I’ve been a residential remodeling contractor for almost 8 years now, having worked in the industry most of my life (my mom was a GC). I run a small operation and have done mostly kitchens, baths, and repairs mostly. I can do all the subtrades, but do not do roofing, concrete (foundations), excavations, and most siding. Besides that, I do most things. (I will sub out a trade if I can find someone less expensive to do the work). Last year, I completed a $80,000 mastersuite addition, and subbed out only the roof and the hardwood. The job came out fantastic, and I’m truly proud of the work. SO, last week I got plans for a much larger addition. The architect who did the plans on last year’s mastersuite, gave me the plans to a job that entails taking off the roof of a ranch, raising the first floor walls to ten feet, adding a second story that features ten foot walls, a turret, a three car garage, etc. I can do all facets of construction, especially since the majority of the roof is trusses. I have several other friends who own similar two/three man companies, and I can get all of them to pitch in. Here’s my fear: getting the job on a flat bid, and not figuring in for everything. Since the architect is a friend of mine, he told me the competing bids are just north of $350,000! The most I’ve ever done in a year is $145,000! So here’s what I was thinking: Go to the owners and tell them I’m interested more in learning to do such a massive project, and less about making a complete killing. Instead of doing a stipulated sum, how about doing cost plus?
I know I’m going to get dogged by most of you experienced guys, but I’d love to make the leap to a larger job. I was somewhat intimidated by the mastersuite, and I did make few mistakes, but I still profited close to $30,000!
Is it smart to be HONEST with the customer, show her the completed mastersuite, and make less, but get the experience to do a great job on future big jobs that I’ll have the experience to do?
I know at some point I’m supposed to put down my tools and just organize crews, maybe this could be the first step in that direction.
I’m 37, and I love building, but at some point, I want to have a business that makes good money. I can play with my tools on my own houses.
Feel free to tell me what you guys think….
Replies
By far the most successful building contractor I've ever met never touched a tool. But I wouldn't work for him. Not that it has to be that way.
I do think the money is in organizing others.
coop.... you apparently haven't run an initial estimate on it yet
look .... why would the owner give you a cost-plus ?
there are already bids in that are above $350k..
so .....are you going to tell him you can do it for less ?
based on what ? .
so.... ... just like you've been doing,
you have to break the job down into packages...
total them up and see what yo get
Follow the Vet. Mike said it perfectly.
Cooper, I feel your pain. It's the #1 reason that I'm a framing sub and not a GC. Scared to death to lose my shirt. I know I simply don't have the experience necessary to bid a large turn-key job with the appropriate accuracy needed to deliver a professional result to a client and to my own business. So I stick with what I know. I tell you this to let you know that you're not alone. MANY of us, whether we admit it or not, open up a set of plans that is so complicated it makes us just want to close it back up again and pretend we never got the call. But the businessman in us doesn't want to let opportunity slip away from something silly like fear.
So even though I just frame... I still get sets of plans from time to time that make me swallow very hard. Some of these houses I get have exterior trim packages that take as long as the framing does and this also falls under my scope of work. And the plans are about 30 pages with exploded details for every nook and cranny of the house. It can be very intimidating.
So... you gotta do just what Mike said... break it down into small managable pieces. I've bid houses that I had to price by treating multiple sections of a house as if they were additions... their own smaller buildings. I'll take one small section and price it from the mudsills to the exterior trim and window install. Jot the number down and move onto the next section. All the sudden, the job becomes very manageable and much less intimidating.
This next part is very important: When you're done, no matter what, when you total all the numbers up, do not panic and start knocking $1000's of dollars off because you think it can't possibly be right. It can be very tempting to talk yourself out of submitting a huge $ bid. But the calculator will never lie to you man. If you've done your homework, then the number is the number. It's right and you've got to have faith in your abilities. I've had very good success bidding large jobs this way with very good accuracy and still turning my target profit.
It's very rewarding to complete a large job that first intimidated you and made good money doing it. And if I didn't get the job, I have no regrets. I did my due diligence and have nothing to feel bad about. Chances are.... some other guy didn't do their due diligence and is taking a beating on the job as a result. Better them, than me.
