I’m nearing the design phase of our second home remodel. The company we are working with also does construction, but that will be up for a separate bid and contract. Now given that I have been through a smaller remodel, like some of the subs I found and did all the material sourcing, should I even consider a total job bid? I can still hire them on T&M with a foreman if I want. I should add that time is money. I have two mortgages, utility and tax bills until this job is done.
I get the impression they want us to go total job which probably makes them more money. Comments from your experienced points of view?
Replies
Hiring someone for the total job means that you will be hiring a general contractor who will be responsible for the total job. The other option is that you are the general contractor and everyone else is a subcontractor responsible for their little part of the job. If you are willing to do that work and take the responsibility for making sure that everyone shows up on schedule to perform their part, you can save some money.
You won't necessarily save anything and you may be getting yourself into a nightmare. I am a general contractor who doesn't always make money on every job and I have had my share of nightmare jobs too. It's all part of the job. Good luck.
The trade off is this. On T+M work, the sub incurs little in the way of risk, and has a set hourly rate which won't change. Not going to lose out, but not going to make a killing either. With a flat rate bid, (which I prefer, though I also do both) the GC assumes the risks. It's a gamble. Will things go as planned. If not, will he/she be able to problem solve in midstream to avoid dramatic changes in outcome? You could break even. You could lose your shirt. You could walk away saying "wow, how'd I pull that off?" But the customer gets what they asked for at a price they agreed to. If you think the flat rate is reasonable, run with it. If the GC makes a percentage point more than they bargained for, they probably earned it.
"If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man." - Mark Twain
Excellent reply by RW, to which I'll add...
With a t&m job (maybe with you as GC), your main challenge is to make sure the time and materials you are billed for are correct, and you will have little sense of the final cost before you get all the bills in. The scope of work is whatever you says it is, right or wrong. If a mistake is made, expect some difficulty in determining who pays, because as RW says the folks doing the work are probably not charging you much of a risk premium, if any. The typical homeowner does not know enough about building to run a job and handle the scheduling and sequencing correctly, even if they've had some other remodeling done. I just did some work for a homeowner who is managing his own kitchen/bath remodel, and since he's a friend I spent some time lining him out on what to do before I got there and what to do next.
With a fixed price job, your main challenge is to make sure the scope of work is what you want. You need to be willing and able to read and understand the plans and specs and all of the items in the scope, including the exlusions and allowances. If those are minimized, then you should be very close to knowing the final price at the outset.
They are two completely different things.
If you sign up for a fixed price job and then start making lots of changes, you are mixing the two modes and all hell breaks loose (especially financially).