How Do You Price The Unknown?

FCBuilders

I have the opportunity to price a remodel/addition job. Square footage is not relative to my question. I know my price on everything from footings on the addition to roofing the entire house.

Here's the catch. The owners have watched the "Flip" shows and had big dreams. They immediately hired somebody else to go in and start ripping out the interior walls. BANG! There's the termite damage. There's the headers nailed into the sides of the jack posts (eaten up by the 'mites). There's the floor collapsed in one place. There's the...
You get the point.

The owners have gotten some "OUTRAGEOUS" prices (as in you could tear the thing down and rebuild it cheaper) so they're very skeptical. It's in the roughest part of town, but to help themselves out they want to purchase all the material. I'm fine with that, because half of it will be stolen.

I've asked 6 different builders that I know how they would price this. None of them know either. Has anybody priced anything like this? If so what's the route? Cost plus? I think they want a solid price because it's a "Flipper". Thanks.

dayspring

Cost plus would be a fair way to go but you would be limited as to what you could make off the job. Many HO's may argue with you on the "PLUS" part of cost plus. If you need work, then try that route. If you give them a "price" for the work they will expect you to stick with that price.
You must remind the HO that this is not a TV show, and many things do not pan out as they portray them on TV. After all it is TV. If TV shows showed the reality of many projects, most HO's would not remodel some of the homes they have. A perfect example is what you quoted above.
The owners have gotten some "OUTRAGEOUS" prices (as in you could tear the thing down and rebuild it cheaper)
Who is to say the prices are OUTRAGEOUS? The HO of course.
Truth is termites can do alot of damage, damage that takes alot of time to repair and replace.
If they got more than one estimate, and they are all too high, in their opinion, RED FLAG, I'd run for the hills.

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reveivl

Large additions/renovations on older homes can often cost a great deal, even to where it might be simpler, and cheaper, to start over. When you start from scratch you know all the associated costs, when you are tearing into a building you WILL have surprises.

These guys sound like they got in too deep on this one, make sure you're covered if you decide to do work for them. Day's advice about reminding them this is not a tv show is good. Tell them this loud and clear and often until they get it. Or run.

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From where does knowledge come? If you need to know what is in a box, you could ask someone (not reliable), you could pray, (not useful), you can consult with the scripture (not helpful) or you could open the box (science)

Teetorbilt

Tell them to start watching TOH! They run into problems all of the time and they talk in real $$.

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thom

Many years ago, I was just starting out, (way back in the late 1970's) I renovated some old victorians in the chicago area. I was the only bidder on the jobs I did because no one else would give a fixed price bid.

You can, if you are very detail oriented, put together a fixed price proposal. Include everything you think could possibly be a problem, figure your costs on the very high end, then double the entire thing.

The proposal must be very specific. Not this is what it will be when I leave, but this is what I will do.

If the owner got a real deal and stood to make a lot of money on the project they would not expect to share that with you. You should not share in their loss.

Never be afraid to walk. It's way cheaper than loosing money on the job.

Dusty

I just estimated a complicated remodel/retro job and spent a lot of time to accomodate the need for a fixed price. I figured pricing on all of the known factors. Next I made a list of things that in my experience could present, of which some became known factors.
When I write up estimates/bids for remodels I present what it includes and excludes. The Exclusions can be more important and often as long a list if not longer. I often offer to do the job T&M and use the estimate as a not to exceed number for what it lists doing.
Works for me. I am still learning to listen to the "Run" factor as well!
Good luck

dayspring

Teetor, So true, This Old House is most likely the only "REAL" TV show related to our business, that shows our side.

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karma_carpentry

I agree with thom if you can do it - if you know the type of job well enough to anticipate possible problems and estimate with good accuracy on the tasks involved.

Then you can put together a detailed proposal outlining exactly what you intend to do, and also include CYA clauses for any possible problems / extra costs you are able to anticipate, and a general CYA clause for any other unforeseen delays or added costs due to conditions you were unable to foresee until you got into the job.

Giving them a fixed price will let you pad in some extra % for your comfort and to cover the unknown, and also some extra % in profit as the market will support in your area. And they, in turn, will appreciate having a fixed price (even though you can still charge extra for any problems that come up).

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joasis

You do have an advantage to seeing the problems exposed by the demolition...I would simply go after it in this way: You charge X dollars per hour, 8 hours per day X the number of days you safely think it can be done. They have the price, you have the maximum you would have bid with a safety margin, and if you don't get it, you haven't lost anything. I am seeing more people get involved in "flipping" houses, and thay all have one thing in common...they are cheap and greedy, with unrealistic expectations.

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Shellbuilder

If it's exposed, price it. If it's covered, price it so many dollars per hour including any time to pick up material and don't allow a day to get broken up. Paid for hourly services at accumulation of 30 hours.

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donb1959

I couild not deal wit a project like that...I have HPP, aand Im afraid thet even with the meds my head could implode the ole grey matter

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Double-A

You don't know what you don't know. Have the home owners have their demo folks finish up the demo and then go in and start pricing for repairs.

Get a termite inspection while everything is exposed. This way they can follow the trails to the end and you can price the replacement/repair.

Don't even discuss a cost with the homeowner for unknowns. Use a change order for everything that pops up afterwards.

If they are not open to this approach, bid them good luck and move on. Its not worth the headache of dealing with folks that are more interested in how much money they won't pay you than in the quality of service and performance of you and your crew.

__________________
"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y.
New York Times, July 20, 2006

Teetorbilt

You know what you are facing (maybe) now. Throw this into any future proposals or contracts. *********, Inc. (the Contractor) is not responsible for anything unseen.

__________________
You can't solve you're problems with the same level of thinking that created the problems.

Albert Einstein

POOLMANinCT

well said Teetor..

my fave episode , was on years ago but stands out in my bird cage..

"no deadman in a rail road tie retaining wall,, thats 45grand, rip it out thursday"

on the other side of the boob tube hgtv/ whatever its called where you guys live..
they would bring the owner to stoneyard, tell them how to save money by buying damaged rocks.
then have 3 wheebarrows and pick up truck of stonedust, & finish by lunchtime.."

to further stray... ever notice those bbob tube shows are never in frost heave zones??
oh, yeah... thats why the finish by lunch

fci

Sounds to me like you are not ready to take this job. You are asking questions that clearly show you need to turn this one down.

Gordo

There is a reason all the other contractors bid high.

If you want to do this job the safest way is time and material. Otherwise you will be spending alot of free time just bidding this job (for free) only to find out you are OUTRAGEOUSLY overpriced (like all the other contractors).

T+Mx30%=cost

No secret to that formula. You just gotta work hard and fast putting it all back together.

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Looks like some pros were here.