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Discussion Starter · #1 ·
I am a builder working on a higher end, new construction home. I am looking for ways to handle mark ups on change work orders for materials being purchased by the homeowner? We normally add on 20% for materials on change work orders (The contract just states that all change work orders must be approved of in writing). We are crediting homeowners for certain items on contract and they are purchasing their own much more expensive tile, subzero appliances, lighting fixtures, kitchen cabinets (they are not giving us their cost). They are having a hard time understanding that we do have to add on some kind of mark up on materials even if they purchase them, we will be responsible for these more expensive materials. Has anyone here had a similar experience?
 

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DeanDeMar said:
I am a builder working on a higher end, new construction home. I am looking for ways to handle mark ups on change work orders for materials being purchased by the homeowner? We normally add on 20% for materials on change work orders (The contract just states that all change work orders must be approved of in writing). We are crediting homeowners for certain items on contract and they are purchasing their own much more expensive tile, subzero appliances, lighting fixtures, kitchen cabinets (they are not giving us their cost). They are having a hard time understanding that we do have to add on some kind of mark up on materials even if they purchase them, we will be responsible for these more expensive materials. Has anyone here had a similar experience?
No warranty whatsoever from you on the items they supply, for starters. They need to understand this.

Sounds like they're being ass hats as well. That's unacceptable. You need to get control of your scene. Hopefully at least you're only crediting back the cost of the items and not the markup as well. Guess it depends on your contract, or on how able you are to exert your will on the situation.

That's a bad road to go down, letting owners buy the tile. Inevitably they will order off of your figures but somehow come up six pieces short of bullnose, and that bullnose will have been bought at a close out sale, and it will fall to you to spend all day on the phone trying to find any more, and you will find that it can only be shipped from Portugal after the local tile maker gets back from his three week vacation and makes some and it's $65.00 apiece plus shipping and on and on....

And that's just the tile.

Been there, done that.

Good luck.
 

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Discussion Starter · #3 ·
Thanks for your reply . Clients actually hired a designer about a month into project and has yet to catch up on project . They are doing the purchasing of tile and light fixtures for owners . Again my concern is once material is delivered to site it will be our responsibility to inventory , check for damages , shortages store and install . If some damage occurs while in our possession they we are eating the cost therefore we typically include a gc cost of 15-20% whether we purchase the material or not . It's a liability and as the builder were always the one they point a finger at . And yes no warranty if we didn't purchase material . Anyone deal with this differently ?
 

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This is somewhat the norm here.
For tiles as an example, in our price there is a margin figured for the tile, let's say 2bucks a sq. ft.
If the clients decide to buy the tile, other than assuming all responsibilities, we add on all costs associated with putting the tiles on site, many a times I left the their tiles on the truck because they refused to pay to unload them,
Many start off trying to save a few dollars only in the end it costs them more, and they have no guarantee.
 

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I am a builder working on a higher end, new construction home. I am looking for ways to handle mark ups on change work orders for materials being purchased by the homeowner? We normally add on 20% for materials on change work orders (The contract just states that all change work orders must be approved of in writing). We are crediting homeowners for certain items on contract and they are purchasing their own much more expensive tile, subzero appliances, lighting fixtures, kitchen cabinets (they are not giving us their cost). They are having a hard time understanding that we do have to add on some kind of mark up on materials even if they purchase them, we will be responsible for these more expensive materials. Has anyone here had a similar experience?
Add 20% to the installation cost, and let them know if something is missing parts, need to be exchanged, or replaced down the road, there will be additional charges for labor to remove it and re-install, not excluding extra charges if items need to be picked up or taken to be exchanged by you.
 
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