Contractor Talk - Professional Construction and Remodeling Forum

Contractor Talk - Professional Construction and Remodeling Forum (https://www.contractortalk.com/forum.php)
-   General Discussion (https://www.contractortalk.com/f11/)
-   -   How do General Contractors charge? (https://www.contractortalk.com/f11/how-do-general-contractors-charge-110827/)

BigJake 01-09-2012 07:18 PM

How do General Contractors charge?
 
Hello Fellas,
I just moved to Texas from Kansas and found your forum. I have been framing houses for some time now, but I am thinking about starting my own deal here in Texas. I have a few questions if y'all don't mind me asking:

1) How do general contractors charge their clients, on say a home build or remodel?

2) If they take a percentage of the total build costs, which is how I think they do it in Kansas, then do they pay for all of the subs out of their own pocket? Or is it paid at the end of the build and the home owner pays all the subs?

Any information you can give me would really help. Thanks guys.

BrandConst 01-09-2012 07:57 PM

I try to get 1000% mark up.

BrandConst 01-09-2012 07:58 PM

or a million, which ever is the lesser amount.

rselectric1 01-09-2012 08:04 PM

Quote:

Originally Posted by BigJake (Post 1383111)

2) If they take a percentage of the total build costs, which is how I think they do it in Kansas, then do they pay for all of the subs out of their own pocket? Or is it paid at the end of the build and the home owner pays all the subs?

.

Lot's of variables here, it's not a simple answer.

Google Fixed Contract and then Cost Plus Contracts. They are two different animals.

You've got a LOT of learning to do, and in NO CASE do subs wait until the homeowner pays at the END to pay them. Or you will lose that sub.

BigJake 01-09-2012 08:11 PM

I don't think I was clear enough. Let me try again.

Usually its done 2 ways correct? The first is cost plus deal where the GC charges an over all % of the total cost of the project. Is that right?

The other is a flat fee that gets negotiated before the build begins. If the costs go over, the GC's fee doesn't change.

Now, my true question is this: How do GC's get paid? Do they run all the costs through their business, then pay out the subs as they complete their task and keep whats left?

Or, does the home owner pay the subs out of their construction loan as the subs complete the work and then they pay the GC at the completion of the build?

I'm building to a greater overall question here, I just wanted to know the answer to this one first.

Again, thank you.

BigJake 01-09-2012 08:13 PM

Quote:

Originally Posted by BrandConst (Post 1383149)
or a million, which ever is the lesser amount.

Do you have any useful information?

skyhook 01-09-2012 08:17 PM

Quote:

Originally Posted by BigJake (Post 1383163)
I don't think I was clear enough. Let me try again.

Usually its done 2 ways correct? The first is cost plus deal where the GC charges an over all % of the total cost of the project. Is that right?

The other is a flat fee that gets negotiated before the build begins. If the costs go over, the GC's fee doesn't change.

Now, my true question is this: How do GC's get paid? Do they run all the costs through their business, then pay out the subs as they complete their task and keep whats left?

Or, does the home owner pay the subs out of their construction loan as the subs complete the work and then they pay the GC at the completion of the build?

I'm building to a greater overall question here, I just wanted to know the answer to this one first.

Again, thank you.

Yes, no, sometimes, maybe. :jester:

ohiohomedoctor 01-09-2012 08:20 PM

Quote:

Originally Posted by BigJake

Do you have any useful information?

Sure, tree fiddy + cost (current temperature(current price of gold+cost of subs))=how gcs charge.

go dart 01-09-2012 08:21 PM

Why do you believe you're ready to be a contractor if you don't even know how to charge for being one?? Work for someone a year or two and get close to the manager.

Seven-Delta-FortyOne 01-09-2012 08:25 PM

I.m sorry you're getting a bunch of smart-a$$ answers here, but the problem is that your question is too broad and complex for a simple answer. And questions like these gives us the impression that you are in way over your head.


To the other posters: You guys are doing what angus just asked us not to do.

ohiohomedoctor 01-09-2012 08:27 PM

Quote:

Originally Posted by A.T.C.
I.m sorry you're getting a bunch of smart-a$$ answers here, but the problem is that your question is too broad and complex for a simple answer. And questions like these gives us the impression that you are in way over your head.

To the other posters: You guys are doing what angus just asked us not to do.

In fairness I did report myself...

rselectric1 01-09-2012 08:28 PM

Enough already with the stupid answers. :censored:

Seven-Delta-FortyOne 01-09-2012 08:29 PM

Quote:

Originally Posted by ohiohomedoctor (Post 1383204)
In fairness I did report myself...

