How to Determine PRICES for construction work!?!

[Roger Doe]

How do you tell if a price on a job is too high or not?  When you start out, you bid the work out and get several estimates.  But after a while, you have to stop doing that because the contractors will stop coming around because they feel that you are wasting their time.  So, soon, for example, you settle on an electrician that you think you can trust.  But you can never be sure, right?

How do you tell if the next job that they do for you, they aren't taking advantage of you, especially if you have larger buildings?  I definitely notice that the job price goes up by the size of the building.

For example, I just noticed that on one invoice, they didn't put the model number but it was a unique part.  I checked online and the part was only $15 but he charged me $400 just for the replacement.  This was a company I thought I could trust.

So, how do you see if they are charging you a fair price?  Do you ask for the equipment invoices?

Btw, do you guys really ask for certificate of insurance from every vendor and contractor that you use and have them add you as an additionally insured?  Or does that never really gets done.

[Michael Gessner]

Its honestly trial and error, always get multiple estimates from contractors and usually the middle ones are more or less on point. Contractors in the city are way more $$ then where I am in NY, the labor rates are way higher. Just a note to add, plumbers and electricians have some of the highest labor rates and mark up on material. If possible try and get with a contractor on a labor only basis, you purchase the materials. Yet even that can have pitfalls, I used to steer away from customers who wanted to buy the material, not only to reap the markup but if they skipped on 1 piece of material I needed it could throw the whole schedule off. Learn to do more your self, contractors are some of the sketchiest business people out there, you need to just filter thought until you find the right one. Im a contractor up in rockland, im new to the REI but I will act as my own GC this way I don't have these ??? and headaches. Good Luck

[Cody Evans]

@Roger Doe

I am a newb that has been actively searching for that for over a month now. You arent going to get any sure answers. Just keep asking for estimates and try and follow along with how the people are estimating it so you can learn costs. Hang around big box stores so you can try and estimate repairs yourself better. Often a good rule of thumb is to take materials and double their price to account for labor. A good site is homewyse.com 

This website is not god and is fairly inaccurate but a feel good guys and one from near your area, @Brian Pulaski said it was sort of good.

[Brian Pulaski]

@Roger Doe when I worked for a GC on larger projects, we always had to compete for business and always had multiple bids for our subcontracted work. If you are hiring one trade and go with a single company without multiple bids, you have to have a level of comfort. If you feel they are taking advantage, don't simply hand them the "project". If he charges you $400 for a $15 part, and you feel he is overcharging, get more bids. There are a lot of companies that will not provide breakouts of individual parts however, so it might be hard to compare other than out the door price.

Back when I had trusted Contractors, I never thought they were taking advantage. Once or twice I got multiple quotes to make certain that was the cost of the job and it always was. If my regular guy was charging significantly more I would probably ask him what she up and if I felt he was gouging we wouldn't be working together anymore.

Any larger scopes I get insurance from my subs. If the sub has less than a days work I probably forego it, but anyone with any decent scope (hvac, plumber, electrical, roofer, siding, concrete) I have them provide me with coverage and get a copy for myself directly from their insurance -agent.

[Roger Doe]

I don't think that contractors are the sketchiest business people out there.  We all are, to be honest.  Contractors, lawyers, doctors, financiers, etc.  eg. How can we have an honest society when the basis of our law is to look for loopholes?

I wanted to know how to determine if the price is fair after you've been working one with a while.  I think even long-term relationships have to be aware that you are checking up on them to make sure the price is fair.  If they feel that you are starting to hire them without regard to price, the prices start to inch upwards.

I was wondering how do you keep them in line?


Originally posted by @Michael Gessner:

Its honestly trial and error, always get multiple estimates from contractors and usually the middle ones are more or less on point. Contractors in the city are way more $$ then where I am in NY, the labor rates are way higher. Just a note to add, plumbers and electricians have some of the highest labor rates and mark up on material. If possible try and get with a contractor on a labor only basis, you purchase the materials. Yet even that can have pitfalls, I used to steer away from customers who wanted to buy the material, not only to reap the markup but if they skipped on 1 piece of material I needed it could throw the whole schedule off. Learn to do more your self, contractors are some of the sketchiest business people out there, you need to just filter thought until you find the right one. Im a contractor up in rockland, im new to the REI but I will act as my own GC this way I don't have these ??? and headaches. Good Luck

[Roger Doe]

Hi, Brian,

I guess I was looking for more specific tips and tricks.  I've been doing this for 15 years so I know general prices but even then, there is no way you're going to keep up with the cost of things.  And vendors seems to be looking for every opportunity that they can get, these days.  I don't know why.

In my experience, for small repairs and stuff like that, they don't like to provide the cost of materials.  They get offended actually.  Contractors are sort of a grouchy lost in my opinion but I understand that they have to deal with a lot.  A lot of shady owners out there that tire kick them all the time.

