So the Home Show was fun/interesting. I met with a ton of Home Owners, most of whom were surprisingly prepared (they brought their Architect's drawings/pictures/etc)...I suppose that's a testament to BILD's "Destination Renovation" booth's popularity.
One Home Owner stuck out more than the others and I want to talk about this because her dilemma is not unfamiliar. She basically came up, sat down and placed drawings from her Architect on the table, looked at me...then sighed. After enough years in this business, I recognize the cues...I knew where this was going before she said a word. So for those of you whose telepathy is not as fine tuned, this is her story in brief:
-She went to an Architect to draw up some renovations to her home.
-The Architect she chose mainly designed commercial spaces.
-The drawings complete, she set out to find a contractor and receive bids.
-She hit a wall...kind of.
Nobody was going to properly bid on the job without a financial commitment from her up-front. With a budget of $500,000, she wanted an assurance from the contractor that they would stay within that budget...without paying for pre-construction services.
This strikes a deep cord with me, I knew exactly what she was going through...it happens all too often and there is no simple solution/answer. For her part, she doesn't want to pay just to have contractors bid on the job...which is fair enough. Considering that she is entertaining bids from 2-4 Contractors, paying each one for pre-construction services doesn't make any sense.
Now I don't want to make a sales pitch here, but that's exactly why we do what we do, how we do it at Nostco Construction. Because Home Owners are stepping outside their field of expertise and riding off into the journey of making considerable and costly renovations to their home...and nobody is there to assist and advise them along the way.
She did what most reasonable people do...start off by going to an Architect. Now, there are other options. For example, she could have gone to a Design/Build company instead and that would have probably saved her a ton of headache...but she didn't, so let's not dwell on the "ifs".
Her first mistake was choosing an Architect that did not specialize in Residential construction, instead she went to an Architect who mostly did Commercial design. What's the difference? For starters, the latter breed tend to over design the project from an engineering point of view. Is that generalizing?...yes, but it's also true. They are far more familiar with Commercial code requirements than with Residential and there is a big difference. So they over-design, which ends of adding to the construction cost.
Secondly, they have no clue when it comes to residential construction costs and they are less likely to design for a client's stringent budget, not that half a million dollars for residential is "stringent", but they are normally working on multi million dollar projects and commercial construction costs differ greatly from high end residential costs.
The third item is rather less concrete and completely biased but they also tend to design...well, like how they would design a building's lobby/office and not very "domesticated".
So anyways, here is this very charming woman, who only has the best intentions but now can't find a contractor without shelling out money with no guarantees.
You see, in order to properly bid on a job that large the contractor would have to invest not minutes but days, not hours but weeks...if not months before arriving at a realistic budget. Every detail would have to be sourced out, from suppliers to vendors, to sub-contractors, re-design, permits, zoning, committee of adjustments possibly and the list goes on.
And so her frustration and dilemma. I have seen this a hundred times, and some contractors with questionable character literally prey on such clients. It's no different than going to a Lawyer when you're in a bind (and when else do you go to a lawyer...really)...and happen to be wealthy. The retainer is the worm and hook, what is about to happen could very likely become day-light robbery.
Now, this is usually where we come in. We work on behalf of the client and protect THEIR interests and navigate them through the quagmire. Given her situation, I told her to drop everything she's doing. Find ONE contractor that is reputable and known in the industry for the size of project she wants done. BILD and Renomark are the ideal place to start, those Associations have some of the most professional contractors in the industry and they are the only industry that govern the ethical conduct of their members. Then, check their references and talk or visit with past clients who had similar work done by the contractor. Ensure to question whether the contractor stayed within budget for the project. Then once all of research is done on the contractor and they pass all of the pre-requisite requirements, sit down with them and ask them to bid on your job. Ensure that staying within budget is of paramount importance.
A reputable contractor, will most likely ask for a retainer at this point for pre-construction services. BEFORE you sign, ask them what kind of contracts they offer. A knowledgeable and professional contractor will offer you a variety of contracts to choose from for the post pre-construction services...essentially, the construction services being that it will be broken down into 2 steps. Demand either a Cost-plus-incentive or Project manager-at-risk contract. This protects the client and penalizes the contractor financially for going over budget.
The problem with most contracts (cost-plus, project management) is that the contractor has only his morals/ethics keeping him from driving the initial $500,000 project up to a million and beyond, since the stipulated prior contingency percentage basis is factored off the total cost of the project.
Furthermore, I stressed that she demand financial transparency throughout the project. Some reputable contractors have no problem with that, and a few actually endorse/practice that method exclusively...like us :). We have an "open book" policy and open a segregated bank account for every project. This allows the client to stay on top of all the costs as an added measure.
You see, there is a misconception that you must get 2-5 bids from different contractors ALL THE TIME, for ALL projects, when sometimes...that very attitude/approach is what prevents people from finding the handful of contractors that are qualified to actually perform the job.
It's like going to the bar and having 5 guys buying you drinks, when the one you really want is the guy standing off to the side just watching you set yourself up for a bad night. Now, I'm known for my classic analogies and I used that scenario because she's a woman...not because I'm gay...not that there's anything wrong with that...but I'm not.
But seriously, what decent contractor is going to spend a month pricing out your job...for free? With no guarantee that you will hire them? The answer is...somebody you don't want working on your home.
There is a big difference between "pricing" a job, and breaking down an itemized list that has been fully sourced out, line by line, in detail of exactly what the scope of work entails, what materials are to be used, their availability, etc.etc.. You want to stay within budget? Then you have to completely change your perspective on hiring a contractor.
You would rather make an initial commitment of say...$5000, which you will be reimbursed for by the way if you retain that same company...and spend a month or two going over every detail of what is going into the project with ample time to prepare...than to hang tight to your purse strings for the beginning and watch half a million dollars literally disappear into a white smoke and find yourself in front of a judge, being represented by another possible opportunist, trying to recover some money from a dishonest contractor that you will most likely never see.
Sound harsh? Tell that to the umpteen former clients who came to us AFTER the fallout. It is harsh, and potentially devastating, and it bothers me so I won't be nice about it. One of the things that bothers me the most is seeing good people get hurt, and this woman was a "good person". But bad advice and well meaning naivete could have landed her in a bad place.
I wasn't there to sell my services, not once did I mention our company. I was just there to help and I genuinely hope that she heard and not just listened. Before she left, I wrote down on a piece of paper:
"Cost-plus-incentive"
"Project manager at-risk"
"Transparency in paperwork"
Ten meager words and sometimes...they can make all the difference.
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