Hello all,
What information do you include in your bids? I’m not asking for numbers/costs, but more for things like: Do you include an itemized materials breakdown? Cover letter? Just a total price? How do you lay out your bid form? Stuff like that. Does it depend on the size of the project?
I like to put an itemized materials list for larger jobs. This helps serve as a double-check for my materials take-off. Small jobs may only get a total bid figure. The exact form varies somewhat on a job-to-job basis. On both, I include a cover letter that states the scope of work, contingencies, how change orders work, and a “why you should pick me” paragraph.
later. Matty
Little Sawhhorse Construction, LLC — Building, Remodeling, and Repairs. Bayfield, WI
Replies
Actually Matt, I do just the opposite. Small jobs get a total materials breakdown, large jobs I just show a total. All of my large job estimates include seperate line items for overhead and profit. I dont list these on small projects yet I always figure some percentage into final cost. My coverletter is very similar to yours.
J. D. Reynolds
Home Improvements
"DO IT RIGHT, DO IT ONCE"
Materials are unimportant for my work, but I know a lot of contractors that will not itemize beyond what might involve a potential change. Things like the allowance in a bid for tubs, toilets, cabinets, etc. Things the customer can up or down grade to match their price point. Many feel that getting more detailed then that is just giving away what is needed which allows the customer to start pricing those out themselves which starts the, "What if I get the wood, etc," track of a customer counter bidding process. Customers like to negotiate. Also the customer can start comparing materials from one contractor to the next.
All some will include is a materials cost and leave it at that.
Don
I dont like putting in a materials list other then main products such as brand names of tubs or roofing or siding etc. I've had too many penny pinchers try and chew my prices down by asking for different choices before the contract was signed.The amount of 2x material or sheets of ply arent discussed in my opinion....just brand names and the exact item. Personally I hate to say it but I think this is a good question for Sonny Lykos if anyone knows where he's slumming these days beside JLC. He'll write you an armload of good information
Be well
Namaste'
andy
You don’t complete your inner work before you do your outer work. Nor do you say, "Well, the hell with the inner work: I’ll go do the outer work because it’s so important and pressing." That’s not conscious either. The conscious thing is the simultaneous doing of both. "Ram Dass"
http://CLIFFORDRENOVATIONS.COM
A "bid" is just that.............a $$ figure I propose to complete the project as per provided information. I never provide anything other than "The total cost: --------"
It's a bid. Any additional information turns it into an auction.
I'd also add that I rarely "bid" work. Rather, I have the Owner / Architect / Designer define the the following............
1. The program, whadda want to do?
2. The budget, whadda want to spend?
3. The quality, what level do you wish to acheive.
Ultimately, these answers all come out at some point of the project, why not get the answers up front. It works for me.............
Matty, no basic stuff like lumber or drywall unless you want to show that your'e using 1/2 or 5/8 drywall or green board, or certain sizes of joists.
Anyway, I'll email you three contracts I use, one for jobs under $1000, another one for jobs from about $1000 to $5000 depending on the scope and detailing, and the biggie for jobs over $5000. I also use a "specification Sheet for the small one if needed, and the middle size contract. The biggie has it built in.
Also use an Additional Work Authorization (AWA) istead of a Change Order. The Change Order is only used if ther is no change in price, like a paint color, and just to document it and get a signature on it.
Finally, I use an Addendum for any changes to any of the contracts if the change occurs "before" the start date, and because it then becomes an Addendum" to the original contract.
Anyway, after I get back from buying our Xmas tree I'll email it all to you. Since I use a Mac, I have already converted them all to "pdf" format. Just modify they as you desire and need. Check with your local laws and statutes too for any changes from mine which are for Florida.
I break down the Scope of Work into catagories defined in the AIA Contract Form. Each catagory then describes the work to be done and a price for that catagory. The Bid/ Proposal is the foundation of the Contract.
We had debated if this should be differant with smaller vs larger jobs. Then came a small kitchen project - porcilean tile floor, skim coating walls, wall paper and wood base board. I broke it down to catagories as I would with larger jobs. Each catagory was priced individually. I was critiqued (unmercifully) by my peers for giving out too much budgeting information. So, now any job under $15,000 the only pricing information the prospective client gets a bottom line $ figure.
The Scope of Work outline includes all moulding design #'s, fixture model #'s, appliance model #'s and other items mentioned in the drawings or specifications and are listed as line items under the appropriate catagory with a reference to wherever I got the info. Terms like "as shown in Drawing # dated..." and "as specified in Specifications # dated ..." appear throughout the document. Items like electrical outlets are counted and assigned. On large jobs this is kept to just a count per room. I never write, as most Arch's would love, "Electrical as shown in drawings." Listen, we ALL make mistakes. I may have missed something or added something.
Clients are RARELY permitted to buy ANYTHING. That's my company's responsibility. If they want me to install an Italian chandelier they bought in Venice on their last trip, fine - but THIS installation comes at a premium. Anything I can buy, I do. If they are trying to save money by buying big ticket items themselves, I explain that it will actually cost them more money because any mistakes or damages incurred will be their responsibility. My company will NOT: sign for any of these deliveries, bring in the deliveries to the room where they are to be installed or even check the fixture for compatability or completeness of parts. If the plumber is missing a part, he will pack up his/ her tools and walk off the job until the part is delivered and he can find time to come back. Plus, he/ she will submit a service charge for having to return. If they insist, they are looking for a different type of Contractor and I run.