I always tell myself when I lose a job, that I didn't lose it because my price was too high.... I lost it because someone else's price was too low.
You know Gary Katz, right? For better or for worse, he's a very successful trim contractor in So. Cal. Writes lots of books and does a lot of stuff for JLC. He once told a bunch of us about a project that was so large he just kept sitting down to bid it, getting overwhelmed, and walking away. Accomplishing nothing in the process. He finally started breaking the job down. He said it took him a full year to bid this job and it was just the exterior trim of a home. But the exterior trim was about an $850,000 endeavor, IIRC. We're talking crown molding with a 3 foot profile here. The pictures he showed were gorgeous.
Anyway, I digress. Point is... even the "Big Guns" get intimidated by sets of plans. But they're the "Big Guns" because they suck it up, do their homework, and then perform and turn a profit.
You can do this. You might not want to, but you can. If you can sell an $80,000 job and turn a $30,000 profit then you already know what you need to know..... or just got really lucky. I'm giving you the benefit of the doubt here, so I say if you break it down into bites you can swallow..... this thing is all yours. Now get to work.
Many thanks to all (especially Diesel Pig/Jim Allen). It definitely is intimidating to get 15 pages of complicated work, but it's also exciting. It's almost like building your tolerance for stress. when I first went on my own, I thought I was Tom Silva when I landed a kitchen AND a bath at the same time!Thanks again for all the good advice. ( I can relate to the temptation of lowering the price because it LOOKS like too much. There's always something that takes three times as long that I never consider. That's the major UNKNOWN about such a large project. By entering a different level, I'm not sure what that is, until I get the experience of doing it. That means someone has to believe in me to bring the job in.)Can't tell you how good it feels to know you guys have been there too:)
Hey Cooper
Don't forget at the end of the project you may have some down time. So factor that into your bid.
Hands on carps tend to get involved in the project and forget to market. So thier name drops out of circulation. And there is a great big hole that needs some work.
just something to think about
Good luck
I always tell myself when I lose a job, that I didn't lose it because my price was too high.... I lost it because someone else's price was too low.
That is one of the best pieces of advice I've ever seen here. Everyone should have that printed somewhere they'd see every day.
Mike
Insert initially amusing but ultimately annoying catch phrase here.
Edited 2/16/2008 2:20 pm ET by Junkman001
Thanks Mike. I thunked it up all by myself. :)View Image
I agree Junkman. I gotta remember that one and I believe it should be entered into the quote thread, if it's still alive. Bob's next test date: 12/10/07
exactly my point
When we ( a group of 4 GC) received a bid and one got it, we always asked the successful bidder: Tell us where did you make the mistakes
You have to mentally go thru all phases of the project - from design to finish - write all categories down and price it (get quotes, not estimates) from people with whom you worked before, include your own time plus the profit margin.
I quoted on a project for a custom home. It came in (after 6 months pricing, etc) at 3.2 million. Did not get it. The lowest bidder got it for 1.2 million. The highest bidder was over 4 million. The lowest bidder later told us he hardly looked at the plan, just went 25% over the then present custom home squarefootage cost. Big mistake. He got sued all over the place by the HO.
In project like yours detailed specifications are an absolute must. If it is on a plan you can cost it. All project are only as good as the workers that are building it. Good trades - good product - satisfied HO.
This next part is very important: When you're done, no matter what, when you total all the numbers up, do not panic and start knocking $1000's of dollars off because you think it can't possibly be right. It can be very tempting to talk yourself out of submitting a huge $ bid. But the calculator will never lie to you man. If you've done your homework, then the number is the number. It's right and you've got to have faith in your abilities. I've had very good success bidding large jobs this way with very good accuracy and still turning my target profit.
Man do I remember THAT feeling! All warm and swoozy! Start sweating.........
Great thread, lots of good advice.
