of the guys, in return they make sure we have the $$ so we don't waste the time of the contractors.
Lisa
I've been noticing the same thing. I like to use some ballpark numbers to get the lay of the land $10K $20K etc The other thing I notice is that the new homeowners often have an amount that was included in their mortage for repairs/renovation. Around here it tends to be 5-10% of the cost of the house.
This is an excellent thread, because what's involved is the beginning of building a trusting business relationship, and how a contractor approaches it professionally and personally is often as important as the potential cost of the project.
On remodels or renovations or additions, I tend to follow a similar path to Mike Smith. The education is really important, because a client unfamiliar with the building process may not be familiar with all the permitting issues, setbacks, site prep, etc., and, especially in older homes, the potential hidden problems or the need to bring some of the old structure up to code. The money issue kind of creeps into the discussion as the cards are layed out and expectations and the scope of the project emerge.
I've always been a little uneasy asking about budgets for a couple of reasons; one, because as mentioned, there's the perception that you're trying to see how deep the pockets are and, two, some people will try to throw a lowball # at you, just to see if you'll bite. In reality, they may be well positioned financially to fund a first rate job, no questions asked. So the information derived from inquiring doesn't mean a whole lot.
One possible exception to all this is when the project is being bankrolled by a bank construction loan for a specific project and, in that situation, the HO and GC sometimes develop the budget together. (though, granted, at that point, the contractor usually has some kind of written commitment or agreement to perform the work).
This is good. I think the encouragement in all these replies is to get a dialogue started, get a client talking about money. My usual tendency is to ask if they have a budget and, when they waffle, to move on. I think I need to develop a "script" to get the ice broken. To whit:
1) Is this project financed by a bank, line of credit, your father-in-law, or are you using your own money?
1a) Is the budget fixed, or if we get into it and you decide you want to expand the scope, are you able to expand the budget?
2) Are you firm about the finishes you need on the project like flooring, trim woods, cabinetry, plumbing fixtures...?
3) Did you give your architect a budget? How did you come up with this plan without one? Is this the first version of the plan you have tried?
4) Here are a couple of projects I did that are similar in scope to yours...this one ran $52,000 and this one was $96,000. Let me tell you about the differences.
5) Have you gotten any bids yet? How did the numbers come in? Why didn't you go with those contractors?
Come to think of it, I got awarded a contract for a $250,000 job by offering to look over the competing bid and analyze why theirs was so much lower than mine. It turned out that they used a bidding software and instead of bidding the laminated-glass Marvin windows, it plugged in aluminum windows, instead of low-voltage, scene-controlled lighting, it used a figure for "high-grade" electric, and didn't account for other finish specs.
It is so easy for me (and maybe all craftsmen/contractors) to discuss the construction end of construction and difficult to discuss the business/financial end of construction. Maybe with some addition to the list above we can develop a comprehensive ice-breaking conversation script and learn to talk comfortably about money with a HO and both avoid wasting time being the tire they are kicking, and not get taken advantage of by clients who have more business savvy than we.
-Ben Carnes
I think this is something Sonny Lykos might jump in on but......where Sonny use to talk so much about "charging" for estimates.....this thread is perfect.
I will NOT do an estimate for free on a large job if I can't get a HO's budget. This is where I agree with sonny. I don't beleive I could ever get paid for an estimate on smaller jobs so I add that estimate time into the estimate being that the estimate may just take me a few hours (just? ugh).
All in all this is where we all need to put our foot down. If a HO expects us to make a zillion calls and probably two "full" days at least, then they better pay me for that time like they paid the archy and if theyre not willing than neither am I.
Pays to do smaller jobs when you add up all the wasted estimate time that HO's put us through.
I mean who would spend two days full time and phone calls and visits back and forth and wracking our brains to be told...."oh sorry, its over our budget, bye" that they wouldnt speak about to begin with. ANDDDDDDDD use all our ideas!
Don't be an idiot...."charge" for large estimates or just walk away and take the jobs that you don't have to put so much initial energy into.
Getting paid for a large estimate says something....that theyre serious or that theyre users.