A blank Change Order form is submitted with the Proposal.
By outlining the Scope of Work thoroughly, I demonstrate that I have a comprehesive grasp of the job and therefore do not need a "This is why you should pick me " Statement. Let your presentation and work speak for you.
Hi all. Owner/Client type lurking here.
I must say... Thanks for the 101 on "Why not to use the bid system to choose a Builder".
I chose my GC based on his qualifications NOT bidding. I sure hope that I've started a more honest relationship than some of the examples I've read about here.
Please tell me (anybody), would this make a difference to you?
Would you be more upfront and maybe even help "value engineer" the project if you were shown some respect from the beginning?
Thanks for the insight.
Most of our customers chose us to do their work, often before they have a design. Nonetheless they all want to know what the project is going to cost. Call this a bid if you want. I would call it a price. As soon as the project has sufficient detail, we give the customer a price, subject to change as the scope and details of the project evolve. This price will be the basis for all discussions about payment at the end of the job. It had better be a reliable number for the contractor and include overhead and profit, or the contractor will/should be out of business.
This is quite a bit different than a competitive bid system which formalizes the price but does not start from an assumption of mutual trust. We also do a few competitive bids which can work out well but it starts with a much different approach. In the end the results are similar if your company professionally performs all aspects of the job, both the business and the production ends.
Mutual trust is what it's all about. I feel that people should take as much pride in their integrity as they do in their craft.
As far as the price goes, I feel that a certain house, at a certain quality level, in a certain market, should cost a certain amount of money to build. That amount of money DOES include O&P that the GC is comfortable with. In this scenario, the GC should be able to adjust the numbers to fit the scope of the project, up OR down.
By doing some research anyone can find out the costs for labor and materials involved in building a house, it's not top secret. That's the way to figure out where the dollars fall, NOT by wasting anyones time involving the competitive bidding process.--Solo
Remember, measure twice... then keep cuttin'
'til it fits really fine.
We're talking about "mutual trust" here...About people "taking pride in their integrity". Do you mean the clients or the contractors? I guess I was still waiting for the punchline.
Are you suggesting that if clients did not ask for "bids" they might get a better product and a better price? I'm not sure where you're coming from. Or going.
I'm a remodeling contractor who gets calls for bids all the time. Many times, I know they're wasting my time. What should we, the contractor, do? We can't read people's minds. We usually do ask the client what their budget is when working up a proposal for a project. More often than not though, the client will lie and say "we don't really have one." This always sets off alarms for us, because either they are lying, OR, they are really irresponsible and frivolous people--who, by the way, are almost certainly wasting our time.
We believe ourselves to have the utmost integrity. We always look for ways to "value-engineer" a product. So, YES, if folks would be more "upfront" with us, and show us more respect for our craft, and our established integrity, it would probably make a difference in the way you, the client, were treated. Mutual respect is a two-way street.
If that's what you meant by this post.
Yes, by all means, "mutual" trust. Clients and contractors. Build it in from the beginning of the relationship.
As far as "better" product and price... see, here's where the meat is! I ask YOU, "better" than WHAT? That kind of talk still sounds "competitive". I hope that you will agree with me in saying that most craftspeople always do their best work, no matter what the profit. That's a weak point makes them an easy mark.
In this almost dreamworld we're talking about, there would be a "well crafted" product that both parties are proud of, and it would be constructed for a price that both parties were "comfortable" with. This scenario will be difficult to construct but, it is possible with a serious level of mutual trust.
As I said earlier, clients need to do their homework. If they spend the time, they can find out what things cost and get a ballpark budget together. Most clients will say that they don't have a budget because they have not done ANY research. So when you ask them how much they can spend, they equate that to you asking them "how much ya got in your checkbook?" and (I hope) that's not really relevant. Well, you say that you can't read their minds. I say, that there's nothing there to read.
This may help you understand where I'm "going" with this train of thought.--Solo
Remember, measure twice... then keep cuttin'
'til it fits really fine.
I provide a line item list with the only actual numbers shown for allowance items. This prevents any competitors, which maybe the owners brother-in-law, their school friend, or even the owner from knowing my specific pricing, and makes the bid harder to shop. I also then get to sit down with the owners and clarify all of the allowances. This gives them time to get to know me and allows me to determine the exact specifications the owner wants for items not specified in the construction document.
There is no upside to including your material break down. If you forgot something you're still going to have to provide it, you're signed on to DO the work, and if , hopefully you end up with extra material, your not in a fight with the owner over who owns the surplus material. When it's not itemized it's yours.
I also never use the word profit in my bids. I use overhead & supervision. Not just a few owners, usually multi-millionaires, know your making profit they just resent your telling them how much. I've never understood why clients making $300 - $3,000/hr begrudge a contractor from making $30 or $40/hr for the 3 - 4,000 hours they put in, in their clients behalf a year.
