A guide for homeowners doing renovations.

Specifically - Hiring Contractors, How to Save Money and Disaster Prevention.

Showing posts with label Money Savers. Show all posts
Showing posts with label Money Savers. Show all posts

HOW TO COMPARE QUOTES!

If you're like every homeowner, you probably think that you need to get 3 quotes and decide from there.
I'm here to tell you that you're going to have a really hard time deciding accurately between all the quotes.  They're NEVER apples to apples.   In fact, it's more like comparing apples to grapes to watermelons.


Defining some terms

  • Quotes are NOT Estimates.  Know the difference and we've explained them here.
  • Allowances:  Is a sum of money or "budget" included with a bid to allow for the purchase of materials, fixtures or some other aspect that may be uncertain at the point in time of the bid submission.  Generally, in a perfect world, all allowances across all quotes should be the same but never are.
  • Quotes can be define as a "fixed" amount, therefore you should know the context.  Contexts can be from "lump sum", "cost by unit of measure -( ie: hourly rate or cost per sq.ft.)" and "fixed cost of labour" AKA "Quote on Labour".
  • Draw Schedule:  Is an schedule of payments you issues to your contractor, usually at a stage of completion or after a certain amount of time.  They are sometimes regular or irregular time frames.
  • Holdbacks: Withholding amount that you keep until the job is completed.  This is usually 10% of the job.
  • Deposit: Can range in terms of the size of the job.  This in some cases may be non-refundable if it's towards securing a schedule.  Deposits are a whole topic I will write an article on eventually.

Steps towards deciding on a quote

  1. Your first step for getting quotes is to identify the scope for your contractors to bid on.  The only best way for you to accomplish this is getting a set of plans for each contractor to quote on.
  2. The next step is to ensure that the project schedule is roughly the same across each quote.  What I mean by this is it needs to be able to be evaluated so that you can tell if you are paying a premium on the speed or a discount because it may take longer for example.  Example: 1 worker taking 4 weeks vs 4 workers taking 1 week.  Even though these add up to the same, they influence contractors risk assessment and scheduling difficulties.  The later scenario might be padded for overtime for example which could be unfair to you if your schedule is flexible OR it might be simply a factor for helping to make a decision.
  3. Now you need to do a little bit of homework.  Actually a lot.  You need to read this article on getting "smart quoted".   Ten minutes of reading might save you thousands of dollars.  
  4. Convert each quote to not include the "allowances".   You'll have to subtract the allowance amounts off of each.  Also, if you notice a big discrepancy on the allowance amounts then you might be getting "smart" quoted.  It might be a good idea to try and get a "budget" for allowances.
  5. The next few things you'll need to do are all things that you weigh according to what you're after.  Warranty.  Safety.  "The Basics".  Ideally, each quote should include the basics and you can use "finding a contractor you can trust" as another resource or way to help you make a final decision.
By the time you've gone through those 5 steps, you should have a pretty good idea of which contractor to choose from.  

The important thing to remember is try and put the quotes in the same terms, then see where the extra value is - or lack thereof!


I hope that helps you!

Cheers!


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STARTING A RENOVATION - THE FIRST STEP

This is a giant money saver if I ever heard one.  So you might have ideas and a budget for your renovation - now what?  There's so much bad information out there it's no wonder there's a problem with the industry.

If it's a big job involving lots of trades, then option "A" is by far your best answer.
If it's a deck for example, a designer is your next best option.

Option:"A"

Multi-Trades Involved Or Large Size/Scope

Hire a General Renovation Contractor first, who works with a Designer(BTW, Not an Architect or Engineer). 

Option: "B" (Not as good)

Not as good: find a designer (or worse yet on the wallet: an architect, engineer), get drawings, then find a contractor who will agree to follow them

DO

  1. Research contract types:  "Fixed Price",  "Unit Price" & "Cost Plus" for example and understand which one you should use.
  2. Research General Contractors in your area for "The Basics" and read "How To Find A Contractor You Can Trust"
  3. Get an idea of how much designers typically cost - but don't hire them unless you're doing Option 2 above.  It's sometimes best to let your contractor pick the designer so you have an option to hire one that has one "in house" 

DON'T


  1. Don't get an estimate period - it's just a good way to have false information.  
  2. Don't waste/frustrate contractors with back and forths with estimates or quotes when they don't have the job or plans.
  3. Don't get quotes UNLESS the job is a NOT multi-trade and you're hiring for say doing a deck structure.