BE real
Namaste
Andy PS....wheres Sonny when ya need him...lol?
In his first interview since the stroke, Ram Dass, 66, spoke with great difficulty about how his brush with death has changed his ideas about aging, and how the recent loss of two old friends, Timothy Leary and Allen Ginsberg, has convinced him that now, more than ever, is the time to ``Be Here Now.''
http://CLIFFORDRENOVATIONS.COM
Ben,
As a homeowner, if you asked me #1, I'd probably tell you it's none of your business where the money comes from and start looking for another contractor. If it's financed by a bank that's still my money, I'm just paying more for it. If it's financed by my father in law, it's my money plus I'm suffering more for it. If it's cash that I've been saving for years, it's my money and that has been carefully earmarked and carved out of day to day expenses, saving for college, etc. No matter where the money comes from I want to spend it wisely.
The problem is that homeowners have very few ways of getting a reality check without getting estimates. Last year I asked on this board about ballpark costs for fixing the plumbing in this house and possibly remodelling my bathroom. I wanted to have some sort of goal to shoot for in saving ($3,000? $30,000? 50,000?) and didn't want to waste the time of a plumber by bringing him in 5 years early to give me an estimate so I'd have a ballpark. My post received little response, and I still have no clue how much I'll need. I don't have a budget because I don't know the ballpark. So, in a couple of years when I hope I've saved enough I will be calling a plumber and going through this exact process. I will not tell the plumber what my budget is until he's done the estimate because I don't know anything about plumbing - I don't know what my budget is until he's looked it over.
"Where is the money coming from" may not be an essential question for a small project. But for major remodeling or new construction (by major I would have to say $10,000 & up) it is absolutely a pertinent question. It has to be asked.
Do you think a car dealership will write up the paperwork before financing is confirmed? Or a boat dealer? C'mon, think about it!
A customer who dodges the question or resents the question (when it is asked in a diplomatic way of course) throws up an immeadiate red flag.
It is our business as contractors to find out the customer's ability and willingness to pay. It's not like all you have to do is leave the checkout counter and return the $20,000 kitchen remodel to the shelf.
John Svenson, Builder, Remodeler, NE Ohio (Formerly posted as JRS)
Edited 5/27/2003 3:31:28 PM ET by Svenny
Actually I was thinking that he was asking this question before doing any kind of estimate - that is too soon in the relationship and a red flag for me. If we are getting to the business of signing the contract, then I think that question has more validity.
"Do you think a car dealership will write up the paperwork before financing is confirmed?"
Yes, we have bought cars this way before. You tell them "I will give you $X for this car." They write up the sale, you come in and write the check and drive away. This is actually a bad example, because a car can be repossessed if the check bounces, you can't repossess a kitchen.
If you were handling the financing of the construction, then it is pertinent to you who is paying, but otherwise I don't think it is any of your business how I get the money, only that I do. So, I give you consideration when we sign the contract (20%, 30%, 50%, whatever) that is too much to walk away from and pays for materials. You do some work and I pay you more. You finish the job and I pay you the rest. It does involve some trust, but that is why there is a contract. You can also file a lien if I don't cough up the dough. You have every right to do a credit check for the credit you are extending. But that happens after we have signed paperwork and have an agreement to do business. And I want to see your financial statements so that I know you'll still be in business to the end of the project. (that last is joke, so smile, please).
I want to know your budget from the start because I don't want to waste either of our time planning something that isn't going to happen. $10 per square foot is the difference between clad wood windows and vinyl.
I don't care where you got your money but I am not going to turn a shovel with out being certain that there is enough. Self funded buyers put the money into a 2 signatures required account or we don't build. I want to know which bank I will be dealing with to alert my vendors to any changes from normal submission/inspection requirements.
Your job costs what it costs and thinking you are clever by keeping your cards at your chest is just silly and immature. People who are suspicious are that way because they know how they are themselves.
My three questions (tactfully asked)
When would you like to start?
Who will I be bidding against?
What is the budget?