I used to give completely itemized and costed bids, but I've had my throat cut so many times by having my number shopped all over town I quit it
I still call 'em bids, though when they reach the customer they're called (on paper) proposals. Early on, I got real tired of having unit prices shopped around, so I quit giving them. Some homeowners hate to think I'm making a profit on materials or equipment I purchase for them but want me to make plenty of money on my work, others "know" the materials are expensive but don't think laborers make more than $5/hr., etc., so I just let 'em guess what slots the dollars go in, and, like several of the other posters here, I give a bottom-line price only. If a customer tells me they're not sure how much they can afford of the work they want, I'll give a price for several separate aspects of a proposed project that can viably be done separately (like the cabinets and the floor, or the room addition and the den remodel). I do quite a bit of design-build work, and do much of my work in the rural area where I live. As a result, I can't remember the last time I had to refer to a architect's plans on a bid. It's been years.
I always hold an initial meeting with the customer to determine the scope of the project, and I try to find out what the customer's budget is. I've found that many people are defensive about this, and there are a bunch of jake-legs in this area who will be happy to do $100 worth of work for $1,000 and convince the customer they're finished, so I try to be understanding. Repeat customers almost always tell me what they have to spend, and often just ask me what can be done with the money they have budgeted, so I must be doing something right. One way or another, at the initial meeting, I try to think of all the "bones of contention" there might be with the job, and I ask questions until I'm confident that I really know what the customer wants to do. In this way, I can also find out if the customer wants a bunch of insubstantial flash, which is when I can tell that person that they'd probably be happier with a "less expensive" contractor, and run for my truck.
In any proposal, I present the list of materials that could be changed because of customer preference, whether it's the name brands and models of appliances or fixtures or just the size of plants used to landscape behind a retaining wall. I include a paragraph or two that lines out in sentence form how the work will be done, so that the customer can compare the quality of workmanship I'm going to put into their job. I also include the quality of materials I'm going to use if I suspect there will be a bid from one of the "I can do it for half that" guys around here. Understand that I don't give the client DIY instructions, but if (for instance) I'm going to use 2x12 headers and 3/8 angle-iron over a garage door, and I know Joby always uses 2x6 and thinks the garage door trim should hold up the brick, I put what I'm going to use in the specs, and I might even draw it to their attention in the presentation, though I never make any reference to any other contractor. I've had a number of people who call me back to say they want me to do the work, but my proposal for the project is more than they can or want to spend. I always go back and see them, explain what items can be saved upon and what can't, and make as many recommendations as I can. I find that most homeowners are clueless about this kind of thing, but again, if I find they just want something cheap, I opt out. OTOH, I've learned that if they can only afford part of the project and we do that, they are really motivated to save for the rest of it, and I'll be back there working again soon.
One more thing. Although I encourage the customer to call me if they think of any question, and let them know I'll call if I come up with any, I don't ever, ever give a price or present a proposal over the phone. I always insist on presenting it in person. First, I've found that the part of my personality that allows me to show a prospective customer that I'm competent and trustworthy comes across much better in person, and that customers are much more likely to ask what they need to and go ahead and sign if I'm there to talk with them. But I've also found that the "mover and shaker" who's too busy to meet with me again will also probably be too busy to meet me with the check when I'm finished, and I'm too damn old to be chasing around after my money.
Mac
hey, mac... exactly...
after i've spent 20 to 40 hours... or even if i've spent just two hours, putting together a proposal... i'm going to present it in person.. to both parties if there are two..
.no face-to-face.?.. no presentation.?...no proposal... unless we have a previous relationship... the old "why don't you just drop it in the mail" stopped working for me years ago....
i'll put it in the dead file before i'll mail it.... and of course, the closing ratio goes way up..... close to 90%.... none of this 20% success ratio for industry standardsMike Smith Rhode Island : Design / Build / Repair / Restore
There's something about being able to look someone in the eye.
I landed a job last summer that we'd wrangled about for 3-4 months. For weeks, while I revised things, my voice mail talked to his voice mail, or I'd get him on his cell phone while he was down in the Metroplex shopping with his family on Saturday. But I refused to give him any price on anything over the phone. Finally, I was so insistent about it that I figured I'd just blown the job. After we started doing the work, I was still there one evening when he brought a friend to see his place, and after he introduced us, he told the guy, "this is the only man who would actually talk to me and shake my hand." One part of my head said "yeah, like you wanted to do that!" but the other part gave me a little chill.
Mac
an old stat from my old sales days....
over 60% of deals aren't closed.....because the salesman never directly asked for the sale!
No "just sign here"...no "when would you like us to start".......no nothing!
Just....."here's the product, here's the price.....uh.....I'll just wait to hear from ya".
A coupla major rules.....like you said....
all decisions makers in the room....unless absolutely impossible.
and....
Be there! In person.....people don't buy "services"...people buy "people"!
Can't be a "people" over the fax.
Well worth it to be there early...or be there late...just be there...when both of them are.
This has applied well to my remodeling....but I know it's true from 8 yrs on the sales floor.
Jeff
And when it's time to get the first big check to start of get a place in line......be there!
Lotsa deals never happen when the fax and the postal service are your front line sales force.
Buck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
oh, yeah... and don't let 'em get ya by the beltloops...... hah, hah, hahMike Smith Rhode Island : Design / Build / Repair / Restore
U still like the old belt loops story, huh?
Still works for me!
That, and the time the same guy let me lose a sale because I wanted to "be fair" to the old rich lady and charge less. Moral of that story...people expect to pay high end prices for high end work...........and think ya don't know what the hell you're doing if ya give cut rate handyman prices.