If you found this helpful, please "like" or "share" or leave a comment below.


Cheers!

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THE BASICS - CRITERIA YOU SHOULD LOOK FOR IN A CONTRACTOR

Literally whoever you hire, should have these basic requirements.  I mean, it's no wonder sometimes people get burned because this sort of criteria or lack thereof is a flag and, no offense, but if you did your homework, your chances of having a blown up project starts to go down.


"The Basics" Criteria



  • Insured
  • Bonded (Only commercial or bigger jobs like general contracting a home)
  • Writes a clear contract
  • Writes a clear pricing agreement
  • Asks for a reasonable deposit
  • Has a verifiable licence.  Red-Seal.  Don't over weigh experience, diversity counts for a lot.
  • Safety Record
Now there's a whole customer service basket you should look for too, but you only learn that after meeting with them.

Why isn't WorkSafe Coverage included in the basics?  Well it is but it matters more that they safe and the coverage clearance letter should be checked before the job starts.  This is a thing that depends a lot on the scale of the job and some trades - especially sub trades might not have WorkSafe because the general has agreed to pay for it.

"Extras" Criteria you should use to make your hiring decision

  • Check reviews.  The problem with this is that someone can have their friends and family all give them 5 star reviews.  Also, quite often the reviews won't be consolidated on one platform or they are repeated over several platforms.  Some reviewers are more harsh than others.
  • Check Relevant Experience.  There are major pitfalls with experience checks.  I'll list them in another article.  The point is, you need to make sure they are diverse, knowledge and experts.  Having done one kind of job doesn't mean they can't do another kind and vice versa.
  • Cost - but more importantly trust.  Don't get smart quoted.
  • Quality, 
  • Value,
  • Availability, 
  • Project Duration/Scheduling


Basically, make sure they have the basics, and check the big picture on the extras.  If they don't have the basics, that's a red flag!


If you liked this post, please like it and share!

Cheers!


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KNOW THE DIFFERENCE BETWEEN QUOTES vs ESTIMATES?

QUOTES ARE NOT ESTIMATES!  YOU LOSE MONEY ON ESTIMATES!

It really drives me crazy sometimes when I hear "professionals" treat quotes like estimates or vice-versa; so much so, I decided to write about it.

What is a QUOTE?

A quote is a "fixed" price contract.  This essentially means, you can write me a check for the amount of my quote before I start the job.  Once the job is completed, you could give me the check without having to re-write it.

If I give you a quote, I take ALL the risk if something goes wrong during the scope of work as stated in the quote.  Sometimes, there may be clauses to mitigate certain risks.  For instance, I might put things in the quote like "not liable for damage to sprinkler heads".  Quotes can be high risk for certain kinds of jobs.

So what's an ESTIMATE?

An estimate is a flexible price.  It's purely a guess at the costs a project entails and ultimately you could pay more or less than an estimate when the job is completed.  One major thing to note, there's absolutely nothing to fall back on to determine what's actually going to be charged.  Some might say "customer service" is the only thing that you as a client has as leverage.  Quite often estimates create conflict between contractors and homeowners who use the terms quotes and estimates interchangeably.


In Summary:

Complicated, unpredictable jobs should never use estimates or quotes for the contract. (There are other more appropriate contracts out there).

Jobs like a framing a deck or doing a foundation are jobs that can be quoted as there are specs/drawings that show all the necessary information.

Estimates should never be used for "the contract" but instead for determining a "budget" where your actual contract should be "time & materials" or a "mark up".

Cheers!



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7 TIPS ON HOW TO GET THE BEST PRICE ON ANY RENOVATION!

TRY USING THESE TIPS ON YOUR NEXT RENOVATION TO GET A BETTER PRICE FROM YOUR CONTRACTOR!

These are all very important, and whether you like it or not, you're paying for these things in some way. 

TIP #7 - Give your contractor ample notice and freedom of schedule.  

You catch more bees with honey so they say...
"Be Nice".

The more available the project is as filler, the more likelihood overtime will not need to be paid AND the more the schedule can be more easily filled up to keep crews busy(sometimes an added perk).  At the same time, you need to COMMIT to the job way ahead of time.  Jobs that come up in peek demand get quoted high if the schedule is too full.


