The Rehab Cost Figure Everyone Gets Wrong

[Stuart Udis]

Site cleaning is consistently understated in rehab construction budgets.  Most rehabbers include only enough for initial demolition/cleanout, drywall scrap removal and end of project cleaning. Increasing your construction budget by a small amount can have an enormous impact on your overall construction budget, productivity and site safety/insurance premiums. Let me explain why:

1. Have you ever wondered why builders risk insurance is more expensive? It's priced the way it is because of the added risk exposure. Top of that list is premises liability occurrences.  Falling due to construction debris is a leading cause. Keep your sites clean, reduce your liability exposure, keep your loss run reports clean and premiums from increasing. 

2. Your subcontractors will work more efficiently and provide better quality work when they are not dealing with construction debris interference.

3. If you keep your work sites clean consistently,  subcontractors will take notice and price your work more competitively because they will want to work your jobsites over others. 

4. Piggybacking off of #3, you will receive favorable scheduling and complete your projects quicker.

If you are wondering if you have adequate site cleaning built into your construction budgets ask yourself these questions: 1. If there's selective demo that's required after the initial demo is completed for the electrician, plumber and HVAC tech, do you wait until sheetrock is hung to have it cleaned up? Is your plumber, electrician and HVAC tech maneuvering around trim and tile scraps left behind by the finish carpenter and tile setter?  If the answer to either scenario is yes, you didn't budget adequately. Give it a try for two consecutive projects and see how you perform by project 3..... you will be surprised how such a small tweak to your budget can impact the overall project performance. 

[Alan F.]

Quote from @Stuart Udis:

Site cleaning is consistently understated in rehab construction budgets.  Most rehabbers include only enough for initial demolition/cleanout, drywall scrap removal and end of project cleaning. Increasing your construction budget by a small amount can have an enormous impact on your overall construction budget, productivity and site safety/insurance premiums. Let me explain why:

1. Have you ever wondered why builders risk insurance is more expensive? It's priced the way it is because of the added risk exposure. Top of that list is premises liability occurrences.  Falling due to construction debris is a leading cause. Keep your sites clean, reduce your liability exposure, keep your loss run reports clean and premiums from increasing. 

2. Your subcontractors will work more efficiently and provide better quality work when they are not dealing with construction debris interference.

3. If you keep your work sites clean consistently,  subcontractors will take notice and price your work more competitively because they will want to work your jobsites over others. 

4. Piggybacking off of #3, you will receive favorable scheduling and complete your projects quicker.

If you are wondering if you have adequate site cleaning built into your construction budgets ask yourself these questions: 1. If there's selective demo that's required after the initial demo is completed for the electrician, plumber and HVAC tech, do you wait until sheetrock is hung to have it cleaned up? Is your plumber, electrician and HVAC tech maneuvering around trim and tile scraps left behind by the finish carpenter and tile setter?  If the answer to either scenario is yes, you didn't budget adequately. Give it a try for two consecutive projects and see how you perform by project 3..... you will be surprised how such a small tweak to your budget can impact the overall project performance. 

 Great post! I hope flippers take this to heart. I'm extremely picky about job sites. Plus I've done several live in flips...so. I also like to start on curb appeal immediately, I like to make the neighbors allies.