Interesting Article For T&M Bills

realpurty2

Surfing construction info online and ran across this article.. thoughts?

http://www.markupandprofit.com/articles_2.html

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Woman in a Man's World.

Mike Finley

Geez, I knew there was a reason I don't do T&M, but I didn't know there was 22 of them!

MinConst

I tried the T&M billing when I started out. Customers didn't like it at all. I don't blame them. Many customers stated they had been "ripped off" with Time an materials before. Weather they had or not was not the issue. The fact that they perceived it was.
Since changing to fixed estimating I find I get more jobs. I feel and felt that T&M was the fairest way to bill but the fact that people take advantage of it makes it a no go. On the other hand once there is a relationship with a given customer it might work better.

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Paul
Minichillo's Construction
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I will never leave you hanging!

Grumpy

T&M is great for commercial accounts. I see no reason not to do T&M. I do alot of T&M even for residential. Yes I don't make as much as a bid job. However I also spend much less time driving, inspecting and writing a proposal.

It takes the same ammount of time to close a sale for a repair as it does for a replacement. Replacements yield a higher ammount of profit, while repairs yield a higher margin of profit, but less overall ammount. In most cases it is simply not worth my time to BID repairs.

I only do T&M on repair type work and usually close the sale over the phone. If they don't go for it, no loss to me. I wouldn't have the time to run their estimate anyways.

fez-head

Time & Material works best for my company and is fair for everyone involved

For insurance work I do write a firm bid off of the insurance summery. I have no time to guess what the isurance adjuster is willing to pay for and if the homeowner wont show the summery I wont give a bid. You would be suprised how hard it is to get the summery out of them...it even says "contractor copy" right across the whole page.

Gordo

Thats because the homeowner wants to pocket the difference between lowballer and what ins. co. gives them. We stopped doing ins. work because of this very reason. I refuse to let ins co. tell me how much to charge.

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Looks like some pros were here.

Gordo

Nice article. I think it touched on some very interesting subjects. Our company will bid both ways......depending on the situation. All of our kitchens and baths will be bid at $X. Any type of wood damage/water damage is at cost plus because we do not know how long the job will take. All of our business is word of mouth so we already have a trust bond built in.

I stress to the client that it is in their best interest to pay cost plus in these particular situations.....otherwise I highball the bid to CMA (then they are getting ripped off!).

Bottom line is it depends on the situation IMO from my experience. Commercial work most definitely stay away from cost plus.

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Looks like some pros were here.

PipeGuy

Out of those 22 reasons you don't see even one? Here's a good one: #18 If you make a mistake on a Cost Plus or Time & Material job, who pays for it? Do you donate your time or is the customer willing to pay for it? Who pays for ruined materials? Who pays to go get the new materials and the cost of the vehicle expense to do the pickup?