OfflineOK, if a Contractor tells me the repairs are going to be $44,000.00 and he later goes over budget in the amount of $15,000.00 and the new repair budget is now $59,000.00 what can I say or do to control an original quote in an estimate from the Contractor?
I have seen public documents recorded with expenses listed. Is this a good way to protect myself and to keep a paper trail of all agreements?
What do you folks do to protect yourself from construction cost over-runs.
How many of you Investor's, even do this?
Do you add in a percentage of perhaps 3% of the Contractor's quote as a cushion for mistakes in estimating?
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A good rule of thumb is to add 25% to the rehab expense. Cost over runs are just a part of it. It is bound to happen. Always stay on top of your rehab crew and what they are doing. It is your money they are spending...Jan
but if you want to save money, ask them the amount they would charge if you bought the materials and they were just charging for labor.
I've done this and I saved that 20-25%
But always remember, an estimate is still an estimate, so there will/may be a chance of price change in the middle of a job.
First, I would always get more than one estimate before committing to a contractor. Like Elix said, try to get a better breakdown of what exactly is going into their estimate. Ask for it every time. For instance, if they say they will charge 20K to replace windows, get a per window breakdown for labor and materials. Also, stay on top of change orders. And READ all of the contract before you sign anything. Try to understand the construction process and what exactly will be going into the job before they start. The more knowledge you have, the more questions you will know to ask.
We are right in the middle of a huge rehab project, and before we started we priced ALL the materials from more than one supplier. Then we got bids from at least 2 contractors per specific job (i.e. roofer, flooring, window replacement, etc.). Then when we settled on a general contractor, we were very knowledgable on whether the specific proposal was reasonable and competitive. They knew that we had priced the materials already, and were prepared to supply the materials ourselves. We were also educated enough in the process to ask the right questions along the way to make sure we stay on budget. There will always be unforeseen change orders that happen, but you can minimize the unexpected by doing your own due diligence on the rehab before you ever sign your name to anything. And ALL contractors are not created equal! Get references and ask around.
Sheila
"If God is for us, who can ever be against us?" Romans 8:31 NLT
Find a good contractor and stick with him. I have never charged more than my proposal in thirty years, except when the customer asked for extra work.
Always write in the contract any and all extra charges must be agreed on by both parties in writing.
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