Firm Quotes For Difficult Jobs With Unknown Variables - Business - Contractor Talk

Firm Quotes For Difficult Jobs With Unknown Variables

 
Thread Tools Search this Thread Display Modes
Old 08-02-2013, 06:53 PM   #1
Pro
 
rtztgue's Avatar
 
Trade: security
Join Date: Jul 2010
Posts: 243
Rewards Points: 278

Firm Quotes For Difficult Jobs With Unknown Variables


What procedures do you you when a customer wants a firm quote on odd construction and unknown variables. Every once in awhile we get these quotes and the customer just wants a hard quote. And these are not large projects. Perhaps $1000-$5000. This is typically for our wiring jobs when we find out halfway thru the job that walk ways go only half way, or studding is odd, concrete walls, remodels that were not done correctly, etc. Something that should take 2 hours ends up taking 8 because of hidden variables.

I have one now and this one is a doozy, I can already see concrete walls and pulling old wire to replace with new will be a pain.

Anyway. I quoted an estimate but made it clear it was T&M. they want a hard quote, or at least a 'Not to exceed' In their words they want I quote I can live with. (personally I would just quote really high)

I can think of a few things.

1. Stick with T&M

2. Give an quote but with a lot of exclusions.

What do you guys normally do in these situations. And what would you consider a change order? (especially if this is a basic walk through with no specific rfq)
rtztgue is offline  

Warning: The topics covered on this site include activities in which there exists the potential for serious injury or death. ContractorTalk.com DOES NOT guarantee the accuracy or completeness of any information contained on this site. Always use proper safety precaution and reference reliable outside sources before attempting any construction or remodeling task!

   

Advertisement

 

Old 08-02-2013, 07:34 PM   #2
Pro
 
RobertCDF's Avatar
 
Trade: Custom deck builder
Join Date: Aug 2005
Location: Colorado Springs, Colorado
Posts: 9,177
Rewards Points: 1,533

Re: Firm Quotes For Difficult Jobs With Unknown Variables


Just say "ok, fixed price, 500,000, or you can just t&m it"

Advertisement

RobertCDF is offline  
The Following User Says Thank You to RobertCDF For This Useful Post:
Roofcheck (08-04-2013)
Old 08-02-2013, 07:45 PM   #3
Texan
 
j_sims's Avatar
 
Trade: GC
Join Date: Jul 2007
Location: Central Texas
Posts: 276
Rewards Points: 68

Re: Firm Quotes For Difficult Jobs With Unknown Variables


I hate T&M......but sometimes it a necessary evil
__________________
TEXAS Born, TEXAS Bred, When I Die, I'll be TEXAS Dead
j_sims is offline  
The Following User Says Thank You to j_sims For This Useful Post:
SAW.co (08-04-2013)
Sponsored Links
Advertisement
 
Old 08-02-2013, 07:58 PM   #4
Pro
 
rtztgue's Avatar
 
Trade: security
Join Date: Jul 2010
Posts: 243
Rewards Points: 278

Re: Firm Quotes For Difficult Jobs With Unknown Variables


Quote:
Originally Posted by j_sims View Post
I hate T&M......but sometimes it a necessary evil
Why? We are a service based company so a majority of work is t&m. For our business model it works out great.

So what are your reasons for not liking t&m and what is your business model like?

Thanks
rtztgue is offline  
The Following User Says Thank You to rtztgue For This Useful Post:
j_sims (08-03-2013)
Old 08-02-2013, 08:26 PM   #5
Pro
 
rrk's Avatar
 
Trade: remodeling
Join Date: Apr 2012
Location: new jersey
Posts: 5,909
Rewards Points: 2,628

Re: Firm Quotes For Difficult Jobs With Unknown Variables


I will never just give a high price for no reason, you will forever be known by them and their friends as someone who tried to rip them off or as extremely expensive.

I usually explain it to them that what ever price I give will not be accurate or fair to them or me. And that T&M is best for us both.