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
In the last 3 mos I have submitted 26 bids. I have always come to the last two standing and then lost each job for various reasons. 9 Times I was invited to discuss the bid. Then many horror stories. All bids were submitted through Arch"s. Don't see it as being realistic to meet with each Client and Arch for the submission. When I have suggested this I am told that they, the A and C, need to read the Proposal and digest it before they meet with me. The only time I meet with the C at submittal time is when there is no Arch involved. Then they need me to explain the proposal. Those deals are about 95% successful.
I must add that doing a $200K job without the input of an A is very stressful. Lots of hand holding and decision making that conflicts with the progress and timing of the job and my day. In these instances the C didn't hire an A to save $$$. So, it ends up costing me. I have found it easier to be told what to build and I'll tell how and how much. I have always wanted to have a Design Build firm but the C has to respect your design sensibilities. When a C asks a contractor for design advice they are really asking for a scapegoat.
Edited 12/20/2002 1:01:14 AM ET by Frankie
Frankie... i can go along with some of that... the best job i ever did was with an architect...and the owners were pretty sophisticated...
but you did 26 bids with 0 success... how much stress is that ?
if an architect comes to me and tells me i'm on a preferred list , i might entertain a bid.. but not usually.. because most of them have a preferred list of contractors they ARE going to work with, and you are just a stalking horse to legitimize someone else's bid...
most of the time we do design / build... they pay for the design and estimate... then if they like that we give them a proposal and do the job..
if someone already has plans... we NORMALLY charge for an estimate .. if they don't want to pay for the estimate we don't do it.. the estimate has value.. wether we do the job or not.. so....20.. 40... or 100 hours putting together a proposal... no thanks.. not unless the job is mine.. or we get compensated for putting the proposal together..
if you devoted the time and effort to marketing .. instead of bidding... you'd win more bids .. instead of being a doormat for some architect who never intended to use you in the first place... or even worse.. is counting on some poor schmuck to low bid that job and lose thier shirtMike Smith Rhode Island : Design / Build / Repair / Restore
>"if you devoted the time and effort to marketing .. instead of bidding... you'd win more bids .. instead of being a doormat for some architect who never intended to use you in the first place... or even worse.. is counting on some poor schmuck to low bid that job and lose thier shirt"
Mike:
Speaking as an architect, this is a little harsh. We architects seldom _choose_ which contractor gets the job, the client usually does. The best we can do is suggest responsible contractors we've worked with in the past, and point out differences in the bids. We hardly have Rasputin-like control over our clients. (Although I sometimes fantasize about it.)
That said, there are many reasons why one contractor could have a significantly different price besides lowballing, that have nothing to do with quality or changing the specs. (e.g. vastly different overheads, shops the subs a little more, desire to get established in a particular neighborhood so willing to discount a little, need to keep crew working, better discounts from suppliers, more experience in a particular project type so more efficient, does their own sub work, etc. etc.) Unfortunately, there is no good way for a customer to flush out these variables in advance and so are left with the competitive bid route. On a tightly spec'd $300K project, it's EXTREMELY common to see variations in price over 10%, sometimes significantly more. And I'm talking about contractors with established track records, all of whom deliver quality work.
If you said to the client, "You can Contractor A, or you can have Contractor B, plus a brand new Mecedes Benz", the stakes become a little clearer. It's not just the evil architect.
I prefer negotiated contracts with contractors, and usually try to steer my clients that way, but it's not always possible. If I were a contractor, I would definitely want to know who else was bidding, and if I were being used just to "keep the chosen contractor honest." (BTW, I wouldn't work as an architect for a client who did this to a contractor. If they're willing to screw contractors around, there's a high likelihood they'll do it to me, too.) Also, I would expect that all contractors were prequalified. If I had the low bid and wasn't chosen, I'd be very upset, unless there was some issue like availability that skewed things.
Richard
richard.. i know lots of great architects... and quite a few good ones who have the ethics of a snake...
if you noticed , i said the best job i ever did was with an architect...
didn't it sound peculiar to you that frankie was a contender for 26 bids ?
what do you suppose that was all about ?Mike Smith Rhode Island : Design / Build / Repair / Restore
>"didn't it sound peculiar to you that frankie was a contender for 26 bids ?
what do you suppose that was all about ?"
Yes, it does sound peculiar. It's hard to guess, but I think it's unlikely that all of the losses can be ascribed to the machinations of architects and their clients. If I were Frankie, I would certainly try to find what made the difference to the recipients of the bids. It might be a lot of work to check with each and every one and pull out the _real_ reasons, but if the answers are consistent, it would be extremely helpful for Frankie in the long term. It might be worth it to have a third party do the followup calls since people may be more forthright with a more neutral party.
If it's ALWAYS just price, then that might mean either he's overpriced for that particular market, or he needs to be more careful about the pool of competitors he puts himself in. I suspect, though, that there is something more to the story. However, only research will tell.
Richard
Rich,
Do you push your clients to use the AIA contract?
And if a contractor says no, I'll write my own..what happens?
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
>"Do you push your clients to use the AIA contract?
And if a contractor says no, I'll write my own..what happens?"
Pushing clients towards a particular form of contract gets dangerously close to the unauthorized practice of law, so I avoid this. However, I do show them the AIA contract to make them aware that it exists. (Usually the short form one, the A105/205. The longer forms seem like overkill, IMO, for the kind of projects I do.) I figure the client has as much right to control the choice of actual contract as the contractor does, so after that, I leave it in their own hands, suggesting that whatever contract they decide to use, it would be worthwhile to have an attorney review it.