TIP #6 - Don't offer or say you're going to do some of the work yourself.  

Contractors don't want to work with DIYers.  If a DIYer wants to even paint or do demo themselves, that means I need to pad MORE for delays in scheduling, excessive demo work.  I might have higher standards than you and I have to put my name on it.  How can I warranty your work?  Also, in some cases, I need to start dissecting things more thoroughly since some jobs have the profit divide up to sub-scopes and if you're doing part of the work, well now I need to know how much that in theory should take off.  This is a whole lot of work, especially if we are trying to make changes with square footage rates.



TIP #5 - Don't pick your contractors sub-trades for them. 

Quite often I'll have regretted not spending the extra time vetting a client's own "go-to" and in hindsight, a lesson learned is I should add minimal padding if they request to use someone I'm unfamiliar with for warranty, liability, & double/triple checks for QC.



TIP #4 - I've said it before and I'll say it again.  Get drawings.  


I do cheap, to scale drawings if not for the permit, for communication purposes and also as a record to sign off on so that we are in agreement on spec.  This is guaranteed to save you and your contractor money from better communication and organization.  This increases my margins without charging you extra.


TIP #3 - It's ok to change your mind.  


The thing is, some jobs it's expected and some it isn't.  Make sure your contract reflects the kind of job that is being done.  Bathrooms, Kitchens & Additions all are prone to mind changing and the contract should clearly and easily reflect that.  Don't get "Smart Quoted."


TIP #2 - If you've chosen to get your blueprints drawn up without consulting your contractor, make sure your contractor likes them.


There's sometimes cases where I've saved my client lots of money because we deviated from the plans to the way I know how to build better.  Not only that, sometimes, people are accustomed to the hard way or old way.


TIP #1 - Be nice to your contractor.  


It's way more likely your contractor will go above and beyond if you've treated them well.  There's been a lot of cases where I could have and should have charged as per our agreement but I gave them a deal!


BONUS: If your contractor is given you a price...don't do these


  • Use prices from other contractors as leverage saying "he'll do it for less"  - this annihilates #1 advantage.
  • Say right off the bat, you're getting other quotes. - This turns the opportunity into a "smart-quote" environment.  This is really bad for your budget!!
  • Ask for line item break downs.  This smells of "price-checker" free consulting.
Any of the above and you become hard to bargain with and ultimately I need to charge more for spending more non-billable time on paperwork and math than I should.  Or I think there's no money to be made here and I quote high for safety and move on.



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ABOUT TO START A BATHROOM, KITCHEN, OR LARGE RENO? YOU NEED TO READ THIS.

It's not enough that you can trust them(ie: your contractor)  which is why I think this article will save you thousands of dollars.  It's applicable to all combinations of renovations involving bathrooms, kitchens or multiple trades.  Any time you're selecting from materials or look to make changes "on the fly".

Let's start with a given project...say a bathroom renovation - because they're among the 
worst!  


Take your time, work with your contractor on a budget and a plan.

Introduction

THE PROBLEM


The first question you're going to ask yourself is:  


On average, how much does a bathroom renovation cost?  


You'd probably ask the same thing if it were a kitchen, garage, addition or house.

It's next to impossible to answer.  I've done a lot of bathrooms and they're all different - but that's only part of the problem.


"It's not like picking a car with features to select from, bathrooms are more like picking vehicle parts and seeing what kind of vehicle you can get."

Make sure you have a budget
AND plans.

SO WHY IS THIS A PROBLEM?


The problem is there are TOO MANY VARIABLES


 Contractors can't predict:

  1. What is in the walls 
  2. If "Smoke & Mirrors" by a previous owner/contractor was used to do terrible work
  3. If you are going to want to change your mind and when.
  4. What it is YOU want unless they spend a ton of time with you. 


To mitigate this we use what's called "padding" on our quotes to cover contingency funds.  This is standard. 

HOWEVER, with bathrooms and other multi-trade projects, this isn't ideal.  If you add all the padding up and it to your costs, then the price, or quote, might not be competitive compared to contractors who are using proper methods.  

AND

If you do think you are getting a good price, you are likely getting "Smart Quoted".  