I have followed advice from my plumber who rarely gives estimates, now most of my customers just ask me to do the work with out an estimate.
rrk is online now  
The Following 3 Users Say Thank You to rrk For This Useful Post:
glkirk (08-04-2013), TAHomeRepairs (08-04-2013)
Old 08-02-2013, 09:06 PM   #6
LRG WoodCrafting

 
Leo G's Avatar
 
Trade: Maker of Fine Sawdust
Join Date: May 2005
Location: Windsor Locks, Connecticut
Posts: 40,873
Rewards Points: 1,907

Re: Firm Quotes For Difficult Jobs With Unknown Variables


Change order for anything that isn't stated in the scope of the contract. Let them know in the beginning that the unknowns will probably increase the price, and since they are unknown, you can't know how much the price may increase.
__________________
Sawdust Follows Me Everywhere
I can explain it to you, but I can't understand it for you.
Sanding is the bane of my existence
WWG1WGA

Quote:
Originally Posted by HusqyPro View Post
Carpenter by day.
Mad scientist by night.
http://lrgwood.com
Custom Cabinets in Hartford County Connecticut
Leo G is online now  
The Following 3 Users Say Thank You to Leo G For This Useful Post:
CENTERLINE MV (08-04-2013), moorewarner (08-05-2013)
Old 08-02-2013, 09:12 PM   #7
Pro
 
fjn's Avatar
 
Trade: mason
Join Date: Aug 2011
Posts: 5,155
Rewards Points: 11,158

Re: Firm Quotes For Difficult Jobs With Unknown Variables


I found the best way to skin the cat is offer a cost plus contract. If they balk at that, figure it for the absolute worst case scenario on every aspect and shoot them the price. If they take it fine,if not move on to next customer.
fjn is offline  
The Following 2 Users Say Thank You to fjn For This Useful Post:
A&E Exteriors (08-02-2013), ryanshull (08-04-2013)
Old 08-02-2013, 09:59 PM   #8
back doors to hell put in
 
Irishslave's Avatar
 
Trade: Carpenter
Join Date: Jun 2010
Location: Google knows
Posts: 4,137
Rewards Points: 690

Re: Firm Quotes For Difficult Jobs With Unknown Variables


Unknown variables? Firm price on such? Not happening. I don't know what kind of work you do, but remember one thing: Once you open it.....you own it and that is why most experienced contractors will tell you the right written and signed provisions in your contract make all the difference
__________________
Warning: The topics covered on this site include activities in which there exists the potential for serious injury or death. ContractorTalk.com DOES NOT guarantee the accuracy or completeness of any information contained on this site.
Irishslave is online now  
Old 08-03-2013, 07:20 AM   #9
Texan
 
j_sims's Avatar
 
Trade: GC
Join Date: Jul 2007
Location: Central Texas
Posts: 276
Rewards Points: 68

Re: Firm Quotes For Difficult Jobs With Unknown Variables


Quote:
Originally Posted by rtztgue View Post
Why? We are a service based company so a majority of work is t&m. For our business model it works out great.

So what are your reasons for not liking t&m and what is your business model like?

Thanks
I operate mainly with an exclusive client base. I have about 40 of these clients that took about 7 to 8 years to compile. A large percentage of them are retired from military and medical field.
I also put a lot of emphasis on referral marketing which, of course, is the best marketing there is. My “exclusive clients” have been more than willing to help me with that. Even though about 60% of my biz model has turned into a home/business maintenance program (which I guess sounds better than handyman) it pays the bills.
A bit mundane, but I still get some of the larger GC type projects which satisfies my need for a challenge now and then.

As far as T&M I have had two bad experiences with it...One client (retired colonel) went from keeping time cards to receipt accounting..which mind you I knew it was their money and I was somewhat okay with it, BUT when it went to counting bathroom breaks to telling my employees the project schemata, to how he thought they should be doing it because he watched an episode on HGTV...blah blah...
The other client bitched every check he wrote...knowing full well what the hourly charge was and questioning the materials receipts. “I have some 2x4s behind that building, why did you buy new ones?” Okay, if you want to pay the time to pull nails and cut off the bad ends.....which I wasn't going to do anyway.
So yeah, it left a bad taste in my mouth. I am not saying I would never do T&M but it would have to be an extreme case.
TO ME, it involves the client too much into the mechanics of my business. Don't get me wrong...I want them to have a part in the project because it is their money, but with limitations.

As far as hidden or physical conditions-
I have a very specific well spelled out “Claims for Concealed or Unknown Conditions” (Type I and Type II). But...just because I have what I deem as a pretty solid clause in my contract it is NOT full proof,
....and I know that.
Plus I have been at this for 35 years and experience helps me to “predict” ,with some degree, underlying damages and or structural ambiguities that may occur. (Well... that and my digital inspection camera.)
Not that I am right 100% of the time but I am very upfront with my client and tell them what I think may arise and an approximate cost IF the corrections are needed. I absolutely hate it when Contractors intentionally lowball their bids to unsuspecting home or business owners and then make their profits from Change Orders knowing full well that the damage is there. This “scam” was rampant on the military base here where I live.

