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T&m

 
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Old 12-05-2007, 05:35 PM   #1
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T&m


I am not a big fan of T&M for my line of work or for that matter any line of work in New Construction. So this customer who I have been dealing with for the better part of 6 months now, helping with design and engineering details (about 24 man hours of my time billed hourly) is ready to start the job, my bid is acceptable but to try and save money they are wanting to pay me T&M.

I don't make it a habit of showing people my math, I give a proposal based on the job which includes All Materials and Labor incl. comp and insurance plus profit/overhead and something for the PITA factor and warranty.

If these people want to pay T&M I think they are acting as GC and as such should have to cover the insurance and comp and there is no warranty. This is not service, it is new construction only. I think essentially I am an employee in this case.

What's your guys feedback on my thoughts?

By the way, my proposal is for ICF work and Roof/Floor system only not complete construction of the house...just the shell.
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Old 12-05-2007, 05:47 PM   #2
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Re: T&m


I hate T&M too. Usually costs me money. Like everyone else, I bid a project according to the information provided and figuring worst-case scenarios. If things go good I'm money ahead, if they don't, then I'm still even. While there are occasions that a T&M situation is perfectly acceptable or even required, I try to avoid them.

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Old 12-05-2007, 06:37 PM   #3
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Re: T&m


If you go T & M start working like the hourly guys do. Morning break, hour lunch, afternoon break, tool belt off at 5.
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Old 12-05-2007, 06:54 PM   #4
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Re: T&m


I disagree with the above posts. Billing time and materials you carry no risk, so set your price at what you would expect to average in a good week (divided by hours of course). Insurance, overhead, profit, etc. should be built into the hourly rate, so why are you doing any worse, esp. this time of year.
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Old 12-05-2007, 06:57 PM   #5
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Re: T&m


just double what your actual man hours are. example if it cost you 30 per hr per man,bill them at 60 dollars per man hour.profit ahead or they,ll do some re-thinking
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Old 12-05-2007, 07:44 PM   #6
 
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Re: T&m


My advice would be to go with your bid or walk away. Who's running the business - you or them?
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Old 12-05-2007, 08:12 PM   #7
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Re: T&m


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Originally Posted by indm45 View Post
just double what your actual man hours are. example if it cost you 30 per hr per man,bill them at 60 dollars per man hour.profit ahead or they,ll do some re-thinking
and you have the math to back this up?


ps...it's a money losing price...
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Old 12-05-2007, 08:31 PM   #8
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Re: T&m


I'm with you. I hate t&m. It's a motivation killer.

I'd walk. If you go down that road now, they own your soul. They will argue about paying you for holding their hands weekends and evenings. They will tell you who to hire and how to schedule. It becomes their job, not yours, but you're on the hook for permits, inspections, and ultimately warranty.

If you need the work and the money, become their contract employee and live with it. Permits in their name, sub-contracts in their name, screw ups out of their pocket. Don't let them do you both ways.
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Old 12-05-2007, 08:32 PM   #9
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Re: T&m


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Originally Posted by mahlere View Post
ps...it's a money losing price...
It is, you have to triple an employees wage to cover everything and have him make you a profit.

And that in itself will scare the general public.

The way I am seeing this, these people have to write checks more regularly then normal as they will be paying all materials COD, not getting the discounts, hence me not getting any profit of the materials, thus making me an employee as well as my crew, they too become employees of the owners and now since they have 100% control of the job they have no warranty from me.
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Old 12-05-2007, 08:39 PM   #10
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Re: T&m


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Originally Posted by thom View Post
I'm with you. I hate t&m. It's a motivation killer.

I'd walk. If you go down that road now, they own your soul. They will argue about paying you for holding their hands weekends and evenings. They will tell you who to hire and how to schedule. It becomes their job, not yours, but you're on the hook for permits, inspections, and ultimately warranty.

If you need the work and the money, become their contract employee and live with it. Permits in their name, sub-contracts in their name, screw ups out of their pocket. Don't let them do you both ways.

The job was scheduled and let's be honest, ICF work is something that takes a fair bit of time to put together, so yes I want the job since the next one ready to go is not until March.

Realize I am a contract type employee and I am only staying for foundation, walls, floor and roof. Anything beyond that they are on their own. Permit is in their name. Because of what I do, I have no subs beyond concrete, pump truck and crane. At this point I will give them the contact # and they can deal with it themselves.

But with this scenario I don't believe I need to carry GL or warranty and I am even thinking they need WC coverage for the crew.
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Old 12-05-2007, 08:56 PM   #11
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Re: T&m


I know guys who only work T & M and do great. I offer it as an option. The jobs that have been T & M were winners. Easy money, no worries.
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Old 12-05-2007, 11:24 PM   #12
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Re: T&m


The last T&M job I did went all wrong. I haven't looked for a repeat. The main issue is control. Are you going to retain control or give it away.

If you have to have this job, maybe you can negotiate enough to keep it profitable. You might agree but stipulate a minimum phone fee, paid travel time, shopping time. A lot of T&M guys show up at the job, make a material list, then head to the store (at least twice a day). There's always a way to make it work if you have to. Just be sure to talk it over & get it in writing.