I haven't had much resistance to the AIA contract from contractors who have actually READ the short form AIA contract. Usually resistance is only from contractors who have spent a bundle on attorney's fees to write their own and can't bear the thought of it going to waste.
I like the short form AIA myself, because it clearly defines the roles and responsibilities of the architect/contractor/owner. Usually contractor-generated contracts leave the architect out of the equation. Contrary to popular mythology, the AIA contract does NOT give the architect ultimate authority over the contractor and absolve the architect of any responsibilities. I have yet to have a contractor point out the specific language where this occurs, although many of them believe it's in there somewhere.
Richard
Your last paragraph was what I was refering to.
That was my impression also......and I have read one of the aia's before. Might have been the long one......I didn't even know there were 2 available.
I just remember not like the wording of the one I read. I write my own contracts......more of a proposal with sig lines...and an attached boiler plate.
I don't do real big jobs either....so these work for me. I have had a few customers ask me about using an aia, and I just explain I write my own and put it all in writting....so I'll write it..and if they think they need anything more....they can pay their lawyer or who ever to reword it......haven't had it come to that.....
I think those that ask are told by someone's brothers sister that ya need it.
Any chance you'd have that short form email ready that I could read thru for my own education?
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
Jeff:
>"That was my impression also......and I have read one of the aia's before. Might have been the long one......I didn't even know there were 2 available." <snip>
>"Any chance you'd have that short form email ready that I could read thru for my own education?"
Actually there are THREE documents available. There's the "Big Gun" A101/A201 which is a book in itself. Suitable for hospitals, office buildings, etc. <g> I have seen paranoid homeowners use this one.
Then there's the A107, which they call the "Abbreviated Standard Form of Agreement between Owner and Contractor for Construction Projects of Limited Scope—Stipulated Sum", which isn't that abbreviated, to my mind.
And then there's the A105/A205, called the "Standard Form of Agreement between Owner and Contractor for a Small Project" which is shorter still. (Only 4 pages of "fine print"). This is the one I use the most.
The above are for fixed price contracts, but they also have versions available for Cost Plus a Fee type arrangements.
These are copyrighted, but readily available online at http://www.aia.org/documents/
Sounds surprising, but I was recently involved in a negotiated contract where the contractor INSISTED on using a long-form version, which left both the owner and myself scratching our heads.
Richard
Thanks for the link. Should be the reading I need.
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
Just a follow up to the comment about 26 bids and no bites, what was that all about? Must be more to the story.
Yes, 26 bids is a lot without signing a one. These have all been for NEW archs/ home owners/ designers/ decorators. I am trying to expand my base. Of the people I bid for with whom I have worked with before I usually have a 75% success rate. As mentioned earlier when dealing with soley a HO I have a 95% success rate This situation with new contacts is nevertheless incredibly frustrating. I assign it to growing pains in order to remain sane.
BTW I do follow-up all my Proposals and do try to get an answer to where and/ or why I did not get the job. Many times I lost to their Contractor who had a "lock" on the job and I was USED to keep him honest. (I don't understand that, because if you felt you had to qualify his honesty why are you dealing with him/ her?) More than half were not done because of cost, timing, change of heart or they decided to sell instead. There were 2 occasions where I am sure the Designer (not Arch) USED my proposal as an outline for his favorite contractor. These designers are now personna non grata. I did loose 7 to another contractor due to cost. Thought about coming down in price but they wanted more than I could come down. Then though it might be worth it to get a broader base but then reconcidered since it would be the wrong precident to set at the beginning of a relationship. Enough said.
Edit: Missed this point due to a "phone call".
I lost one job because I would not sign an AIA Contract. More on this issue below. I offered to include any wording they liked from the AIA document in my contract (18 pgs detailing Scope of Work including many ideas borrowed from the AIA document) but was flatly refused. It was an all or nothing option. It was a $675K job and quite frankly (no pun intended) I was uncomfortable with the unwillingness to work together on this issue, that I respectfully declined the job. The Clients are two lawyers and I felt that if my Agreement was flawed to their favor or they AIA Contract was less to their favor, they may have been more receptive. Now enough said.
On the up-side, it has "inspired" me to improve the organization and wording of my contracts. I write my own and have never signed anyone elses. My contracts are the final evolution of my proposals. This way the Client is fully informed from the begining of how and what to expect from me, and me; them. Again, I use the AIA Contract as a guide. It outlines everyone's responsibilities quite well but being an AIA document it does favor the Arch. It may not absolve the A of all responsibilities but does give the A more wiggle room than anyone else. The one with his/ her feet closest to the fire is the Contractor. One example (and I admit I am recalling from memory) is that there exists a line to the effect of "Work shall be done as shown in the drawings and specification schedules provided by the Arch." Not rarely, but never have I seen a set of drawings and a set of specfications being completely 100% in-line. I don't ever expect to. We are human and we make mistakes and ommissions. This line, IMO, leaves the Arch to pick and chose which (plans or spec sheets) I should follow AFTER THE FACT if I missed the discrepancy. I can't tell you how many times I have heard " Well if there was a difference you should have called and asked." What if I too missed the author's mistake? According to the AIA document, I am responsible. Legally, maybe not, but in the On-Site-Courtroom, where MY money is in THE CLIENT'S pocket and the judge is the Arch and the jury is the Client, I loose everytime. In my contracts, one and only one location is refered to for each line item - sometimes spec sheet, sometimes plans, sometimes sketches. ALL are dated.
