On every construction site, a little Grace should fall

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Open or Closed Doors

As long as there is work to be done (and there always will be, remembering that shelter is a basic necessity), people will have to consider the difference s between Fixed Price and Cost Plus contracts.

The first is exactly as it implies: the contractor commits to a scope of work for a specific dollar amount and completes it, no matter the cost to him. Cost Plus (also known as “Labor and Materials”) charges for every invoice incurred, plus a percentage, and labor at an hourly rate.

No easy answer is available here to client or contractors. Pros and cons for both are so complex that ultimately each can be considered for any size or shape of project. The contractor, in theory, having more experience, can be prepared for both, and direct the client towards the one that is most advantageous to the circumstances.

At first glance, the one paying gravitates to a Fixed Price. You go to the store, pick out a shirt, put the money down, and it is done. Conventional wisdom says construction always goes over budget so the client wants to nail it as firmly as sheathing to a rafter, and banks absolutely insist on eliminating the risk.

In this case, the builder makes a bet that he can twist his predictions into reality, trusting that he has considered every problem and counted every stick. Unfortunately, he has little room to wiggle out of a more expensive sub-contract or an over-looked detail. Constant renegotiation, no matter how legitimate, smacks of “nickels and dimes”, or “low-balling”, and alienates the relationship. It is usually better to absorb the losses in the hopes of higher profits.

In a Cost Plus contract, the dollars accumulate in direct proportion to the project, no risk to the builder who shows up, produces a kitchen and gets paid. Less potential for a “killing”, he also, in theory, pays his bills and can count on his own paycheck at the end of every week.

The risk now falls on the owner. Construction projects usually do run over budget, but more often by choice than by mistake. It might cost fairly what it costs, but the owner and builder must have pencils sharp enough to pay for it all.

Size of the project and personalities of the parties play an important role in the choice of contract. As a rule of compromise, in new construction--which is so much easier to predict--a fixed price establishes a clean bill and an easy list of details with specific dollars attached. A remodel, potentially hiding surprises behind every existing wall, lends itself to the organic flexibility of a Cost Plus agreement.

How easily trust can be established in a few short and agenda-full meetings influences the choice. Ultimately, one’s comfort with risk is the ultimate decision.

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For Better or Worse

Once the scope has been established and the cost estimated, a contract must be written for the work. Many builders use—and often lawyers require—the standard AIA contract of many many pages. In my mind it really has too much verbiage and “boiler plate” legal phrases to have much bearing on your basic residential kitchen remodel.

A good contract can have a load of line items to define schedule, change orders, furniture protection, and snow removal. My list has grown along the way as a new problem is encountered.

The real point of the contract is to define the cost and scope of work so that owner and builder alike can have as much agreement as possible. Where decisions have been made, name brands and colors should be included. No detail is too small because at the end of the project, if they see red, it solves the dispute to point out that “red” was in the contract.

Without decisions, an allowance with a specific price marks the item for later adjustment. My contracts name a specific “builder’s grade” brand and standard color. When they upgrade (and the usually do), the cost is raised with a change order. In case they don’t, the product named in the allowance must be of sufficient quality that we both can live with.

While the owner naturally wants a start and finish date, too many variables are at play at either end to commit in a contract. Lawyers suggest a penalty clause, but that immediately transforms the project energy from teamwork to adversarial. The builder’s ability to stay in business is directly related to the list of satisfied customers, so he has strong incentive to ensure timely and efficient work.

Ultimately, the cost and a schedule of payments is the main purpose of the contract. It is easy to reach an agreement about what should be done physically, but who pays for what, how much and when is where disputes arise. Whether a Fixed Price or a Cost Plus contract (to be discussed in another entry), all of the detail helps to smooth an inheritantly rough and unpredictable process.

So much can change over the course of a project. Surprises lurk behind every wall. Crew availability fluctuates. The owners can divorce or even die. The contract with both signatures and all attachments, including drawings and budgets, proves a partnership to start. A line at the bottom that agrees to seek mediation before a jury, if trouble arrives, can restore that balance. A project completed is so much better than starting all over with a different horse and just another contract.

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Estimating

Back at home, the office, or the Home Office, it is important to set aside time without disturbance to estimate the project at hand. Careful consideration of all the details is required. An interruption could change a decimal point and make the difference between profit or loss, or getting the job at all.


As many ways as there are to build a house, there could be methods and styles for estimating. Rooted so much in the imagination of the builder and what is translated from that first meeting, I believe the process is highly individual—not only to the person, but to the particular project as well.

Again, I assert I am no more expert at this than 30 years of stumbling and bumbling and a large portfolio of work can allow. Happily, the several workshops attended in that time seem to support my system (or the lack of The One). And, as always, I would be grateful for any and all feedback on the subject.


Depending on the size, sometimes I will start with a map of the project. Home-owner friendly CAD programs, or projects large enough to afford a design, may greet me with drawings, but generally, there is little to work from besides a few pictures, rough measurements, and a concept communicated with little detail (and lots of wishes) from the owner

The map I actually draw is less “what” but “how”. Microsoft Project, or any software that produces a timeline, a path of progress, helps to establish focus and orders the tasks ahead. It also adds veracity to the prediction of “how long?” that immediately follows the answer to “How much?” at the next meeting with the prospective client.