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Old 12-06-2007, 05:40 PM   #13
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Re: T&m


I can't understand your point about not carrying insurance. If I, as a subcontractor, work for a builder for T&M, I still have to warranty my work, carry liability and workmens comp. etc. I'm still the expert in my work, and I'm still writing the checks for my crew. It's irrelevant how you and the homeowner decide what he owes you. It has nothing to do with your contractor status, merely a way to calculate the $
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Old 12-06-2007, 11:50 PM   #14
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Re: T&m


T&M
Time and material helps to expedite a project, no time is needed to estimate a job, a ball park can be used or the ever so popular square foot price. As the general you are still assuming all responsibility and deliver scheduled completion dates, just as you would if you were working at a bid price. The difference is that the chance for error in the bidding process has been removed. The bidding error could go either way. This is very beneficial for the both the contractor and the customer as they are in a win-win situation. The customer gets what they paid for and the contractor gets what he is asking.
For all those guys who ask, how much a square foot should they charge should consider this option, that way they can gather the information it takes to determine what a project really costs……
For those worried about losing control....likely did not have it in the first place.

Last edited by woodmagman; 12-06-2007 at 11:56 PM.
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Old 12-07-2007, 12:16 AM   #15
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Re: T&m


Quote:
Originally Posted by Chris Johnson View Post
<snip>my bid is acceptable but to try and save money they are wanting to pay me T&M.
Why are you even considering this? Is this your business model? Is this how you normally sell your services?

Accommodating a client is one thing, but being the butt of their experimentation in economics and money management is another. Are they going to pay you in barter bills or empty wine bottles as well?

Are they willing to pay for you to rework your proposal to break out materials and supplies and pay you your normal and customary overhead and profit on these items, or would they like you to pass your price along to them with no handling, overhead or profit attached?

Who's watch do we use and how will time be kept on this job? Will you have to submit a time card to them on a weekly basis? What happens and how will you be paid if there are circumstances beyond your control with timely delivery or acceptability of materials and supplies? What about the needs for overtime and possibly weekend/holiday work? Do you get double or triple time for that?

Again I ask you, why are you even considering this? Is this your business model? Is this how you normally sell your services?

My thoughts are this, at this time, I would not be inclined to change my standards of doing business, nor would I be inclined to discuss this matter without firm answers to the above and about 600 more questions in the form of a contract for my consideration, drafted at their expense.

In other words, I ain't up for it.
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Old 12-07-2007, 12:29 AM   #16
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Re: T&m


a neighbor came me to install his 12 new vinyl retrofit windows. i quoted him $25 per hour (years ago) or $100 per window. he chose $100 per window because he didn't want to get into a long drawn out project. at the end of a 12 hour day i was done and he paid me $1,200 cash.
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Old 12-07-2007, 02:04 AM   #17
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Re: T&m


Quote:
Originally Posted by Double-A View Post
Why are you even considering this? Is this your business model? Is this how you normally sell your services?

Accommodating a client is one thing, but being the butt of their experimentation in economics and money management is another. Are they going to pay you in barter bills or empty wine bottles as well?

Are they willing to pay for you to rework your proposal to break out materials and supplies and pay you your normal and customary overhead and profit on these items, or would they like you to pass your price along to them with no handling, overhead or profit attached?

Who's watch do we use and how will time be kept on this job? Will you have to submit a time card to them on a weekly basis? What happens and how will you be paid if there are circumstances beyond your control with timely delivery or acceptability of materials and supplies? What about the needs for overtime and possibly weekend/holiday work? Do you get double or triple time for that?

Again I ask you, why are you even considering this? Is this your business model? Is this how you normally sell your services?

My thoughts are this, at this time, I would not be inclined to change my standards of doing business, nor would I be inclined to discuss this matter without firm answers to the above and about 600 more questions in the form of a contract for my consideration, drafted at their expense.

In other words, I ain't up for it.

See, that's what I was waiting for...Thank you
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Old 12-07-2007, 09:18 AM   #18
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Re: T&m


I am not advocating T.M. As a general contractor is would be impossible for me to supply a fixed, however as a general contractor I would be guaranteed my estimating was correct, my profit margins where correct, my material was paid for and nothing was missed.
The popular misconception is that it would not cost the owner more is misguided. The average contractor would loss less.
The most profitable service businesses are plumbing and electrical…….They are profitable because of time and material…..and they deserve to be complimented.
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Old 12-07-2007, 10:10 AM   #19
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Re: T&m


I love T & M. It's a no-brainer. You can't possibly lose. The consumer knows exactly what they're getting. As long as the contractor in an ethical/qualified business, it's the "fairest" way to go, IMHO.

Just make certain you have all your costs/ovrhd figured in properly.

I would agree that quite often it cost the consumer more going the T&M route, as opposed to "hard-bid". It can also save the consumer, as the contractor doesn't have to allow for potential unknowns, so-to-speak.
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Old 12-07-2007, 10:32 AM   #20
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Re: T&m


I'm not sure the point of the OP was to debate the merits of T&M, but rather to point out how its not his way of doing business, and his client's were aware of this from the start, but now they are coercing him to use T&M on this one project so they can save some money on a bid they already found acceptable.

T&M has its place as a business model, so does bid work, but changing horses in the middle of the stream? Someone's feet are going to get wet.

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