You coming to JLC?[email protected]
I'm just going down to JLC for Friday this year Eric. Didn't much like the course selection this year... they were either repeats or not really applicable to my world. And I agree... it is a good thread. I think it's something we all deal with from time to time... the scales may change but the intimidation is the same.View Image
Your are right to be a little hesitant. That is ok. As others have mentioned, cost it piece by piece just like you would build it. Avoid the temptation to start subtracting costs once you complete your estimate. It is too easy to start thinking since it is bigger certain things will be more efficient. It won't be that much more efficient. Do not be shocked by the numbers you generate-well it is okay to be shocked, but do not make them smaller to make yourself feel better-you will not feel better at the end of the project-I promise.
You also need to build in much more management time and cost of money for cash flow. I am guessing this project is probably at least one year's revenue if not more for you. All your overhead and profit for the duration of the project needs to come from that project. Do not give that away because you felt the number was too big.
Lastly, do not underestimate the extent of damage to the first floor as a result of this effort. It will be much more than a drywall seem where you added the height.
I encourage you to go for it. Just do not let the numbers intimidate you to lower the cost. As others have stated, the calculator does not lie.
Bruce
"I still profited close to $30,000!"
Profited? Are you sure about that?
That represents a 37% profit...nice! Or, are your saying your earned 37% operating costs which include overhead soft costs and profit? Or, does that 37% include wages and earned income from labor?
If you're going to delve into a 350k arrangement, you should understand the differences or the cash flow might eat you up.
Anyways, I always feel overwhelmed when I open a plan up too. Even simple ones. It takes me much longer than most people to fully absorb it all and understand it. I'm not good at looking at pieces and understanding them. I'm a big picture kind of guy and most plans don't deliver a big picture understanding like a 3d model would.
My advice would be to do what every professional salesperson would do: set an appointment and go qualify the client and sell yourself. Don't waste time breaking down the plans just because an architect gave them to you. At this point it's a lead and you need to do the same thing with it that you would do with a 2k deck.
You know you are qualified to do this job: it's like doing two of your 145k jobs. You might have to explore and create new relationships with different subcontractors (excavators and foundation guys) but the process is the same as finding an electrical sub: interviews, price quotes and inspecting their current projects.
The hard part about doing all that is if you are wearing the carpenter's belt. Each job is full time, so one of the job's will suffer. If you allow the GC job to suffer, you fall behind the eight ball fast. If you allow the carpenter job to suffer, your job site progress isn't so impressive.
I suggest finding a qualifed framing sub to handle the job and then if you work on the job, you are either working for him by the hour, or doing small specific tasks that aren't part of his contract. That frees you up for your GC duties without causing a hole in the framing schedule.
Bob's next test date: 12/10/07
Sit down and take it apart piece by piece and bid on each honestly to yourself first and then the owner then add in your profit. If you have to touch a part of the project in any way, add your cost. Once you've got all the pieces together, gather the total bid then add in some cushion. Submit the bid and forget what other's have told you they bid or received as a bid. Your bid is what you can do it for.
Big contractors, roads and bridges etc., feel lucky to get one or maybe two contracts out of every 5 to 10 submitted bids. Whatever you do, you don't want to be the lowest bid doing a job that cost twice as much as your bid. That doesn't impress anyone, you the owner or other customers.
Others have given you good advice.
Just remember a mouse can eat an elephant... one bite at a time.
I went from custom home building to being a site super on a 2.5 mil. winery . I didn't have the dollar worry , but the scope of the project scared the beejeesus out of me.
Keep in mind that your archy buddy also doesn't want you to fail. Lean on him if you don't understand something, but rely on your self and your experience for bidding.
If you know an more experienced builder you can trust walk through some of it with him as a double check of your thoughts. Mentors make a difference.
Just remember a mouse can eat an elephant... one bite at a time.
Too true.
My jobs the prints come out to be a few inches thick & I see some people get overwelmed by the shear size of a project.
I teach foreman how to run larger projects I always tell them a large job is nothing more than a bunch of small jobs put together.
Everything is built one step at a time.