Regarding the budget question, most of the time they say they have know idea. So I educate them and it goes something like this. How much are new homes going for? How big are they? What are the lots going for? Net out the land, and you have square foot costs for new construction. Remodeling will cost more, because of the prototype factor, economies of scale, etc. Depending on the project, there will be additional costs on a square foot basis, because for example a sunroom has a lot of windows, an addition that involves a kitchen or bath has the most expensive room in the house, one floor additions allocate a roof and foundation to one floor of living space, etc.
So I suggest a new neighbor hood s.f. price, and extrapolate that certainly a reasonable s.f. price for their remodel would be in the range of x-y. Then we throw out a room size and say it could cost "z". Often after taking the customer through this excercise they say, "that's about what I thought."
If at this point I think their expectations are reasonable, we go further.
But I'm still learning.Tom
Asking how a project will be financed is perfectly acceptable before an estimate or proposal is given-nothing shady about that.
A car salesman who has never delt with you before will ask how you plan on financing. You might not tell them, but they will ask. If you have dealt with the salesman before, he probably won't ask.
Qualifying the customer at the time of contract signing is way too late. Sounds good from your point of view, as the customer, but to me, you're way too arrogant and dismissive of the contractor's time. I would drop you real quik if you resisted such gentle questions about your project. My banker sees my financial statement but my customer never does. If a customer tells me that's required to get the job, it's adios.
You see, you come across as one of those people that see their remodeling work as a one way street. You're there for my benefit, dangling a job in front of me, and I'm supposed to run in circles, jump through hoops, sit and stay, or go fetch, on your whim. And if I am granted the privilege of doing your job I can be truly grateful.
It's a two way street, and my customers are benefitted by hiring me. I know how honest I am, and the pride I take in my work. And they're calling me because someone has told them this already. I don't get every job I bid, but I am truly grateful that I have plenty of customers that show me the same respect that I show them, and that I have never had to grovel to get a proposal accepted.
John Svenson, Builder, Remodeler, NE Ohio (Formerly posted as JRS)
Well, sorry I come across that way. Guess you and I wouldn't work well together. I believe that contractors have every right to know that there is enough money to pay for job (why I suggested that you can do a credit check), just not every right to know where the money comes from. While most contractors (and all the ones on this site) are honorable people, there are those people who give estimates merely to find new marks for their con, and questions about money that early in the game are a way to spot them. The idea in an earlier post of setting up an escrow account was a good one, I thought.
Back on the topic of estimates, I have paid contractors for an hour of their time to come look at a project and would gladly do so again. The problem I face is that everybody offers free estimates and I don't want to waste their time to give me an estimate years before the actual project so that I could have a ballpark figure. Homeowners have no way of knowing how much something costs. If you ask me my budget at the outset then we have to start a guessing game. If you instead tell me that $___ will get you this level of quality in this space then we have a starting place for discussions. I don't want to say I have $10,000 and then you tell me what I have to cut out of a project, I want you to tell me that this project costs $15,000 and here is where the expenses are so I can figure out what I can live without.
The value of a contractor is in giving the best result for the money available. So the best way to bid is to start with the money and determine what you can provide.
But I don't give bids.
I'm a HO, but I work in industrial equipment sales (typical quote we do is $200K). If you told me you'd charge me to do an estimate for me, I'd tell you to go have a nice day. In my business, the time it takes to prepare a detailed bid (might run to 30 or 50 pages, assembled in a binder, shipped by courier) is called OVERHEAD. I'm assuming that anyone involved in house construction would be the same. I know how much time it takes to to a take off on an industrial project, and I know what it's like to put bids together involving sourcing components around the world. Yes, it takes time and money.
That being said, the contractor we sat down with on our new house used the Means book, and said, for a house like you've brought me, with the level of detail I normally use, it will cost $x. And he went through the various components that were more important. Then, based on this meeting, we said, ok, give us a written proposal for the whole thing, with this, this, and this. And so he took a couple of weeks at this point and came up with a final figure for the contract.