In the “old” days, we sat with pencil and calculator, scratching out guesses of how many sticks, stones and buckets of paint were needed, tossed in a number of weeks, months or days, slapped on a contingency, and with a handshake and a reassuring smile, said it would cost what it costs. Now, the plethora of programs is overwhelming, and as many as I have flirted with, I find I am a dog in Midlife who is still open to others, but keeps returning to modify my earliest tricks, reassured that they are flexible enough to accurately estimate as well as anything can.

Over the years, my Excel spreadsheet has grown from a simple three column tabulation to a five page monster that can track actual costs as well as estimate, comparing successes and red-lining potential failures along the way. It begins with a data sheet (no previous entry is ever deleted—unless discovered to be dismally wrong!), pre-loaded by experience, measured in square feet, running feet, by the hour, or by the ton.

Here, the bulk of the work is estimated, and the potential for a catastrophic mistake looms large. Typically, the whole process, no matter the method, is set up with phases and categories that match the actual steps of building: pre-construction, foundation, framing, mechanicals, finishes. To me, it has always worked best to estimate by herding all the trades and deliveries through my mind in the order that they might appear on the actual site. A good process wants to trigger all those details in the hope that nothing is forgotten.


Once the numbers are tabulated, the information should be packaged into a clear and legible format. Gone are the days of scribbled contracts on the back of a napkin (it did truly happen that way sometimes). Computers allow for no end of pages of drawings, estimates, verbiage of cautions, and references to previous projects and happy customers. A fairly clear line runs between professional presentations and overkill to sell a countertop replacement. No matter how discerning a prospect may be about quality, the dollar, in the end, usually dictates the decision. Accuracy above all is critical, because there are many jobs not worth taking, if items must be clear-cut to win the contract.

In the end, for a remodel especially, somehow it must be communicated to the owner that the estimate is not a science, but more a “magic trick” to see through walls and rely on carpenters who have sick kids and transportation problems. Here, a much finer line between creating fear and instilling confidence is harder to balance, keeping those extra rooms for wiggles and giggles designed into the contract for their addition.

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First Visit

Considering that a simple bath renovation can be $20,000 and a whole-house make-over ten times that amount, it is amazing how little time and money people have to make such a large decision. In actuality, the first visit can decide everything for the builder, including not being invited to return.

Amazingly also, often the most basic courtesies can be overlooked, or worse, ignored completely. I have a notorious reputation among my co-workers for being late (always trying to squeeze something else in), but for a client, I am usually complimented for being on time. Since cell phones have become a tool (and we really did manage to live without them), a call acknowledging 15 minutes of tardiness is actually impressive.

In the last ten years, it has become common that houses are “shoeless”, so removing them immediately, waiting to be asked, or tromping right off the last job site and splattering mud all over the carpet of this one gives the owner a lot of information. I know a contractor who whipped out medical booties upon arrival and immediately established his expensive-but-worth-it reputation.



Again, this is the time to get to know each other. The builder needs to get oriented to the house, learn a little about the client’s needs and their expectations. Owners also have a lot at stake when inviting a stranger into their home to make months’ worth of mess and (hopefully) clean it all up again better than ever before. Feel out how you might get along. Are you each understanding the other? Are the ideas translated accurately? Finding a common ground beyond the project creates a connection and the trust begins to grow.

Standing in the space to be renovated while chatting through introductions gives the builder a chance to eye the surrounding trim, measure up the style and characteristics to be matched. As the owners explain their thoguhts, reassurances and expressions of confidence draws out their enthusiasm. Perhaps a brain-storming suggestion leads them to simple solutions they had not envisioned on their own. In the best of circumstances, it is an open dialogue of questions and ideas to shape the scope of the project.


Only after the full tour and careful, focused listening is the tape measure produced. With a CAD program that requires accuracy, I take my time, sketching the floor plan and writing every pertinent measurement on my intake sheet. The owners feel useful holding the “dumb” end of the tape; others rush off to tend to children, leaving me to calculate alternatives and ponder scheduling issues.




This modern age has given us digital abilities to take all the pictures, angles and details we need to recall accurately the existing conditions a week and three other sites later. Being thorough, even if the work is limited to one room upstairs, it matters to see the electric panel to know if there are additiional circuts and no ancient wires. The heat system could have bearing on the plans, or a critical post directly below the renovation might be necessary.

How much to discuss the budget is a topic all on its own. Some people tend to hold their number closely, fearful that revealing it will raise the price to just over that amount. Others admit they have no clue what such ideas might cost (they usually balk and postpone). In actuality, I believe—being honest and forthright—that a discussion of the budget on the first visit is healthy. The builder gets a sense of how serious is the prospect. The client may get a reality check to temper their expectations.