“The world is a dangerous place, not because of those who do evil, but because of those who look on and do nothing.†—Albert Einstein
"Just remember a mouse can eat an elephant... one bite at a time."Also remember when the elephants start dancing, it's usually time for the mice to leave the room. I don't build houses, but in 2005 I bid on and won a job from Boeing. It was the largest contract my small company had ever received and it scared the hell out of me because I knew it could bust me if we didn't deliver. Boeing was in a hurry and rushed the order through with none of the usual paperwork and forms -- they wanted the stuff right damn now. Our entire manufacturing specification was a single-page, E-sized drawing last updated in 1993. Easy money. What could go wrong?We built to the drawing specs and delivered the parts but in actual use, they didn't work. Boeing's foreign customer was mad as hell and within a week Boeing ginned up an internal report that put the blame for the failure entirely on my company. When I suggested that their drawing was defective, they laughed -- who were we to judge their drawings? Bottom line -- they weren't going to pay us a penny. I was ready to hire an attorney in Seattle and fight in court when Boeing's customer shook things up and demanded $300M in concessions or they would cancel the entire contract. God smiled on me that afternoon because the shell shocked Boeing managers and buyer accepted our offer to accept the parts at big discount. We barely broke even on the job but I was happy to take the money and run back to our mouse hole. AFAIK, two years later Boeing still hasn't finished the contract and delivered the equipment to the foreign customer! After that experience, 1) I will never do business with Boeing again, and 2) I avoid bidding on jobs that involve making elephants happy.
Note that I said I was the project site super . I get paid by the bite, not on whether I finish the meal. I make sure that at the outset that if the elephant is starting to dance I am not going to lose more then a week or so in wages. I have been in similar situations to yours and learned early on that I don't play well with the big boys when they start to throw their weight around and hold large sums of money back. Better for me to CMA and when involved with them get hired on salary or by the hour. One thing I would suggest to the OP is offer cost + a fixed fee contract. Work up the estimate add a fixed fee and let the owners pay the bills. Fee is due 1/2 up front to secure my services and and 1/2 at the end. OP is at a manageable level of financial risk that way.
They can't get your Goat if you don't tell them where it is hidden.
I would be careful to give out any estimates.
They might come back onto you later and make you responsible for cost overruns etc.
Let them spend time running around and getting cost together. In a way they act as GC and take all the responsibilities, you manage the project, suggest where they can save money, they pay you a fixed fee for the project on a bi-weekly basis.
I am comfortable with my giving estimates because I do them just as I did when I bid jobs. Same as the rest of you . Take off materials, sit and mentally build the project for labor, subs. etc. I just keep it as an estimate rather than make it a bid.
They can't get your Goat if you don't tell them where it is hidden.
the architect is a friend of mine, he told me the competing bids are just north of $350,000
I hate it when someone takes a legitimate bid from someone that did their homework, and shops it to their buddy so he can underbid it. Of course, as you've shown, its often not what you know, but who you know that gets you the job.
CaliforniaRemodelingContractor.com
Wondered if anybody noticed that. Don't think the architect is looking out for the best interest of his client. Plus the fact that the OP is saying he made $30,000 profit on a $80,000 job. Either he's a heck of a salesmen or he doesn't know the difference between overhead and profitfeeling sorry for the homeowner
Barry E-Remodeler
I thought the same thing. Just had it happen. Bid a building that a local church bought. Just an interior face lift, new ceiling tiles, wall patch and paint, new carpet, some minor repairs, new light bulbs in the lights etc.
I bid it and don't hear anything. I call and I get "well, umm, well the thing is one of our parishoners is really interested in doing the work and we feel obligated to work with them first, but thanks anyway".
They then called and wanted numbers on an extensive bath remodel. I sent a nice but clear letter stating that I would pass as I wasn't interested in having my numbers used as a goal post for the congregational handy guy. The called and assured me that wouldn't happen.............this time. I passed. DanT
>> They then called and wanted numbers on an extensive bath remodel. I sent a nice but clear letter stating that I would pass as I wasn't interested in having my numbers used as a goal post for the congregational handy guy. The called and assured me that wouldn't happen.............this time. I passed. <<
I don't work in the "arena" that you guys do, but maybe a good policy would be that the first unrewarded bid is free. Thereafter they pay...
I'm in just about the same boat. Just started my own business and have
concentrated on remodels and small jobs the big local builders dont have time for.
Went to see a fellow about repairing some siding that blew off yesterday and I end
up walking away with plans for a small guest house he wants built. I've never
built a house on my own before!