And that my friend, is my long winded answer
__________________
TEXAS Born, TEXAS Bred, When I Die, I'll be TEXAS Dead

Last edited by j_sims; 08-03-2013 at 07:28 AM. Reason: typo
j_sims is offline  
Old 08-03-2013, 02:08 PM   #10
Pro
 
Tom M's Avatar
 
Trade: GC/ Interior & Exterior Remodeling
Join Date: Jan 2007
Location: Bergen County, NJ
Posts: 9,919
Rewards Points: 5,482

Re: Firm Quotes For Difficult Jobs With Unknown Variables


If my estimate is a safe one but feel there is a risk of costly extras I will include a contingency amount to protect both parties. If the client is a straight up person and can respect what's involved I will display the cost and offer a credit if the safety doesn't come into play.
Tom M is offline  
The Following User Says Thank You to Tom M For This Useful Post:
concretemasonry (08-05-2013)
Old 08-04-2013, 08:05 AM   #11
Kitchen Customizer
 
ryanshull's Avatar
 
Trade: Interior Remodeling
Join Date: Nov 2012
Location: Central Kansas
Posts: 422
Rewards Points: 310

Re: Firm Quotes For Difficult Jobs With Unknown Variables


Give a best case scenario and a worst case scenario, but make it T&M. I have found that people who can't trust you to be honest are generally not trustworthy themselves.

With my remodeling gig, they always want a fixed price, so I always figure in the higher middle range between best and worst case scenario, and it averages out.

Only time and experience will make you a better estimator.
ryanshull is offline  
Old 08-04-2013, 05:39 PM   #12
Pro
 
GO Remodeling's Avatar
 
Trade: remodeling
Join Date: Apr 2005
Posts: 2,523
Rewards Points: 96

Re: Firm Quotes For Difficult Jobs With Unknown Variables


Quote:
Originally Posted by ryanshull View Post
Give a best case scenario and a worst case scenario, but make it T&M. I have found that people who can't trust you to be honest are generally not trustworthy themselves.

GO Remodeling is offline  
Old 08-04-2013, 06:57 PM   #13
Pro
 
rrk's Avatar
 
Trade: remodeling
Join Date: Apr 2012
Location: new jersey
Posts: 5,909
Rewards Points: 2,628

Re: Firm Quotes For Difficult Jobs With Unknown Variables


Quote:
Originally Posted by ryanshull View Post
I have found that people who can't trust you to be honest are generally not trustworthy themselves.
That is really the most important bit of information in this business.
rrk is online now  
Old 08-04-2013, 08:08 PM   #14
Pro
 
fjn's Avatar
 
Trade: mason
Join Date: Aug 2011
Posts: 5,155
Rewards Points: 11,158

Re: Firm Quotes For Difficult Jobs With Unknown Variables


Quote:
Originally Posted by ryanshull View Post
I have found that people who can't trust you to be honest are generally not trustworthy themselves.


Is that not the truth in the overwhelming number of situations !

You said a mouth full there.
fjn is offline  
Old 08-04-2013, 08:18 PM   #15
Contractor
 
AustinDB's Avatar
 
Trade: Remodeling & Home Additions
Join Date: Sep 2006
Location: Austin, TX
Posts: 4,381
Rewards Points: 1,242

Re: Firm Quotes For Difficult Jobs With Unknown Variables


try providing some examples of what could be hiding behind those walls and what you would (might) charge for those occurrences and if you gave them a hard and fast figure accounting those 'what ifs' and they really aren't there, won't the homeowner feel cheated? Then explaining how if the shoe is on the other foot and you provide that magical number and run into something unforeseen and YOU feel cheated (don't think I would use that description w/ a client), then a rational customer should be able to understand the rationale of what T&M being more fair than not.
AustinDB is online now  
Old 08-04-2013, 09:04 PM   #16
Pro
 
Shellbuilder's Avatar
 
Trade: Shell building contractor
Join Date: May 2006
Location: Va. Beach, Va.
Posts: 1,098
Rewards Points: 1,236

Re: Firm Quotes For Difficult Jobs With Unknown Variables


Just tell them they need to find someone they can trust with T and M. Make sure you tell them they can trust you.
__________________
www.shelladditions.com
Shellbuilder is offline  
Old 08-04-2013, 09:29 PM   #17
GC/carpenter
 
Calidecks's Avatar
 
Trade: Decking, Railing, Carpenter/General Contractor
Join Date: Nov 2011
Location: Anaheim Hills, California (OC)
Posts: 37,733
Rewards Points: 952

