Refusal to do an itemized bid by contractors (Columbus, GA)

[Ken M Middleton]

Hey BP family,

My wife and I identified a potential home that we are interested in rehabbing. We got an initial ballpark bid from a contractor of around 20k worth of work but after the inspection, there were a few items that looked like they would cost significantly more (i.e. complete plumbing installed and perhaps replacing ALL the windows because they wouldn't open).

We asked a few contractors to give us an itemized bid (ala J. Scott's advice) with labor and materials separate, so we can ensure we are not getting over-charged and to make sure the total price is taking into account all the work we need done, but most of the GC's pushed back to say either they don't do that or this would make the price much more expensive if we asked for it this way.

Is anyone else experiencing this (reluctance of GC's to provide itemized bids) and what are my options in this situation, as there are not a lot of contractors in the area in which we are looking since it is such a small area (Columbus, GA)?

Thanks for any advice in advance!

KMM

[Joshua McMillion]

@Ken M Middleton

Good to hear from you again! Yes, I ran into this issue and given the market now and access to jobs, it seems that contractors are less willing to commit to creating itemized receipts. 

I recommend creating a firm-fixed-price contract with equitable adjustment. That's a fancy contractor language of saying that the material, labor, and fees (dumping, cleaning....) are fixed and provided upfront. However, if there is an issue that is found, the contractor will provide another contract as an addendum to the original to cover the work; I created a general rule of thumb with my last rehab by telling the contractor you can make constructive changes to the contract without notifying me if the total cost was under $250. You will run into small issues like that. 

Second, the cost is not the biggest issue I have had with contractors; it has been time. When you're vetting the contractors, ask them what key performance indicators they track. If one of those is not time per job, I almost guarantee you will have the same issue. One way to help solve this problem is by adding an incentive-based contract clause. Meaning, if the contractor completed his work within the scope and on time, you agree to pay an extra $1,000 or whatever you decide. However, if the contractor does not and busts the agreed timeline, the incentive fee is waived, and every day or week that the project extends, the contractor losses $50 (just an example) per day or week. Essentially you want to create an accountability system for the contract that ties them to cost, schedule, and performance (quality of work). 

I hope this helps Ken! 

Sincerely,

[Waylon Zook]

@Ken Middleton many contractors have been burned by doing what you are asking them to do and it is generally understood in the professional community that it has a huge potential of creating problems.

If it is a fixed price contract then there is absolutely no need to see labor and materials separated. A cost plus or time and material project is a different story which may be a good option for you if you are afraid that you may be overcharged.

Get 2 or 3 quotes on the same scope of work from reputable contractors and compare prices that way.

[Joe Villeneuve]

Contractors are busy.  The idea of getting an itemized list, with separate bids for labor an material, isn't feasible.  It tells the contractor you're looking for a way to cut out their profit...and the contractors don't have the time to do your job of figuring out material lists and their costs...if you plan on doing the labor yourself.

[Ken M Middleton]

@Joshua McMillion Thanks, man. I appreciate that. I'll make sure to include that on future bids. 

@Waylon Zook and @Joe Villeneuve, thanks for the perspective, advice, and for taking the time to respond. 

[Michael Hayworth]

This is one reason my company stopped doing investor work. There's tons of business out there at higher profit margins and lower stress levels. We give a lot of detail in our fixed-bid contracts, but it's broken down by area. When a client (investor or homeowner) comes back asking us to break down labor & materials, we will try to see if they have a particular question we can answer, but will politely decline. It's not our model, and there's too much work out there to spend time arguing with someone about our markup on sheets of plywood. We also pretty well insist on using our own contract. We crafted it for a reason.

As @Waylon Zook said, get 2-3 bids and go with the one you trust the most based on references and perceived competence.

[Ken M Middleton]

@Michael Hayworth Cool. Thanks for responding. I appreciate you taking the time and giving your personal experience and perspective. That helps a lot to see if from a contractor's point of view.