Had to give myself a good talkin' to and remind myself of some of the advice I've
heard.
1. If you don't do it now........then when?
2. Think small - stay small
3. No matter how long I work in this trade, there is always going to be something
I haven't done before(thats part of the fun isn't it)
4. Just like here in BT - don't be afraid to ask for help
Good luck - I've got to go work on a bid for a guest house( after I figure
out where to start :)
There is only one way to eat an elephant, no matter how big or small.
One bite at a time.
Treat this just like any other job, cost it out properly, get advice on each part you are unsure of.
Get rock solid bids on each item you will sub out, and put in some reserve monies, markup, profit, etc and see where your numbers are.
Get bids for anything that you are leary of. Ie. Afraid to rip off roof and raise it with potential weather issues, get a bid from a framer to do it. Use that number if it is more than what you estimated and then you have a contractor you can sub if you choose.
Be honest to yourself and your client.
Like everyone has said, break it down to make it easier to approach as far as the bid goes.As far as you go, I sometimes find myself second guessing if I'm the best person for a particular project. Just recently I landed the kitchen, 4 baths, arched cabinets, 7 arched doors, and all the trimwork in a fire rebuild. The truth of the situation is that it is the largest single project I have had for one client. (I've completely gutted and rebuilt my own homes twice, I'm on the third now) However, while acting as design consultant for the owners, I have watched the GC and how he has handled the project, and I know that, I may not have been a fast as the crews he has brought in for rest of the job, but I could have done a better job by far. (probably cheaper too)My point is, don't sell your self short! You can do this. By the simple reason of you being willing to be open w/ the clients, you show being willing to work for their highest satisfaction. That means you will give this job your best work (as I'm sure you always do) Work the numbers and be sure your covered. Clients are more likely to look down on you or not respect you if you charge them less, and then are happy to turn on you if you don't deliver what they think they want because of all the cost overruns they created by changing things, or problems that you weren't expecting. Do your homework, work the bid, cover yourself, and walk in knowing you are perfectly capable of doing this (even if it is your first time at this scale) and charge accordingly. If you don't get the job, it's their loss not yours. It just means it wouldn't have been worth the time and headache, and remember there's always a better job on the horizon. Blessings,Ott
I dont care if the POPE gives me numbers, i run it through myself. For example A lady wants an addition i say rough 100 grand, She gets someone for 30 grand, He starts and of coarse cant finish but betted on coming up with extras after he used up the 30. Wonder why they are giving you the numbers??? I bet you could do this job but i dont know if you know what its like to babysit and chase subs, Thats where the trouble can be depending on other people, But then again no risk no gain.
You have to ask yourself if you are willing to scale the downside risk along with the potential profits. Are you emotionally and financially ready if bad things happen and the project goes to hell?
Handshakes, smiles, and good intentions have to be backed up with a detailed contract on a job this big. Get it in writing and trust only what others do, not what they say they'll do. Buy the large bottles of Gaviscon or Tums.
Good luck if you decide to go for it.
I've read every reply... some great advice in most everyone of them...
I think it all comes down to comfort level and balance...
if there is nothing there that if you were asked to be a sub to... that you couldn't do... then I assume you could but the parts together to make the whole... only you know this...
I'm often amazed at huge projects and how they get done... maybe just as some might be amazed at what i get done...
the skill set to do the job might not be that great... but I'm guess'n the management of the job will be what puts you in panic... again... only you know how you deal with such situations...
it's much better to have regrets for things you've done... than for the things you wish you had...
lean on the guys here and you might just be fine... or broke... i've been both... and couldn't tell a ton of difference
p
""you might just be fine... or broke... i've been both... and couldn't tell a ton of difference"" Yep , but when I was broke at least I didn't worry myself sick about what to do to hang onto what I had. It was already gone.
They can't get your Goat if you don't tell them where it is hidden.
exactly... and the deal is... i always figured.. if i got it once i could get it again...
but when I was broke at least I didn't worry myself sick about what to do to hang onto what I had.
It was already gone.
I am getting a bit too old to do it too many more times... but you do what you have to do...
peace
p