Re: Firm Quotes For Difficult Jobs With Unknown Variables


I'm not seeing what state your in but if its Cali its against the law to bid T&M. YES I KNOW EVERYTHING IS ILLEGAL IN CALI EXCEPT DOPE.

http://www.cslb.ca.gov/newsletter/2010-summer/page9.htm

Last edited by Calidecks; 08-04-2013 at 09:34 PM.
Calidecks is offline  
Old 08-04-2013, 09:36 PM   #18
Pro
 
CarpenterSFO's Avatar
 
Trade: GC
Join Date: Dec 2012
Location: CA
Posts: 7,076
Rewards Points: 2,044

Re: Firm Quotes For Difficult Jobs With Unknown Variables


They want a firm quote, so give them a firm quote with provisions to mark it down. I'm in California, and as Mike says, we can't quote T&M. I've had people sign on the line for 4X the other guy's quote. It takes some trust, but then so does T&M.
__________________
- Bob
CarpenterSFO is offline  
Old 08-04-2013, 09:45 PM   #19
Registered User
 
blackdoghamma's Avatar
 
Trade: carpentry-design
Join Date: Aug 2013
Location: Burlington VT
Posts: 18
Rewards Points: 20

Re: Firm Quotes For Difficult Jobs With Unknown Variables


T&M may be fair but it also limits one's ability to price based on value and limits potential for profit. As another poster said, it also gives the customer a lot of involvement into your business.

As an example of the first, let's imagine a scenario where you've been been recommended and you've got the skills for the misc electical work required, some framing, some good finish work and working alongside tricky neighbors and the customer wants to move fast. This is maybe not something the average Harry could do. If you figure the job hourly and it comes to $2000...you could be missing the opportunity for profit if the customer thinks it's worth $4000. I'm not advocating dishonesty, just for pricing what the market will support. This is just basic business. You choose (ideally) to focus your work efforts to maximize profits. If you have one truck, $25K of tools and 40 hours per week, you point your business machine in the direction of profits. If you and/or crew are working hourly and there's a limit on materials markup per your agreement, then your potential for profit is limited for the duration of the time you are on that job. Unless you can figure out how to add twice as many hours to each day, you can't increase your gross profit margin. Pricing by perceived value allows you to do this. For some trades and contractors, the "going " hourly rate cannot support the overhead, direct and indirect costs they need to carry. This is typically not true for small operations but it very often is true for larger operations. T&M is more of a barely break even scenario than a profitable scenario.

Of course this is not true for all segments of work and many customers are only interested in low price... so you have to slowly develop this approach.

Some jobs with significant risk and limited potential for profits should probably be declined.

And second, as others have pointed out, you don't have to worry about leaving the job with materials in your truck or not working on the customer's site for 8 hours without wondering if they are keeping track and becoming resentful or at least questioning.

You can still give a contract price and cover yourself for legitimate adds /change orders as well.
blackdoghamma is offline  
Old 08-05-2013, 08:01 AM   #20
Kitchen Customizer
 
ryanshull's Avatar
 
Trade: Interior Remodeling
Join Date: Nov 2012
Location: Central Kansas
Posts: 422
Rewards Points: 310

Re: Firm Quotes For Difficult Jobs With Unknown Variables


Quote:
Originally Posted by blackdoghamma View Post
T&M may be fair but it also limits one's ability to price based on value and limits potential for profit.
Your hourly rate and markup for materials should cover all that.

Advertisement

ryanshull is offline  
The Following User Says Thank You to ryanshull For This Useful Post:
fez-head (08-16-2013)


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Landing Commercial jobs IrriPro Landscaping 4 08-07-2013 10:51 PM
How many deck jobs can you schedule in advance Irishslave General Discussion 11 05-14-2013 06:18 PM
Where are you guys getting your jobs? sledhead54 Sandblasting 5 04-26-2013 06:13 PM
Larger reno jobs seem to have the potential for screw up's ? englishdave Business 24 05-07-2010 11:50 PM
Gen'l Contracting jobs under 200K - subs or employees llpcas General Discussion 13 02-10-2010 04:26 PM

Join Now... It's Fast and FREE!

I am a professional contractor
I am a DIY Homeowner
Drywall Talk is for
PROFESSIONAL CONTRACTORS ONLY!

At DrywallTalk.com we cater exlusivly to professional contractors who make their living as a contractor. Knowing that many homeowners and DIYers are looking for a community to call home, we've created www.DIYChatroom.com DIY Chatroom is full of helpful advices and perfect for DIY homeowners.

Redirecing in 10 seconds
No Thanks
terms of service

Already Have an Account?