I would think if you build up some history, you will know a ballpark figure of what your costs are for certain styles of houses based on approximate levels of detail and features. Say, for instance, $x per sq ft for a boring house, $y for something interesting, with a roof-from-heck roofline. Then, you can have a meaningful conversation with the clients, based on their reaction to what the costs can be expected to be. I know that once we had an idea of what the per-sq-ft costs were in our area, for a house with the level of detail and features we wanted, we could examine our budget and add or delete features (the kitchen bump-out went away at that point).
cairo.. i'm sure you got a nice house.. but it sounds like a tract house... your GC had his estimating program and his history of building the same house with various known components..
everything we do is prototype... and if my prospective customers think they can get the same addtion / remodel from me that they can from some of the other builders in town.. they are wrong.. it will not be the same.. nothing will be the same..
i'm doing design / build.. my competition is not .. so .. i have to qualify my customers.. they've already qualified me.. that's why they called me....
kind of like pro-deck... a client calls him .. "i want a 16 x 30 deck"... .. but the deck they will get from him will not be the same as the one from the tract builder on the next block..
some parts of residential construction are comodities... some are not...from site work to roofing , there are always quality levels that differentiate one contractor from another... no matter what your plans and specs look likeMike Smith Rhode Island : Design / Build / Repair / Restore
Mike is spot-on.
"Ths is what I've built, and this is what it cost to build it."
A statement.
As well as a good example of a picture being worth a thousand words, plus those pictures saving hours of putting together a bid without knowing the true scale of the project.
If they want more, you add more or better components/labor and the price goes up. As you go up, stay within your capabilities. Don't go so high-end (if that's not the realm of your work) to where you screw the pooch on a high-end job ad screw your reputation in the process. Don't do what I've seen too much of...installing high-end materials with low-end talent.
If they want less, you scale back the project and the price goes down. Don't go below your standards of onstruction and build a shack that will come back and haunt/hurt your reputation.
Some folk on low budget still want nice coonstruction. There's almost always a way to work it out. Scale to build the bones of the project now with the intent of you or them completing the work down the road as finances permit. Gotta be careful with that approach, but it can work.
I think Cairo's point is that the GC started out by saying "these are the ranges of what I do, and these are what the costs are like", and from there, they worked together to obtain a budget and a price.
And from my interpretation of most of the responses, it appears that most of you are saying that contractors have no ability to estimate time and materials involved in a project.
to Piffin, of course things change as a job progresses. No one in their right mind would expect a renovation job to be an absolute fixed price worked out ahead of time.
Mike, I think you misunderstood me. This was a process whereby the builder established the range of costs for what he builds, which are custom, one-off, specialty houses. His version of "boring" is what the other builders in town consider "high end". This was his way of doing exactly what the thread title implies. Establishing common ground to see if we could work together.
Maybe I didn't word things well. Notice that I am referring to new construction, not renovation. Tell me, if a client showed you a house plan, and together you agreed on the type of foundation, flooring, siding, roofing, windows, a kitchen allowance, heating system, etc etc, could you not estimate your costs, at least to a ballpark level? To the point of saying, "it will likely be in the $x range. do you want to go ahead and work out a price we can put on paper?"
cairo... i've done it often enough to know i won't do it again...
on custom homes.. i have a conference with the customer.. i get a feel if this will be a correct fit for them and me..
since it is a custom home.. lets say 3000 to 4000 sf.. with all the bells and whistles..
i look over THEIR plans.. and make a guess as to how much time i will spend putting a price on it... it will be about 100 hours.. because it won't be an estimate.. it will be a proposal.. and if there are no changes.. it will be the final price..
if i work 2500 hours in a year.. that represents 1/25 of my prospective income..
i tell them this house looks like it's in the range of $300K - $400K.. or whatever it looks like to me while i'm sitting at their dining room table.. then i simply tell them i'll be glad to give them a price .. and a proposal... but they have to pay for the proposal... usually $2000 ... unless i really , really want this house.. then maybe it's $1000...
