How would you like to see bare bids from the trades and undisguised overhead and profit figures? In a positive change to how we do business, we have been sharing these numbers with our clients over the past year.
While we were a little hesitant to put it all out there, feedback on having more detail and openness—more transparency—around project costs has been overwhelmingly positive.
Our clients report that seeing detailed price breakdowns of their project as it evolves, from a forecast budget up early in the design phase to the contract breakout, helps them understand where their money is going and make informed decisions. Having this detail on the table gives them a sense of comfort that they are being charged fairly for their project.
There is also an unexpected qualitative difference in the relationships that being transparent allows for. Everything seems simpler now that we have eliminated the mystery of what might be in the black box behind a "package price".
We even break out the design time. We develop design objectives up front, along with a design time budget. We estimate how much time will be needed for each design phase.
We ask for a retainer, charge for the actual design time, and then credit this money to the construction project. The time is tracked and reviewed with you at each meeting.
Charging for design time allows us to properly cover our costs so we can work together with you, as a team, rather than trying to rush to get to a contract signing. We are able to spend as much time as makes sense designing with each family to ensure that you have a thorough understanding of the design and all the details.
Additionally, we will send you home with copies of the drawings, allowing you to think about the design as you sit in the space, and provide feedback at each step along the way. This really helps to ensure that what is being put on the drawings is what you want and that you have time to understand the drawings.
Some clients don’t need to take too much time in this phase but charging hourly for our time gives us the flexibility to do so, depending on our client’s needs.
One client was happy to spend the time to change their bathroom fixtures four times as their tastes and the design evolved from a simple hall bath replacement to an eye catching guest bath. Another client had us make life sized drawings of the kitchen drawers so that we could optimize the size of the stiles and rails and panels. Another wished to see a 3D model of a custom vanity that we were creating, and we make many Sketchup 3D project models for full projects so clients can get the feel for the new space.
Billing for design time as it is expended allows us to work with each client in the way they need us to, so that the project includes what they want, and so they understand what they will be getting.
Clark Construction forecast and contract budgets include three types of line items that most other companies avoid like the plague: bare trade contractor bids, supervisory time, and business expenses (overhead and profit).
Starting with the Forecast Budget, you get to see the actual costs for the trades and materials.
Clients seem relieved by the fact that they can see our tradespeople's bids, and often times, if they have previously priced a particular trade, can see that the numbers we have provided on our breakout make sense; this is a great confidence builder.
We are your advocates with the tradespeople. We know where the pricing should be so we will negotiate on your behalf and if we can use another one of our trade partners to get a better price we will do so.
Planning and Project Management
A portion of labor cost on any remodeling job is time spent coordinating with and supervising other people.
Planning and project management tasks are listed as direct costs rather than being swept into overhead and covered by a large markup. The idea is to account for all costs that are specifically related to a particular job, rather than using the same fixed markup on all jobs to cover these activities. Activities in this category include items such as site prep, ordering materials, scheduling deliveries, waiting for inspections, client meetings, job documentation, and trade contractor supervision.
Itemizing out these items makes for a more customized and therefore more accurate estimate, and gives clients a clearer picture of how their budget will be spent. As with tradespeople prices, these numbers are adjusted up or down if and when the scope of work changes.
General Operating Expenses: (Overhead and Profit)
For a lot of remodelers, the elephant is still in the room. For us, general overhead and profit, the last two line items on the estimate, are out there in plain sight to be acknowledged, explained and justified. Being able to share these numbers is refreshing.
Bottom line for you.
When you know what you are getting for your money, you can be more comfortable with the numbers. It allows us to work together with you to make value based decisions to optimize your remodeling budget and investment - so that you end up with a beautiful project, and one that makes sense dollarwise!