If you aren't getting "smart quoted" and you trust your contractor, then it's only a matter of time before the quoting will catch up with them.  Arguments, tension and unpleasantness will ultimately be associate with your reno.  Unless you're really lucky or they are really lucky.


Why quoting is a terrible idea

Bathrooms and other multi-trade projects are prone to problems and none of them you're going to be able to mitigate.

  • They use up contingency funds (unless you're lucky)
  • Multi-trade jobs are highly susceptible to trade cost fluctuations
  • They are prone to having warranty issues.
  • Price creeping happens with the selection of fixtures and materials.
  • Don't scale well.
  • Therefore, are extremely prone to going over-budget
I would say you have a 90% chance of going over your budget! 

OR not getting what you want. OR not getting your job finished and that's if you hire a contractor.  It will be even worse for YOU if they smart quoted you or if you decided to do the project management yourself.  

Problematic Scenarios


Part of the problem is if you want to change your mind on the fly(maybe you see a deal) on a counter top or floor (or whatever it may be).  This is when it will hit you and discover that you should have done more research.  You'll realize that things get messy fast.  And your contractor is going to put up a resistance to any changes that are expensive OR they will be thrilled that they charged you a change-order hourly rate - better hope it was low! (hint: it never is because change orders are also inefficient)


Now, let's talk about project management.  
There's 5 scenarios you will have to choose from.


Scenario 1 
General Contractor Provides You With a Quote

We just went over it. You're going to be over budget or bad things are very likely to happen.

Scenario 2
Sit down, have a chat, and discuss your ideas.
Check if you and them are a good fit.
General Contractor Provides You With a Proper Contract

You know how to price shop and compare apples to apples. (A different article)

Scenario 3
The Sub-Trade General Contracts
And sometimes they'll share that burden with you - that's worse.

You get the plumber or the HVAC guy or the electrician to project manage.  This is bad for you.
It's bad for scheduling, it's bad for the warranties that might come up later, it's bad for quality control and most of all, it's bad for your budget.  It's all of THEM vs YOU.  Let me ask you this.  Does the electrician know or care about what counter tops you are going to chose?  Or how waterproof your bathroom floor needs to be?  Are they going to care how much another trade is going to cost? Probably not as long as they get paid first.  Construction phases overlapping and re-work are going to be prone.  This is very bad for you!  Even if you trust them, and they trust each other.  It only goes well until something goes wrong, once.

Scenario 4
You hire the carpenter

This is your next best option.  It's not ideal, but the good news is: you're probably going to get your bathroom completed.  Budget, warranty and scheduling are all going to be iffy though.  A well rounded carpenter is the only trade that's going to be able to salvage a mess but depending on your contract it could cost you or them.


Scenario 5
You are the General Contractor

Don't ever try and project manage a bathroom yourself unless:
 (and i stress that you shouldn't)

  1.  It's your bathroom.
  2.  You have deep pockets.
  3.  You have a lot of time
  4.  You don't care about warranty
  5.  You are well connected.  (this is dangerous because you might be falling into scenario 3)
  6.  You are a carpenter.
  7.  You aren't doing much for upgrades.
  8.  You have a bail-out plan.


Follow this simple checklist of tips




  • If they give you a quote, that's a flag- you're being smart quoted or one/both parties are going to be unhappy.
  • If they are sub-trades other than MAYBE a Carpenter. that's a flag.
  • If they aren't doing a budget, that's a huge flag.
  • If they are cheap - might be a bad choice. (check if we have an article on finding the best prices)
  • Finally, if you DON'T have ONE CONTRACT for the whole job, you need to find someone else.
Thanks for reading and I wish you luck!
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THE "SMART QUOTE" TRAP

I've coined it the "Smart Quote".


In its simplest terms: "a quote that is designed to fool you". 

I've learned that some people call it "bid low, invoice high" which in their mind, they are "out-smarting" their competition at the cost of deceiving their customers intentionally or not.

Here's how it works and how you can tell if you might be getting smart quoted.


Let's say you are getting your bathroom renovated and you've gotten some quotes.  We'll say you have 3 quotes to select from.  (By the way, you shouldn't be getting quotes on bathrooms, I'll be writing another article on why)


Scenario "A" is the lowest quote.  "B" is the middle & "C" is the highest quote.  Most people toss away the "C" quote and decide between "A" & "B".  We won't get into how to choose the best quote.  For the sake of the argument, we'll say "A" & "B" are the two you're going to seriously consider.

