Negotiating construction costs?

[Jmellc]

I contracted for 5 years and don't miss it at all. I priced work cheaper than my previous bosses because of the terrible economy (2008-2013). Some who cried the loudest had BMW's and Mercedes in the driveway, had much nicer houses than I will ever have and I was driving my 2000 model truck, still am. The guy whose auto shop charged me 4500 for work on my truck complained about my 2,800 quote for a basement wiring job. Or why was JoJo 200 cheaper than me, couldn't I match him? I asked what brands of materials JoJo would use, he didn't know. I used mostly Square D and other good brands. Lots of guys used GE, which is the junkier brand of electrical equipment these days.

Get 3 or 4 bids from reputable contractors. Draw up a set of prints so all will be quoting on the same information. Then choose one. Please don't try to wear him down. He has bills to pay and a family to feed too.

Check out the cost of worker's comp, liability insurance, licenses, tools, vehicles and fuel. These all factor in to the cost of work.

 

[johnnyradiant]

I appreciate everyones input and comments on my post, to be clear, I AM NOT LOOKING TO HAGGLE FOR A JOB.

My initial question, and it may have not come out in text was simply, what is the likelihood that contractors pad their quotes to make a few extra bucks.

They all do. To some extent if they are in it to be able to retire before they die. If I or any of my acquaintances are quoting on a job we always have a what if margin, and we always are trying for more than just wages. If we wanted just wages we'd go back to earning money for someone else or we will do the job without quoting on an agreed upon rate and cost of expenses. In the case of a roof as listed above. I have connections to one company they pay the owner, the estimator and the bookkeeper/secretary. That's a lot of extra overhead that has to be covered by the nailers or torchers. Another roofing company I have a connection with that does most all my work works for a lot less because they don't have that overhead the owner is part of the crew, his quotes and invoices are simple plain jane so nobody is covering any extra overhead even creating a fancy heavy stock shiny colour sales packet. His work is great with very few issues because he is onsite 90-100% of the job to ensure it's done right and at a cost far less than the first one. There is nothing shady about the first guy his price is legit and doubt 'padding' is anything but minimal profit margin, but his expenses to perform are far higher so his quote is going to be significantly higher. For all I know my 'cheaper' guy with little overhead may have an even higher profit margin. With so little overhead he has a lot more room to be competitive and still make a buck.

 

[twistedstang]

As a Contractor here is my take. It takes a lot of time to give an accurate bid (WAGs are easy, but high) and I am only going to bid a job that I have a very good chance of signing a contract. I will provide a price and a detailed list of specifications to my clients so there is no areas of misunderstanding. My price is also my price. If you ask for a discount I will ask what are you willing to delete from the contract. What I won't do is bid high and drop a bit to make the client feel better as I believe the client will think the price is padded and not trust me. I am going to tell you up front that I will not be the cheapest price you get and if that is what you are looking for I will politely wish you luck on your project. I can tell you that all the Contractors that I know including myself interview the customer to a higher degree than they interview us. You just don't realize we are doing it. I have turned down many projects from potentially problem clients, usually by saying i am too busy to get to it for several months.

Thank you! The notion we "pad" our bid is silly. The amount of time (money) we spend putting a price together for a job is more than most would think. To pad that price and not get the job is money lost.

 

[denis4x4]

My wife and I have done several 6 figure remodels and a high end house on a time and material basis. We pay the material bills with an agreed up on percentage mark up. Contractor submits the gross payroll total with an agreed up on mark up on a weekly basis and we cut a check and he handles the deductions. We pay the subs directly and the contractor gets a percentage. On some smaller remodels, we have hired a project manager rather than a contractor. We came to Colorado unaware that there was to such thing as a state licensed contractor. One contractor didn’t know what a lien release was when we showed him preprinted releases. Had some contractors that produced fantastic work and had no business sense. Our method of building isn’t for everyone, but it works for us.

 

[Toolfool]

My wife and I have done several 6 figure remodels and a high end house on a time and material basis. We pay the material bills with an agreed up on percentage mark up. Contractor submits the gross payroll total with an agreed up on mark up on a weekly basis and we cut a check and he handles the deductions. We pay the subs directly and the contractor gets a percentage. On some smaller remodels, we have hired a project manager rather than a contractor. We came to Colorado unaware that there was to such thing as a state licensed contractor. One contractor didn’t know what a lien release was when we showed him preprinted releases. Had some contractors that produced fantastic work and had no business sense. Our method of building isn’t for everyone, but it works for us.

This is the way I did the majority of my jobs for 35 years. As far as I saw it, it was the fair way to do business. Other contractors in my area called me a fool. They had summer homes, hunting lodges. big boats, $70k trucks. My mortgage was always paid , and most of my customers became my friends after the job was finished.

 

[scottydosnntkno]

Right now, the way things are. I can see negotiating in only a few cases.

One, putting the building as side job, evenings/weekends.

Two, as filler work between larger jobs. You might have to wait longer than you want for completion.

Three, as a complete cash job and you're writing the check for all materials, nothing run through the contractors account.

Even then, in most areas of the country, michigan specifically we are backlogged months and months with work.

Our current lead time (across my various companies) averages 10 weeks.

I literally want to laugh when I give a customer a price, and they say can you do any better simply for the sake of needing some type of a deal, or can you fit me in sooner I realllyyyy need it done.

Sure, I’ll give you a discount just because you asked, even though I just told you we have three months of work on the books.
Sure, I’ll push you ahead of the other thirty customers who I have deposits from because you need it done sooner.

Or the best one.
Sure, I’ll give you a discount for paying cash, yet cash is extremely inconvenient, especially when we’re talking 15-45k jobs.

Do you have any idea how much paperwork is involved in depositing 45k in cash to a bank and the forms you fill out? I still have my employees to pay, taxes to pay, suppliers to pay, etc. When dealing with a medium sized , well known company, cash has zero bargaining power. We’re not trying to skip a few grand in business taxes from the IRS on your one job when we’re doing millions of dollars a year.

 

[liliysdad]

I'm having a pool installation done. One contractor said he didn't want to come out, one gave me a quote over the phone, one wanted to come out and charged me $75 to come out and quote. I paid the $75 and will be using him. He's not cheap but he talked to me for an hour and asked me to take trees down ahead of time. Best $75 spent on the project!

Barry
North Florida

There is no way I am paying someone to tell me how much they are going to charge me IF I pick them. I have never even heard of such.

 

[kwb]

I won't usually negotiate on the few things I do try to hire out. I will ask what I can do myself ahead of time to take some steps out of the process for them and what that will save me.

If my efforts are worth the savings I get to work.

HVAC guy was all about me taking care of the concrete pad and having a service disconnect ready to go for him to hook up to. That savings was what let me get central air. The initial bid had me too far over budget to proceed.

 

[CAMMShaft]

I had an interesting example of this last week. I called a guy out to provide a quote. He showed up and quoted me $4500 and asked if I was ready for them to get started. I told him I had another guy coming to quote the job that afternoon (I actually got 3 more quotes). The look on his face when I said I was getting another quote was priceless. He knew he was going to be outbid. He asked if I felt his bid was fair. I simply said, "we will see what the other quotes are." He said he had room on his price. I just walked away. 10 minutes later he sent me a text quoting the job at $3500. Almost 25% less! It was comparable with the other quotes, but no way was I going to choose him.

CAMM