I actually go through a rigorous process of hiring.  And so half of my vendors I can trust but the other half, I don't know what they are thinking.  And to find someone half decent these days are getting harder.

Originally posted by @Brian Pulaski:

@Roger Doe when I worked for a GC on larger projects, we always had to compete for business and always had multiple bids for our subcontracted work. If you are hiring one trade and go with a single company without multiple bids, you have to have a level of comfort. If you feel they are taking advantage, don't simply hand them the "project". If he charges you $400 for a $15 part, and you feel he is overcharging, get more bids. There are a lot of companies that will not provide breakouts of individual parts however, so it might be hard to compare other than out the door price.

Back when I had trusted Contractors, I never thought they were taking advantage. Once or twice I got multiple quotes to make certain that was the cost of the job and it always was. If my regular guy was charging significantly more I would probably ask him what she up and if I felt he was gouging we wouldn't be working together anymore.

Any larger scopes I get insurance from my subs. If the sub has less than a days work I probably forego it, but anyone with any decent scope (hvac, plumber, electrical, roofer, siding, concrete) I have them provide me with coverage and get a copy for myself directly from their insurance -agent.

[Brian Pulaski]

@Roger Doe honestly, I don't have tips and tricks, other than to keep really good paperwork of previous jobs. If a basic kitchen job (think 6 recessed cans, homerun for appliances as needed, 3-4 light switches, pendants and switches for over sink and island, and a few backsplash and island plugs) cost $3500 from your electrician on one job, then 3 jobs later a very similar scope he hits you with a $6000 charge... that would have me questioning it. Sure prices of items might have gone up, but $2500 worth?

Without being in a trade, it is hard to do more than trust your go to guy.

I will say small repairs are tough. Half the time the contractor is spending a full day to complete your 2 hour job. He has to hit the store, get the pieces, prep, do the job, pack up, get paid and leave. If he doesn't have another local 2 hours job, then he probably spent his "entire" day on your project. As much as we as the spender want to pay for his rate of $50/hr for 2 hours plus the $100 part, in his eyes, it may not be worth the $200, when he more or less used up his day on it. In the end he will probably charge $400-500 to cover that time. I'm sure you know this, but in my eyes it may not be him looking for an opportunity, it may be him making sure he can pay his bills.

[Roger Doe]

Brian,

I do the same thing as you do and input it into a spreadsheet.  I've found it useful but I've found it sort of limited because two jobs are rarely identical.  There are formulas you can use for certain types of projects.  For example, a deck might equal the number of footings x $X + square foot x $Y...  But even then, some contractors change the $X and $Y, depending upon how big your company is, profitable area, etc.  They also factor in low bids on previous jobs or time spent that wasn't compensated like researching new tech that was used.  However, because of this rough "estimating", costs can swing wildly.

I've also learned that I need to frequently question the costs nicely.  It lets them know that you are watching.  If they feel like you're getting lax on checking up, they will start slipping things here and there.  On the other hand, I've also found that it's a balance, if you question them every single time, they can really get mad.  They believe that after a few years, you should accept every proposal at face value.  A new hire didn't realize this and I almost lost a favored vendor because of this.

On the other hand, they don't realize that I've been scammed a lot.  It's actually not that hard to be kind and honest.  And to put up this façade for years is not that hard as it seems.  I've had times when I don't need their services any more for a good reason but due to bad luck, I am suddenly in a bad spot and quickly need their services. They will take advantage of it and squeeze me. It really surprised me when the following happened. Thought the owners were the nicest guys for 7 years (that's right, seven whole years) but when they didn't expect future business and knew I was in a jam, they squeezed me very badly.  Don't they know that there could be future projects in a year from now?  A big short-term gain didn't look so big I guess several years later as he called me for any jobs.

In another situation, I was intentionally slightly overpaying for a guy's services because he was always timely, kind, etc.  I wouldn't be surprised if half his annual profits came from the job site.  When the project was over and I asked for a fair market cost on something as a favor and he actually squeezed me.  I was truly in disbelief.  He must have made $40k in profits but wouldn't give me a break of even $1000.  "Contract is a contract." is what he said even though I told him that I knew that he knew I was paying him over market.  I guess he knew he wasn't going to be getting any more of that extra $40k in the future so he was just trying to grab as much as he could.  I first asked for a $3k break...and I couldn't even squeeze $500 from him.

I started this question, hoping everyone would share tips on how to determine you're getting the FAIR price.  Please chime in with any ideas of your own or if you disagree with anything or another way to look at certain situations I mentioned.  I can tell you that I get scammed a lot even after 15 years.  I think it's part of the business.  Makes me sad a bit.