Now we will use a job scope which is designed to make the point.

  • Replace the bathtub & shower unit
  • Replace a toilet.
  • Replace a vanity.
Now in the world of residential construction, the paperwork is a big indicator on the vulnerability of homeowners.

If the job scope items aren't specified, you're at higher risk of getting "smart quoted".

Contractor "A" says $4,000 (and I'm just throwing numbers at this)
Contractor "B" says $5,000.
Contractor "C" says $6,000.

Contractor "A" says to make changes, then the hourly rate factors in at $150/hr (again throwing numbers at this)

Contractor "B" doesn't say anything about if you want to change your mind AND you think you know what you want.  They, however, throw something in called an allowance though. The allowance schedule shows a breakdown of each fixture and how much they will cost, but if you want to change the fixture and it's more or less then the actual amount you pay is adjusted accordingly.
- "Some people call that clever, 
some call it strategic bidding. 
I think it's deceiving."

You chose an option and here's what happens.

The job has started.  The vanity has been purchased and installed and the tub/shower is on order.  A toilet is brought in and then the plumber says the drain is too close to the vanity or won't fit.  Now what.  We need to replace the vanity(but the contractor doesn't want to pay for a custom vanity OR move the drain.  If you decided to project manage yourself, you're in big trouble.

If you chose contractor "B"... They knew the drain was going to need to be moved but didn't include it in their price.  Despite you not know their hourly rate, they say it's going to cost $1,000 to move the toilet at $100/hr for 10 hours.

If you chose contractor "A"... well they predicted the drain was going to need to be moved, inflated their hourly rate to compensate for their lower price and didn't include it in the scope of work.  They told you their umbrella hourly rate and unless you want things to go sour right now, you need to pay: 10 hours at $150 = 1500 extra.  Some people call that clever, some strategic bidding, I think it's
deceiving.

So updated new "out of pocket" amounts are:

"A" $5,500
"B" $6,000
"C" $6,000

Now that the floors have been jack-hammered, there's a small amount of flooring that needs to be replaced.

Both "A" and "B" didn't reflect that in the job scope and you end up paying $1,000 more for the new bathroom floor.

Updated "out of pocket" amounts:

"A" $6,500
"B" $7,500
"C" $6,000

Now you're going to love this, it's not over!  The biggest part and easiest to control is allowances. Windows are bad for this.

The tub/shower unit shows up and guess what, it's so shallow you can barely get water on you after you fill it or it's uncomfortable, hard to clean, etc etc etc... You want to return it.

Well, contractor "A" says again, to replace this is going to cost $150/hour (say 5hrs) to change the valve accordingly and you need to wait 3-6 mores weeks for the new one to arrive but nothing was said about the cost to upgrade it.  Your contractor refuses to pay for the upgrade. (+ $250)  But now there's tension and conflict and the job isn't even finished because trim, drywall and paint still needs to get done.

Contractor "B" says, ok, $100/hr to replace the valve and the upgrade is reflected in your allowance so you'll have to pay more in this case as that was the deal.  It's not messy, just it costs more.

New updated "out of pocket" amounts are:

"A" $7,500
"B" $8,000
"C" $6,000
Bathroom
The intention is not necessarily to deceive the homeowner, but instead, just to win the bid against cut-throat competition and tradespeople working out of their truck.

At this point you realize you've been "smart-quoted".  Options "A" & "B" ARE going to get out of hand and option "C" might have been the right choice (in this case).

Option "C" is the more attractive quote! 

HOWEVER, this is still terrible for bathrooms and you're going to be disappointed!

Learn why Contractor "D"(the option you never knew you had) is the right choice for bathrooms in another article.

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Our Moto

Get more knowledge. Get better. Keep an open mind. Tactfully debate what you think is incorrect and together we can learn the best procedure, product or building philosophy.

8 STEPS FOR STARTING YOUR RENO

  1. Decide on a project priority
  2. Find some features you like
  3. Research the kind of contractor you need
  4. Research the kind of plan maker you need
  5. Consider finding & including a contractor in the designs for big projects
  6. Develop a budget from the concept designs
  7. Tweak your concept and budget until it's affordable
  8. Continue saving for more contingency until the project is ready to start!

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