If also find this practice less cumbersome. If there is a difference of opinion of what was (not should have been) included we need only to go to the Contract. If it was in the drawing and "missed" we can then write up an Addendum to Contract (Something I learned from this site. I used to use a Change Order form.), define the Scope of Work, and determine its cost. Cost, yes cost, because if it was not in the Contract it was not budgeted for.
Though the plans are the basis for all subsequent interpratations, the Contract is the basis for all financial dealings and is therefore the "bible" for all building AND billing. I will not have it any other way. I have never had problems with my contracts and have had quite a few compliments concerning its clearity and thoroughness from Archs. Sure Clients and Arch still try to get stuff for free because of an error ( it's their nature) but I retain the right to determine costs.
Edited 12/22/2002 8:14:42 AM ET by Frankie
Edited 12/22/2002 10:39:27 AM ET by Frankie
Frankie:
There's a lot in your post, and rather than address point by point, some general observations.
Plans and specifications, in a legal sense, are as much a part of the "contract" as the signed agreement form. Ideally, the plans/specs should show the scope of the work, and the agreement would outline the terms of payment, administrative procedures, etc. In the event of an adjudicated dispute, usually the plans/specs are the first things that a judge or arbitrator will look to for the project intent. When a contractor recapitulates the work in a proposal (i.e. giving a line by line summary of what he's included), it is a sure setup for disputes, and forces the architect/owner to try to sort out what has actually been agreed to. The homeowner thinks they're getting what's in the plans, and the contractor thinks he's providing what's in the proposal. Get a few bids which have these recapitulations of the work, and it's a nightmare to try to match apples to apples. As a result, in virtually all commercial/institutional/governmental competitive bids, a simple bid form is provided for the bidders and no recapitulations are allowed. I take the same approach in my own competitive bids, and I've often heard from the bidders that they've felt that it really levels the playing field.
From the contractor's standpoint, obviously if you get little to no drawings or specs, the job falls on you to spell out what you're providing. However, if you're working with a reasonable set of plans/specs, your job should be to just provide a price, not give the owners/designers some ammunition to shop around. In general, if the plans/specs don't include enough information for a reasonable price, it's appropriate to ask for clarifications or corrections. If the scope on the plans isn't clear, it should be MADE clear. Personally, I think it's fine to ask the architect/designer do the job they were hired to do in the first place. For example, the designer should give all of the bidders the same allowance for purchase of light fixtures, if they haven't been selected, rather than letting each contractor come up with their own guess.
Now, after you have the contract, it may be helpful to provide a breakdown, but I wouldn't normally EXPECT it in a bid. (However, most of the contractors that I work with do provide breakdowns voluntarily, because they want me to make sure that they haven't missed any major items, and that they have a reasonable understanding of what's expected. Usually I end up pointing out items where's they're probably low. <g> I do NOT share this info with any other bidders, although I give them the option of sharing the breakdown with any other bidders who agree to share their own breakdowns, after the contract has been awarded. I figure if a contractor doesn't win the bid, they at least ought to be able to get some valuable market research out of the exercise. Not all contractors want to do this, but some do!)
On a side topic, I think your intuition about the two lawyers was probably right, since you were being very reasonable. I've worked with a number of lawyers, all quite nice, but no LITIGATORS. I've found that attorneys who specialize in litigation generally have the mindset that if something goes wrong, someone is to blame.
As far as being responsible for what's on the plans and specifications, this is true whether you're using the AIA documents or any other contract. In California, where I'm located, "disregard of plans and specifications" is a pretty serious violation of the Contractors License Law. Plans and specs will never be 100% perfect, but you have every right to insist that clarifications, conflicts, and errors be straightened out by the architect/designer, maybe with your sage input. I'd like to see more contractors INSIST on that so that eventually homeowners start getting the idea that cheap plans aren't that cheap. (Well, you know what I mean...<g>)
Richard
Richard-
Off the topic slightly, but I figured I'd ask anyway. Have you ever used an outside estimating firm to provide budget costs for your clients, either during the conceptual or DD phase, or prior to completing the drawings and getting contractor prices? I ask because I own a cost estimating and construction consulting firm here in New Jersey, and the reaction I get regarding my services is mixed amongst the architects I've solicited. I have some that love the service, and some that seem very hesitant to use it for some reason yet to be fully explained.
Would you use (or have you used) such a service? If not, can you explain your reasons for why you wouldn't? Just curious.
Regards,
Bob Kovacs
www. constructivesolutions.org
>"Would you use (or have you used) such a service? If not, can you explain your reasons for why you wouldn't? Just curious."
I haven't for residential construction, mostly because I've never found a cost estimating service that specialized in residential remodeling projects. All of the services I've used (back in non-residential days) were oriented towards commercial and institutional work.
While I think it could possibly make sense for new construction, I haven't found that estimators want to crawl around and do the field investigations that remodeling requires for an accurate price. Also, there are many local variables around here that an outside estimator might not be aware of. (Recycling fees, required reports, etc.)