i've got dead files with inch thick folders of jobs i spec'd out, estimated and wrote proposals for.. for which i never received one cent... no more.... architects pay estimating services good money to estimate their jobs.. but those are guesstimates.. no one is betting the ranch on those numbers..
my time is worth more .. and my numbers are more valid, than numbers generated for an architect's estimate... if we get done with the process and they hire me to build the home.. we both have confidence in the numbers and each other .. if they don't hire me... i'll just move on to the next customer..
but no more " will work for lunch"...or .. "will work for free"...
do some sign up ?... yup... do some say..."we'll think about it and let you know .. and they never do ?...yup.... too bad for me ...
or ..maybe... too bad for them.. they wind up hiring someone who gave them a "free estimate".... hah, hah, hah..
i think we've already established that there is no such thing as a "free estimate"... someone is paying for it.... and for the rates i charge for the Proposal.. we're really splitting the costs and the riskMike Smith Rhode Island : Design / Build / Repair / Restore
Mike
Very good use of the English language.
Estimates vs. proposals........an estimate you can do right there on the spot.
A proposal you get paid for......Anything that's going to take me over two hours initially
In his first interview since the stroke, Ram Dass, 66, spoke with great difficulty about how his brush with death has changed his ideas about aging, and how the recent loss of two old friends, Timothy Leary and Allen Ginsberg, has convinced him that now, more than ever, is the time to ``Be Here Now.''
http://CLIFFORDRENOVATIONS.COM
Edited 5/28/2003 8:08:50 AM ET by Andy Clifford(Andybuildz)
I like the suggestion of providing the picture book with actual costs. Unfortunately, not every builder has a huge, comprehensive portfolio that is pretty recent to draw on for this.
HO are completely ignorant of the cost of any big change/build because no magazine or home-fix it show will talk about cost (or if they do, not very often).
This is a big set-up for each HO/Builder introduction:
"I saw this in a magazine/on TV and want you to build something close to it (but I have no idea what it might cost)."
Followed by the disappointment when they begin to learn that it will cost 2 or 4 times what they imagined it would.
Then they figure you are not very good at your job and they try to get more quotes. If one of the bidders makes a big mistake, or is unscrupulous, they'll get a number closer to that was in the HO's imagination and then the fun begins (change orders, "going over budget", etc.).
If every magazine would quit hiding behind their excuse, "Well, costs are different and labor is different and projects are different." The only thing this philosophy does is prepare homeowners for disappointment and mis-understanding.
Print the cost of labor and materials (and land) and so on, and people will LEARN about how these factors vary throughout the country, and they will LEARN what to expect things to cost.
Then they will begin the dialogue (that is the basis for this relationship that everyone is wisely pointing out to be key, in this thread)with a much better understanding!
Norm "this is my pet peeve" Kerr
"HO are completely ignorant of the cost of any big change/build because no magazine or home-fix it show will talk about cost (or if they do, not very often). "
Hear, hear (coming from one of those ignorant homeowners). And worse, when they do publish costs it is the lump sum and doesn't tell you how much of the labor and materials were donated to get featured on the show or in the article.
Edited 5/28/2003 2:31:29 PM ET by aimless
I know the one addition I had quoted I was astounded at the cost of just the materials. The cost of having it all built floored me. It wasn't even close to an option. But, I had no idea of that before I asked. It wasn't even an option with me doing all of the work as I had planned.
I have a better idea of costs now, but am still pretty ignorant. Hate to waste anyone's time, and had I had any realistic idea of costs, I wouldn't have. Wouldn't have even wasted my time drawing up so many remodeling ideas. The sad thing is the absolute bare bones idea was what I had quoted.
At least I drove to the guys office with drawings of the house and some basic plans printed out. Didn't take him too long to give me a rough material cost and weed me out as too poor to mess with.<G>
Found out I'd purchased my house at way below building costs, which skewed my perspective.
Same with my second house. The lot is worth about $40-50 if bought seperately. There's a 1600 sq. ft. house with a 1/2 finished basement under it. Plus a large 2 car garage on the side. Cost me $95,000. That's $27/ sq. ft. with a garage and land tossed in for free. It appraised for $115,000 last year. That's still only $36/ sq. ft. But, if I didn't know better, I'd think I was being ripped off when I got an addition quoted. It'd cost at least twice that per sq. ft..
