Contractor rate fair?

Question

My contractor says he charges $1000 a day for a crew of three plus materials of my picking. He gave me general # of day estimates room by room. It's difficult to get a contractor to even look at a house if you don't already own it so i was happy when I convinced him to go through it with me but the day rate seems a little high - am I of base since he is providing his time plus two guys and all his tools?

Aaron McGinnis · Answer

I don't think so. A job of this length should be fixed cost... the only reason to go T&M like this is -

1) You're dealing with a -very- unique house or project that is impossible to estimate in advance.

2) You're dealing with a job that may take a day or two, tops, and is so small it's hard to estimate in advance and easier to simply pay a daily rate.

This sounds more like a shady contractor trying to take advantage of a new investor.

Pro tip: The reason better contractors are too busy for you is probably because you're telling them out the gate that you need rock bottom pricing, everything has to be cheap, and you're supplying materials. Just a guess on my part.

Aaron McGinnis · Answer

That's a tough one.

If all 3 workers are skilled, motivated, tax-paying, tool-owning, car-owning, and insurance-having, and the job is fairly short term, I think $1,000 per day is probably about right... maybe a titch high, but not unreasonable.

If any of the above criteria are not met, then $1,000 becomes not so great. If they aren't tool-having and highly skilled, then your leg is getting peed on and your pocket picked.

Rick Bevilacqua · Answer

Don, I am a Contractor and Investor from Philly Suburbs..I would find out if all 3 guys are skilled mechanics or a mix of mechanics and laborers. I am always leary of doing Time and Materials with my Subcontractors because it gives no incentive for them to get it done quickly and efficiently and then you're always on edge with how many breaks they are taking, how many lumber yard trips etc, on your dime. Unless you have already worked with them and know their work ethic, production etc, I would get him to give you firm, all inclusive pricing even if it's on a room by room basis...Long story short... I don't think $1,000 a day for a 3 man skilled crew is too expensive IF they are highly productive skilled and motivated...

Ryan Mullin · Answer

Pay them by the job so they aren't incentivized to waist time.

There is an e-book you can get on BP with contractor pricing from J Scott I think is his name.

Scott C. · Answer

It sounds to me that the contractor did exactly what you asked him do, He gave a time frame for each room and a cost per day: "My contractor says he charges $1000 a day for a crew of three plus  materials of my picking. He gave me general # of day estimates room by  room."

You didn't any details about the house (location, # of rooms, etc.) but Bangor, Pa is in the Pocono's and that area can be expensive to work in.  And I agree with @Rick Bevilacqua, a legitimate contractor with worker's comp and a crew of 3 could easily cost $1000/day. There is a lot more to his labor burden then just what he pays his employees / hour.

If you just using his numbers to analyze the property and you think he is high; use it as starting point or find smaller outfit to estimate the job. Do yourself and favor and get J Scott's book on estimating rehab costs.

Account Closed · Answer

There are other less risky routes of compensating the contractor.

Rob Hayes · Answer

Jeff V I find it almost comical that someone that is skilled in his craft would be willing to give an honest day's labor along with 3 other grown men and only charge $400.00. There is NO possible way that he carries any insurance or makes any kind of profit to sustain a profitable business. I would not count on him being in business to long! As mentioned in another reply there is always an overhead burden attached to a persons wage. In my area NJ that can range from $30 to 60 an hour alone (for the HVAC trade) depending on the of company! I can't imagine that carpenters or laboreres are that much cheaper! It is amazing the regional differences!

Eric Munson · Answer

@Don McIlmurray - Why are you willing to take on the labor risks and remove them from your contractor for the project???

Put a detailed scope of work together and get at least 5 contractors to bid the project.

Having a lump sum quote with at least a 10% contingency lets you know your exposure going into the project. As construction professionals we take calculated risks and do not play a guessing game with our $$$. Good luck to you.

Have the contractors do line item breakouts for back up and you will start to learn what things cost and it will give you confidence to put fairly accurate rehab estimates together in the future.

Scott C. · Answer

@Manolo D. I agree the law is a joke. The original intention was to protect consumers from open ended contracts, such as T&M, and stated that the consumer had a right to know what the total cost of a project would be before any work began. There are provisions for hidden conditions, but it was definitely written for the consumer and not the contractor. There is a lot more to the law I just pointed out the basics concerning T&M.

Manolo D. · Answer

If he has everything (licensed and bonded, at least 1M good GL and 1M WC insurance) and not just "Man with tools", that's about right, otherwise if something like a handyman who does not even have work comp, 500 is fair. At 500/day for a real contractor, WC and employer share alone racks up 40-60% of labor cost, that turns your 15/hr 120/day into 180/day on carpentry/similar, two guys is about 400/day with gas and food, leaving the contractor at 100/day for himself.

Contractor rate fair?

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