:laughing::laughing::laughing:

griz 01-09-2012 08:30 PM

Quote:

Originally Posted by BigJake (Post 1383163)
I don't think I was clear enough. Let me try again.

Usually its done 2 ways correct? The first is cost plus deal where the GC charges an over all % of the total cost of the project. Is that right?

Well ya sorta...If you are referring to Time & Material. You set up the day of reckoning (weekly, bi-weekly or monthly) tally up the receipts (which the owner sees) + subs + labor + P&O. Even though you may have a T&M contract a sub can/may & will give you a hard fixed cost.

The other is a flat fee that gets negotiated before the build begins. If the costs go over, the GC's fee doesn't change.

Negative. If cost go over it is because of a change order your P&O percentage gets added. You get them approved prior to work. You can also have a not to exceed clause. Also in T&M.

Now, my true question is this: How do GC's get paid? Do they run all the costs through their business, then pay out the subs as they complete their task and keep whats left?

Depends on the job. A large job or one with several phases you set up on a draw system. All costs go through business. YOU ALWAYS PAY SUBS WHEN THEY FINISH.

Or, does the home owner pay the subs out of their construction loan as the subs complete the work and then they pay the GC at the completion of the build?

At times the HO will pays subs on a T&M job. On a draw HO pays GC only. Refer to draw system above.

I'm building to a greater overall question here, I just wanted to know the answer to this one first.

Again, thank you.

You sound more like a HO asking how a job works....:whistling

BigJake 01-09-2012 08:30 PM

Quote:

Originally Posted by A.T.C. (Post 1383203)
I.m sorry you're getting a bunch of smart-a$$ answers here, but the problem is that your question is too broad and complex for a simple answer. And questions like these gives us the impression that you are in way over your head.


To the other posters: You guys are doing what angus just asked us not to do.

I'm a moderator on a few sports message boards. I can see how this type of question would bring out the very best in people.

Anyway, I have framed houses and done many other things for years. I understand the construction process very well. It put me through college.

However, I have never been a GC on a new home build. I could walk up and build it, but I am not sure of the financial aspects. There are a lot of "builders" out there who do it all. There are also a lot of GC's out there who don't pick up a tool. I want to know how it works.

Scribbles 01-09-2012 08:35 PM

It depends on your market, and your product, your sales budget and system and your customer. For the most part small projects like a kitchen remodel, bath remodel, or a small house 300k or so. The GCs round here just submit a fixed cost bid. On the big stuff it seems like they take a management fee and the rest goes to bid. It really depends on what you are offering. Some of the GC gets as little as 2%-3% some are getting 150%.

For me it depends on what we are doing, and who the sub is. My electrician is fantastic. He has always been 100% accurate, very efficient, and customers love him. I will mark him up just a little, my granite guy is the opposite, his work is fantastic, but he is a mess, he is always underestimating the cost of materials, truck breaks down, tools break whatever. I mark him up 200%. And for the record I gladly pay my electrician $75 an hour the granite guy is lucky to get $20

Scribbles 01-09-2012 08:37 PM

hope that helps

BigJake 01-09-2012 08:40 PM

Quote:

Originally Posted by griz (Post 1383210)
You sound more like a HO asking how a job works....:whistling

Thank you. A draw system. I wondered how all these contractors could afford to pay these subs out of their own pocket. They set up the draw system and have it pay out accordingly. There might be a few days overlap I assume, but in general you aren't out a ton of money for months on end.

I guess, in the end, the HO has no idea how much the GC is getting paid unless they have had multiple bids from many other builders/GC's.

BigJake 01-09-2012 08:41 PM

Quote:

Originally Posted by Scribbles (Post 1383221)
hope that helps

It does help. Thanks.

Scribbles 01-09-2012 08:44 PM

Quote:

Originally Posted by BigJake (Post 1383226)
Thank you. A draw system. I wondered how all these contractors could afford to pay these subs out of their own pocket. They set up the draw system and have it pay out accordingly. There might be a few days overlap I assume, but in general you aren't out a ton of money for months on end.

I guess, in the end, the HO has no idea how much the GC is getting paid unless they have had multiple bids from many other builders/GC's.

Why does it matter what the GC is getting paid to the homeowner?
Do you compare new cars by the salary of the ceo or the cars value?


All times are GMT -5. The time now is 10:29 AM.

Powered by vBulletin® Version 3.8.8
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
vBulletin Security provided by vBSecurity v2.2.2 (Pro) - vBulletin Mods & Addons Copyright © 2019 DragonByte Technologies Ltd.