A good friend just had a similar sized house built. Cost him about $160,000 total. His FIL was the contractor and he did lots of the work, otherwise it'd have cost around $200,000.
You folks mess with big numbers, hard for us non-builders to get a grasp of what things actually cost without some help.
Wasn't there a thread here recently about the constant N/A in FHB houses issues Seems they as guilty as Villa and his ilk.
just information about costs
the TOH "dream kitchen" $85K in HO dollars PLUS $120K of donated materials etc. so whats that if HO paid all, $300K?bobl Volo Non Voleo
Lets see.......$x/sq ft for Something Boring, and $y/sq ft for Something Interesting. Sounds like some vocabulary I can incorporate right away in my presentations LOL.
Industrial equipment sales. Are you a one man show? Do you own the company, manage the staff, buy all the office supplies and equipment, plan the advertising, set up the customer appointments, make the sales calls, do the design work, handle the billing, handle collections, write the checks, set up the work schedule, supervise the job, meet with the subs, cover for the missing employee, run the truck to the repair shop when it breaks down, meet with the insurance man/tax man/building inspector/lumber salesman, yada yada yada...............and still have time for a personal life?
If just one customer doesn't pay his bill, are the wolves coming to your door?
Or are you on salary and/or commission?
Don't even try to compare a corporate set-up (even a small one) with what most of us do here with our businesses.
It ain't that easy, every job is different, and every job has thousands of components, and every job involves sourcing raw materials to build components, not just components from some catalogue.
Most of us don't charge for estimates, but please don't tell us that that is the way it should be.
John Svenson, Builder, Remodeler, NE Ohio (Formerly posted as JRS)
You can put together a bid presentation book for a piece of machinery or a system with a know manufacturing cost that is learned from prototype and having manufactured it before, add the overhead for selling it and make your pitch.
In remodeling we have to rebuild that equiptment out in the weather while the owners are making use of it, and needing to design compnents in the process.
I listened to a speech about making more money in building from a guy who said that builder's bids should take no longer than 2-3 hours top prepare. Fine for him but he builds several hundred homes a year and refuses to offer options to customers.
I make an estimate based on design sculped to their reported budget and then some of them want to pick it aprat, line by line, what if we changed this or added that or deleted something else?
Sometimes that extra negotiation adds another ten hours. One way or another, they are going to pay for it. For the builder who includes it in overhead, that means that clients who make simple easy decisions pay for ones that yank ideas out of their Uncle Clive's Closet. It's more fair to let them pay for the estimation and decide for themselves how much of their own money they want to waste - or invest - in planning.
Comparing this to your gig, what if after you make the presentation, they ask, what if we set this up on a different voltage supply system, or have you make the axles two inches shorter, or use ten gauge steel insteaad of the twelve you normaly cut from??? One change can change the entire system, not just the component indicated..
Excellence is its own reward!
Dear Piffin:
I am what they I guess what they would call a lurker. I read Breaktime Forum every day but rarely post. I am self taught remodeling contractor who cannot even carry your lunch box when it comes to the type work you have posted here. However, I learn something new and valuable each time I read one of your posts or look at one of the photos that you have supplied. Without swelling your head to unmanageable proportions, I just wanted to say that I very much enjoy your frequent, salient contributions to Breaktime.
Thanks,
JeffThe reason so few people are successful is that so far no one has figured a way to sit down and slide uphill.
I have to say that I agree with Mike here. When I discuss budget with a client and I meet resistance, I try to educate the client by showing them other jobs I've done and what they cost at the time AND what they would cost NOW. What this does is it allows the client to find the level of remodel without having to reveal a dollar amount and it allows me to get an idea of how much we're talking about. Semantics I know, but many people live on it.
I like the idea of charging for estimates, but in my area I'd be the only one. To a certain extent, our industry suffers because we're seen not as "important" as an architect or an engineer. We really need to change that perception.