I'm guessing that most architects don't use this kind of service in residential because there are so many contractors willing to donate this service for free, as a "foot in the door"strategy. (BTW, I'm AGAINST free bids, folks.) However, I think that independent pricing early in the design process (before construction drawings) is one of the best things that an architect can do to not end up looking like a fool. I can't believe that more architects don't do this. And I think it's a way that contractors can add significant value to a project.
Richard
Edited 12/24/2002 12:20:36 PM ET by Richard
Richard-
Thanks for the input. For the record, you just found an estimator who does residential estimating- both new and remodels. So if you ever have the need, feel free to look me up. Where are you located?
I agree that one of the problems is the contractors who are willing to spend hours of time doing "my job" for free. And I can't fault them if that's what it takes to get work (though I don't think it's necessary). But as you said, during the early design stages, it makes more sense to contact an estimator, and most of my work is done at those stages.
Regards,
Bob Kovacs
http://www.constructivesolutions.org
I NEVER "disregard the plans and specifications."
As I mentioned, I site/ cite plans OR specifications clearly along with the date they were drawn/ written. By assigning ONE directive for EACH line-item I am DECREASING the oppertunitry for any disputes in the future.
I understand that by each contractor using their own model for proposals creates more work for the arch/ client in order to "sort" everything out. But, concidering the cost of construction these days, it's time well spent . I can't even count how many times I have heard from my arch/ des/ and yes, decorator friends, that the contractor is "sticking them up" for additional costs because the contractor missed 2 electrical points, or didn't include leveling the floor or sistering a damaged joist. "The contractor should have read the drawing/ or known this would be needed!" By recapitulating, I am informing all parties involved that a) I understand the project, b) everything has a cost associated with it so one more outlet costs one more outlet - no such thing as a "baker's dozen", c) NOTHING is assumed - floor level, damaged joists, and d) less of an oppertunity for an over-zealous designer from adding and NOT noting additional work. As a bonus, I also don't get stuck paying for a mistake - mine or either of theirs.
It is the design professional's responsibility to the Client, to confirm that the proposals equal the drawings and specs. BTW you are kidding yourself if you think most clients understand drawings or construction contract discriptions. They do understand these - after the fact - when the house/ project/ phase is completed and they can count or touch the design. No disrespect with this point. Just a dose of reality.
You sound/ write like a pretty good arch. We could use more like you on this site and on the east coast.
Edited 12/24/2002 9:43:26 AM ET by Frankie
Frankie:
(Thanks for the compliment.<g>) The following is intended for everybody, not just responding to Frankie.
Hopefully, this won't get too long, but I'd like to put a plug in here for considering the "Cost plus a FEE" contract arrangement. As an architect, I HATE competitive bids, but sometimes have no choice because the client insists on it. It would make my life much easier, and make it much easier for the contractor to sell a job if more would understand the CPF arrangement. This is NOT "Cost Plus" or T&M. Big difference. Although very common in the commercial/institutional world, not many residential contractors understand the concept. (For those that do, sorry if the following sounds condescending. Not my intent.)
With a Cost Plus or T&M, the ultimate cost is based on the contractor's actual costs plus a percentage markup. Owners, rightly so, I think, perceive that the more the construction costs and the longer it takes, the more profit the contractor makes. This makes them justifiably cautious about this arrangement, and want to get competitive bids. Alternatively, with a contractor in a negotiated situation who just provides a fixed price, how does does the owner have any faith that they aren't getting taken to the cleaners? Trust? Trust is something that must be earned and it's hard to have earned it at the very beginning of a job.
With a cost plus a FIXED fee arrangement, the customer reimburses you for your actual out of pocket costs on the project (labor, material, subcontractors), and pays you your overhead and profit as the FEE.
Advantages to Contractor:
1) You can act as an advocate for saving the customer money without cutting into your profit. For example, you could say "Plumber 1 is $1000 less, but Plumber 2 does better work. Which one do you want to use?" You get the same overhead & profit either way.
2) There is no incentive for the customer to buy their own materials or get their own subcontractors. They won't save any money.
3) You can budget cash flow more accurately.
4) You don't have to compete on the basis of price, since the customer knows they will be paying actual costs. You can say, "My fee for managing this type of project is $XX,XXXX and all other costs are my actual costs which you'll see." Very professional, and you can likely get the job without getting into a competitive bid situation.
5) It makes it easier to convince the client to get you involved early in the design process.
Disadvantages to Contractor
1) Because of the open bookkeeping, it's more paperwork intensive. If you aren't set up for it, it can be difficult.
2) You don't get to hide your actual profit from the customer.
3) While you make your profit faster if you're efficient, you don't have the same potential for windfall profits as on a fixed price contract.
Advantages to Customer
1) They see that there is no incentive for the job to take longer or cost more. Actually, since you don't make more profit if the job takes you longer than planned, they see that there is a built-in incentive for the job to be completed promptly.
2) They get a better picture of where the money is going on their job.
3) They get a contractor who can work more in the customer's interests.
Some overall observations:
If the scope of the work changes significantly, the fee will obviously change, too. One arrangement that has worked well is to have a "Contractor's contingency" line item in the initial budget (say, 10%) and to include this in a guaranteed maximum price (GMP). (You still will do change orders as usual, which increase the GMP.) This balances the risk between contractor and owner, similar to the contingency amount you would include in a fixed price contract. However, unlike a fixed price contract where you get a windfall if the contingency isn't used, the unused contingency isn't paid for by the customer; another selling point to clinch a sale.