Usually, the owner cannot resist asking for a “ballpark” estimate. This is extremely dangerous because no matter how informal their request may appear to be, an inaccurate number offered at this early stage can haunt the negotiations a year later. I have learned to quote in very ridiculously broad strokes ($50 to $100 thousand), gracefully exiting with a follow-up date and an agenda to narrow that number to within 10% on the next visit. Then, they're looking forward to my return.

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First Contact

It starts with a phone call, any time of day, sometimes on the weekend, even in the middle of the night. Listening is extremely important because an enormous amount of information is available beyond the dialogue. Speaking is equally important because at any moment, for any reason, the prospective client may decide to break off, declining your services.

Admittedly, for me, that first phone call of inquiry is an adrenaline rush of such addiction, fueling my determination to continue my business when a wiser man perhaps would have sooner opted for a different path. In those first seconds beyond recognition that this is a Prospect, the future gleams so brightly. Although it could be just a handyman repair, my impulse is to listen for the words that speak of a large, creative and rewarding project.

If it turns out otherwise, it is important to continue the call with just as much respect, integrity and humor as you would the Dream Client. For it can easily turn out that this foot used to hang a door may still walk through the opening. Numerous times, the conversation during the odd job has revealed that an addition is being contemplated. Or the neighbor, seeing the truck, invites you over to take a look at their house.

Of course, much depends on the source of the call and whether it comes randomly from the Yellow Pages or directly as a result of reputation and reference. Without bragging, a bond must be established, often as easy as recognizing the neighborhood. Perhaps our children have played against each other in soccer, or we love the same restaurant around the corner. Potentially, you are going to make a mess in their home, it helps to show them your humanity.


Once the conversation moves from introduction to detail, I have found a simple form helps to keep on track. For me, it covers the pertinent facts, gets me to the appointment on time, and provides space to write down notes and dimensions for the estimate later.

A long time ago, I had a tendency to rush to impress, obnoxiously eager to the point of thinking I could prove my expertise by finishing their sentences—and would often be wrong. Now I listen. They have been thinking, planning, articulating their ideas. I listen, ask a few questions when needed, and answer with reassurances their uncertainties or insecurities about the process.


Listen to their ideas.
Ask about their needs, their long-term plans to stay in the home. Have they experienced a renovation before? Survey carefully their clues to determine their commitment to the project. Often, I realize, my intuition can accurately read if the client is serious or just dreaming.

In addition to a specific date and time to meet—preferably not today (implied hunger), but within the week—it is important to leave them with a sense of excitement and anticipation of your visit. In the past, it was helpful to “assign” a simple task such as noticing their movement in the kitchen, or a date to the bookstore to look at design magazines.

Now, with web pages to boast, a portfolio brought to the initial meeting is unnecessary because they can see your work in the meantime, and imagine their own project online in the not-so-distant future.

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Dollars & Sense

My first few jobs in Oregon 30 years ago, I attacked with all the fervor of today’s recyclers.

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We drove 100 miles to retrieve truckloads of used boards for a weathered look on the interior. I always checked the scrap pile for short pieces before cutting a long one. I pulled nails out of old lumber, bent them straight, and drove them into new homes again. There was no name for it then; just common sense and low-budget aesthetics, but some of us were paying attention.


As labor rates rose, the Energy Crisis dissipated, and developments devoured the landscapes, many habits were discarded. At $20 and $30 an hour, a lot of nails can be bought in the time it takes to straighten one. We learned it consumes more energy to drive the 100 miles than to stay put, rough up some planks, and “distress” them with stain and paint.


Now, it swings back the other way, and the carbon footprint has become larger than a site full of steel-toed boots.

Garbage dumps have turned into recycling centers, sponsoring workshops and green celebrations, building a community culture and social network in a small town. Salvage yards are sources for stunning architectural pieces which can be incorporated into new construction. More importantly, the client is onboard, and “green building” is now a requirement on the resume.



Sadly, it does cost more to rehang an old door carefully retrieved from salvage than to install a pre-hung split jamb primed unit—a lot more. Used lumber is cracked and twisted and uneven, making humps in the sheetrock. Better to tear it all out for a fresh, clean line. Engineered studs save trees in the forest, but doubles the price of framing, wiping out the gain and probably quite a bit more painful. We can separate the debris, but does it justify the added truckloads to different disposal sites?

While the focus on Green Building is an important discussion, as builders in relentless competition to hold prices down, we have a long way to go. The truth is that we are taking a lot of the Earth’s resources—whether new construction or renovation—to produce shelter for our neighbors. We are learning that each decision has a consequence and should at least be considered.

And there are success stories.



By chance, I was dropping off a sink at our recycling depot and spotted 600 SF of oak flooring, the perfect amount for my current project. Whoever took it apart knew how to put it together because every single nail was pulled, every piece was reusable. It was stacked and bound together, tongues and grooves aligned, just like out of the box. The cut ends (without tongue or groove) were clearly marked. Although it was stained very dark and worn inconsistently, sanding an oak floor new or used would make no difference. The key was in how it was packaged.


Everyone wins. The wood was salvaged and given a new life. Oak trees were spared. The other guy was paid labor and saved a dump fee. I added a gorgeous floor to my portfolio and my client saved money.

If you are paying attention, some days recycling truly makes sense.

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