To homeowners I'd like to say, the more information you give to a contractor in the form of what materials, level of finish, budget, etc., the easier it will be for you to get an accurate idea of the costs involved. If you don't know what you want or are unfamiliar with the products, then you can't be surprised when a contractor specs out lower quality materials or asks for a fee for running around trying to spec your job in order to make a proposal.
One last note, I hire subs based on the work they give me NOT on what they charge me. I need to feel confident that the sub I use will do the job right, show up when I need him, and will have the same respect for the client that I have. I also need to feel confident that they can do this without my constant supervision. I'll somehow fit their price in my proposal and still make it competitive, but just like I wouldn't ask a good doctor to lower his price on a surgery I need, I wouldn't do it to a tradesman whose work I valued.
Good thread Ben,
The equip-rep is selling products produced in a controlled enviroment. Whereas we set up our factory within the walls / or grounds of a stranger who expects us to produce work for free just to get the business. hahahaha. What a compare! I'm really glad he found a G.C. to fit his needs. That's what's great about us as an industry. A client can find a G.C. who does business their way. The only problem with that thinking is that when the job / relationship goes south, who gets the blame? The industry as a whole. (Gawd-dam Contractors!!!)
As Mike Smith (bite me) and others have outlined, it's really about setting your self apart from those who preceeded you and those who will follow.
A client expressing a budget is an expression of trust. I've found that I have to gain that before I "pop" the question.
I tell the prospects, up front, that the purpose of this meeting is to discover three things. Really, the only three thing that make up any project:
1. What's the program?................what is the outcome? The project.
2. What is the quality?................What level of quality in craftmanship, materials and service does the prospect desire. A lot of time is spent here. In the big 3, most want the best of everything. But the best of service might mean they move out while the work gets done, or it might mean no dust anywhere, or it might mean the crew just don't smoke inside. You get the picture. The same goes for material. A $6,800.00 faucet or are they expecting long service from a cheesy H.D. Delta? All these levels cost.
3. The budget...............how much do you want to spend or think it will cost?
Now I have found that if I spend enough time LISTENING to #1 & #2, most people have figured out that I'm going to give them what they pay for. I also make a point that unless there are blue-lined plans. there is no such thing as a bid because there is nothing to bid on.
I also state (as matter of my business policy,) that I design from a expressed budget only. That once the client expresses a budget, they're the only one who can change it. It becomes my responsibilty to inform them when their desires are exceeding their budget. This givves them back a measure of control they felt they gave-up by giving the budget "away".
I also find it helpful, early in the interveiw, to use published project costs. Remodeler Mag. does a city by city project cost that I use........." The national average for a kitchen remodel using stock cabinets, average appliances, laminate counter with a vinyl floor is $18,500.00." This usually wakes 'em up.
I feel having the prospect express a budget is the first step in turning them into clients. If I can make that happen, then 9 times out of 10, I also leave that first meeting with a design deposit and a commitment that we will be working together.
I think this is a teriffic discussion. I am a designer who works mostly in renovation. I function as a project manager for the client for most of my design projects. As part of our initial meeting, I ask prospective clients if they expect me to get competative bids or do they anticipate me working with contractors of my own choosing. They can either spend their money on my time running after bids or my time designing the end project. Most would rather spend it on design.
Most come to me by word-of-mouth from a previous client so they have an idea about what that person spent - or I will explain it to them very clearly (with permission of course). I will also tell them about the problems we ran into and the options considered and not chosen, and how I usually manage that process. I also don't ask my contractors to bid jobs with big holes of unspecified products in them, I ask my clients to select or specify everything possible upfront - it's the only way to get a bid someone can stand by. I find contractors get a bum rap over "allowances" that turn out to be insufficient. I work really hard to keep up on what products and finishes cost, and when in doubt, I refer to someone who works in that area all the time - or better yet, the person I expect to be doing the work. To some degree these projects become "design-build". In the end, I find I can meet a budget that is discussed with the client at that first meeting 95% of the time. It works for me, the contractors, and most of all my clients.