I'm obviously a big fan of this arrangement, because it allows the contractors I work with to bypass the price arguments and allows them to act as true paid professionals from the customer's point of view. Unfortunately, many contractors just don't want to let go of the percentage mark-up concept that has been inbred into the industry for so long.
On a side topic, many of the contractors I work with charge a fee for "price planning" in the early stages of the design. Sometimes this is credited to the job when the actual construction contract is signed. Sometimes they do it for free. However, my perception of clients is that almost all would gladly pay contractors for estimating services if they felt that it was being done to help them "value engineer" the project, rather than just figure out how much the project was going to cost and therefore how much contractor profit was going to be generated from their job.
Richard
Edited 12/24/2002 1:21:19 PM ET by Richard
Edited 12/24/2002 1:21:44 PM ET by Richard
Frankie,
Any thoughts to using Sonny's(and others) logic of charging for the bids.....uh, I mean...SCA's?
With job's that big...there should be enough money floating around to pay for it.....and I'd think that would eliminate the tire kickers...or at least get ya paid for the work you've done.
Do you charge now? I don't......but my time invested must pale in comparision to yours.......if not.....I'd be thinking about a new policy for new leads.
Jeff
JeffBuck Construction Pittsburgh,PA
Fine Carpentery.....While U Waite
I have never been through a dry patch as long as this one. My success rate on work for archs I have worked for in the past is about 75%. With a record like that I don't feel it would be prudent to charge.
As mentioned in an earlier post, all the recent bids have been for NEW archs/ des/ decs. The first time or so that I'm asked I am just trying to get them familiar with my approach to the project. In the past this has worked great. I did not expect the same return as with the regulars but did not expect no return.
BTW I would have gotten some of the work if I came down on my price. But so far, I have figured if things are going to be tight I would rather not be exhausted from working 12hrs/day and have so much liability and not be able to be available for the "right" job.
This gets to the comment concerning archs using estimators. I have never understood why archs/ des/ decs are always so surprised that our prices are so high. They design res projects on a reg basis. You'd think they would have realized general costs after 5 or so jobs. One question I always get is "how much a point for electrical?" After I tell them they don't integrate that into their design process and electrical is always more than they "expected" it to be. I know I am preaching to the chior here but it would be very productive for all parties if cost (a contractor) was involved in the initial stages of the design process.
A bid is a bid. That's it. A number with a dollar sign in front of it and a period after it. Any specs for a bid request should be provided by the party requesting the bid. Any one asking for a bid is looking for the lowest price, based on the specs they have written to assure themselves ( we know better) that all bnidders will produce the same job based on those specs.
I rarely "bid"
Maybe what you mean is an estimate or a proposal to do X in return for Y. Then you need to be specific as to details of work to be performed. Add enough Y to the remuneration field and you can ZZZZZZZZZZZZZZZZpeacefully at night.
I know for a fact that I have been selected for many jobs because I took the trouble to detail and specify what I propose to do in writing.
Excellence is its own reward!
"The first rule is to keep an untroubled spirit.
The second is to look things in the face and know them for what they are."
--Marcus Aurelius
Here we go.
Always use the AIA form. Why? If you take out an insurance policy, mortgage, loan agreement, etc. none of the providers will allow you to modify one word to your advantage. The reason; all of these forms have been litigated in the courts, for years and the meaning of each and every word and phrase has been interpreted by the courts and their meanings decided.
Now along comes an owner that wants you to sign a construction contract prepared by his attorney or you go out and spend several thousand dollars to have an attorney prepare a custom contract for your company. If there's a problem, total disaster for you. The opposing attorney is going to question every word and phrase of the custom contract and you are going to pay the cost to reinvent the construction contract interpretation wheel. Believe me you can't afford it.
A word about attorneys. If you have a problem on a job that you feel is going to require the services of an attorney, I suggest the following. Tell the attorney that you want him to initially do only one thing, get a court date set for your case. No letter writing, no consultation with the opposing attorney, no research, just a court date. This immediately puts the attorney on notice that he is going to have to go into court and litigate the case. This tactic will eliminate about 90% of the shysters. Most attorneys know how the game is played: assure you that you have an excellent case, drag it on with the opposing attorney until you are tired of the chase, broke or both, and then recommend you settle for .10 on the dollar. There never was, from day one, any intent on the attorneys' part to go to trial, in fact most attorneys couldn't successfully litigate a case in court if their life depended on it.
When you do go to trial bring whatever expert witness, you may need, structural engineer, architect, material specialist, etc, with you. Make sure they understand your case and most importantly agree with your position. Now you and your experts tell the attorney what he needs to say and argue, remember you are the expert, you only need the attorney to negotiate through the procedural maze. To your surprise for the most part the judge will interpret the AIA contract in your favor 90% of the time and the remaining 10% split the decision 50-50. You win, limited attorney fees, and in a timely manner. I realize this is somewhat simplified, but believe me you want a decision in court, by a judge, in a reasonable amount of time. Not to have to give up because you ran out of time or money.
Also, the fellow who was worried about the content or scope of work changing in the construction documents; always have the owner, then yourself initial the corner of each page of the construction documents, then you can't get the double shuffle.