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Discussion Starter · #1 ·
Guy lives in a nice neighborhood in a house that Zillows for about $1.4M. Was referred to the wife by a decorator I know.

They wanted a master bath remodel that included new windows, a steam shower, and a heated floor. I estimated the job cost-plus and got to a price of roughly $62K (excluding all key materials such as tile, cabinets and lighting which were all coming from the designer.)

I was way low. I told the customer I thought the job would take a month, and right now I'm starting month four (but getting close to the end.)

My key sub -- who's did all the demo, all the framing, the windows, and the tiling is great, but way slower than he's been in the past.

Up to this point, I was able to get the customer to make weekly payments and now his total of payments is roughly at estimate. Trouble is, my new estimate is now $90K. I can pin about $8K on spec changes, but the rest is really based on my low labor estimate.

Not sure what to do. Client wants me to eat all commission, but I really think I should make some money on this job. A cost plus estimate is not a guarantee after all.
 

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The problem is that you initially quoted 62k....

Cost plus/ T&M jobs often times come with a not too exceed number. If you knew you were way low you should have had a conversation with the owner early on advising them.

Is your sub slow on this job because he is working by the hour?

I have done very well on these types of jobs....but as I have said before they are not for everybody.
 

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The problem is that you initially quoted 62k....

Cost plus/ T&M jobs often times come with a not too exceed number. If you knew you were way low you should have had a conversation with the owner early on advising them.

Is your sub slow on this job because he is working by the hour?

I have done very well on these types of jobs....but as I have said before they are not for everybody.


Griz, I thought T and M was illegal in Cali?
 

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Thanks so much for the replies. I do pay this sub by the hour.

You just pin pointed part of your problem..... also 4 was too short of a duration on a $60,000 bathroom..... Not that the work couldn't be done, just from experience the designer and homeowner slow things down significantly.
 

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Just the simple word, "Designer", doubles the cost and triples the time. Then you throw in continuing and ongoing collaboration and revising between the Designer and the Homeowner.... ?
 

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Just the simple word, "Designer", doubles the cost and triples the time. Then you throw in continuing and ongoing collaboration and revising between the Designer and the Homeowner.... ?
Oh man you are right on the money there!

Those sneaky designers get PAID to talk, PAID to shop and PAID to cause us problems.

I am not sure I could handle another large project that was evolving by the home owner and designer while being constructed.


To the OP it does seem a little bit of a lessen. Never pay a sub by the hour. Almost sounds to me you have a guy that you 'employ' but use the word 'sub'.
 

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Griz, I thought T and M was illegal in Cali?
Straight from the CSLB: Time and Material Contracts Not Legal for Home Improvement.

It hasn't always been that way; you can do it with new construction and commercial of course; some contractors and customers who have continuing great relationships still do it that way of course.

The poster's situation is the specific classic screwup that California law is meant to prevent. The incentives to underestimate the job are too strong, even for contractors with the best of intentions.

As Griz says, they're not for everybody. I'd probably go further and say they're not for most people. You must have a very good idea of costs, your execution must be outstanding, and you must have a zero-BS relationship with the owner. If you're lacking any of those, there will come a moment.

Edit: Friday lunchtime on C.T. is over. Gotta run and tell a customer why it's going to cost more to repair his DIY mess than it would have cost to pay us to do it right in the first place.
 

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Straight from the CSLB: Time and Material Contracts Not Legal for Home Improvement.

It hasn't always been that way; you can do it with new construction and commercial of course; some contractors and customers who have continuing great relationships still do it that way of course.

The poster's situation is the specific classic screwup that California law is meant to prevent. The incentives to underestimate the job are too strong, even for contractors with the best of intentions.

As Griz says, they're not for everybody. I'd probably go further and say they're not for most people. You must have a very good idea of costs, your execution must be outstanding, and you must have a zero-BS relationship with the owner. If you're lacking any of those, there will come a moment.
Edit: His edit nullifies my comment.
 

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Discussion Starter · #12 ·
Thankfully I do not live in California (I'm in Colorado) and T&M is fine here.

You're all right-on with respect to the designer. In this case, while the designer was consulting with the client, my own contract was with the homeowner.

What I'm seeking here is a consensus on whether, in light of what's happened, it's fair for the client to ask that I eat my entire commission. Thanks in advance,

George
 

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Thankfully I do not live in California (I'm in Colorado) and T&M is fine here.

You're all right-on with respect to the designer. In this case, while the designer was consulting with the client, my own contract was with the homeowner.

What I'm seeking here is a consensus on whether, in light of what's happened, it's fair for the client to ask that I eat my entire commission. Thanks in advance,

George
Not fair, but probably what's going to happen.
 

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Ok, something is not adding up here.

tile, cabinets and lighting which were all coming from the designer.

You said was ABOVE your initial cost of 62k??

And you did say Remodel not Addition correct?

Plus you are able to get 'about 8k' from change orders?

And you want 20k more? For what??

Trust me in the fact that I am all for us as contractors getting our due and making a living but on the surface this just is not adding up to me.

Don't take it as heat towards you but in my estimation of what I have seen to this point...if you haven't made money at this point, no amount he adds on is going to do so.
 

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Ok, something is not adding up here.

tile, cabinets and lighting which were all coming from the designer.

You said was ABOVE your initial cost of 62k??

And you did say Remodel not Addition correct?

Plus you are able to get 'about 8k' from change orders?

And you want 20k more? For what??

Trust me in the fact that I am all for us as contractors getting our due and making a living but on the surface this just is not adding up to me.

Don't take it as heat towards you but in my estimation of what I have seen to this point...if you haven't made money at this point, no amount he adds on is going to do so.






Second
 

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Discussion Starter · #18 ·
Thanks again for all the inputs. The net number for the bathroom was $53K (there was a $9K floor refinish in the family room included in the estimate which was on budget). I should have netted the number down for this forum. My error. In answer to the excellent question "for what??" my answer is that my sub has just in been in there way longer than he or I expected. I'd consider changing him out, but I think we're inside of 14 days to completion.
 

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I have a lot to say, but will keep it short.

Your more than a third over budget, excluding 8k from the clients changes. Unless there is more to the story, that is a big screw up. Either your not on top of your sub or he is milking the project.

In the light you have cast, to me it is fair to eat the commission. UNLESS, you have an unknowns clause and there were a lot of unknowns.
 

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A month for a $62k remodel not incl tile, fixt's etc? And working with a designer?
Is this your first time doing this or are the wallpapering with $100 bills.

Maybe 4 months not 4 weeks and not $62k

What does the value of the house have to do with anything?

Sounds like the whole job is wrong from the start and you are in way over your head.
 
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