Lots of good info here, Ben. Bro always gives free estimates. He will sometimes jack up the price if he doesn't want the job or is backed up w/work. I think the free est policy is a good one--he's never had to advertise. (It's probably a good idea to limit the time you can spend for the estimate, or some folks might take up a LOT of your time.) Of course, sometimes he eats it because he refuses to write up change orders which should up the price due to customer requests for this and that.
What is griping me is that when all I need is an 18" hunk of one garage door support replaced (stop-gap measure), someone wants $40k to rebuild the entire garage. I certainly have double that amt of work to be done here--I just can't pay it out all at once.
The housing market is out of control here, which is contributing to the prob. With the smog, density, and influx of folks from Mexico and South America, among other places, take a shorter flight--come to San Diego instead of Mexico City.
Ben,
Read the thread which your post started, and found it very interesting.
I found myself thinking of the scene in 'Blazing Saddles' where the preacher is leading the town in prayer:
"Oh Lord, do we have the strength and fortitude to meet this challenge? Or are we just jerk*** off?"
And that's the question that every client should answer. How you ask it is critical. The sooner you get an answer, the less time you'll waste.
We've all had clients who think $2,500 will buy them a granite slab counter top. We've all had clients who have a sister in Phoenix who had her kitchen floor tiled for a thousand in cash, ( my response: "Wow, too bad your kitchen is in Seattle!")
Also, for all of the generals who post here, how many of you have gotten a bid from a young, hungry sub, just to make sure that the regular guys you use (and are friends with) are kept within fair price range? Do you pay them for their time for their quote? Show of hands?
Uh-huh. Nobody.
skipj
skip.. i don't do that to my subs.. why would i waste my time as well as theirs , getting a bid from someone i'm not going to use ?Mike Smith Rhode Island : Design / Build / Repair / Restore
Mike.
1.Good for you.
2.To keep your regular guys honest by checking the bottom of the market.
skipj
skip
Although I am primarily a contractor, a small percentage of my business is subbing from other contractors (at one time it used to be about 50%). You are comparing apples and oranges, wholesale and retail. Subs don't charge for price quotes. Period. If I bid three jobs for a contractor and got no work, I stopped bidding. No big deal.
As a sub, the upside is repeat business with minimal sales time and customer interaction. Smaller , specialized work, far less time preparing bids. I would say due to the repetative nature of sub work, most bids for most trades can be prepared in 1 to 2 hours. Many times less than an hour, and for contractors you really trust, They can even be done over the phone. Try doing that for a homeowner!
John Svenson, Builder, Remodeler, NE Ohio (Formerly posted as JRS)
Svenny,
I take your point as regards most residential, and came to pretty much the same conclusion as you did when I was a young, and hungry sub all those years ago ( three bids and yer out!).
I found that this sub abuse is very common on commercial projects, and doing a plan take off for all finishes on a 30,000 sq. ft. medical facility (walls, floors, stairs, caulking, etc) is quite an undertaking. This approach towards up-and-coming subs is very common here on the west coast; once the bid is received it is shown to the regular sub, and he gets his price real close. I notice this more and more in residential work the past few years, and even if it only takes the sub an hour or two, it still leaves a bad taste in my mouth when the sub has absolutely no chance of getting the job. Surely that is the definition of wasting someone's time.
Mike Smith asked, "Why would I do that?", and I like him for that. He, and most of us I think, prefer to build relationships with the folks we work with. Interestingly, you and Mike are the only folks who have responded to my question, leading me to the following possible conclusions:
1. I'm alone in perceiving this as a problem.
2. Nobody ever does it.
3. Lots of people do it all of the time.
4. My posts are so darned boring that most people would rather have all their teeth pulled out with no anesthetic than read one.
skipj
3.
Hey skipj
For the new guy coming up, it's called paying your dues, or breaking into the business. That "opportunity" to bid is the new guys moment to sell himself and his capabilities. His foot in the door so that when the regular sub is too busy, the GC will call that kid he met on that other job. Fling enough stuff at the wall, something is bound to stick.
Brujenn