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All Forum Posts by: David B.

David B. has started 7 posts and replied 20 times.

Quote from @Will Barnard:

First off, for architectural design / structural engineering / submittal and corrections through city plan check, would that really cost you $45,000? Secondly, in the state of CA, no contractor can legally charge a deposit of more than $1,000 or 10% of the total job cost (whichever is less) so for them to ask for $11,250 upon commencement of design is a violation of the law.

Then they ask for $22,500 at start of demo and another $22,500 at completion of demo. Your demo is $45,000? Appears to be extremely high for a single family remodel. Most of the draws in this appear to be overinflated and have you placing out funds in excess of work completed. Proceed with caution with this contractor. As a licensed contractor in CA, I know these rules and I know draw schedules, this one lacks validity in just about every line item.


 Thanks for the reply. I've asked him to restructure the contract to be more accurate of how much each stage costs. I get that they don't want to front a bunch of cash for the project but essentially what I'm gathering from folks here is that its just part of the business they're in. And they have an easier path to get payback than I do with liens.

Quote from @Robert Arquilla:
Quote from @David B.:

Any feedback on this progressed-based payment schedule for a $450K remodel project?

Should there be more specific milestones like flooring, appliances etc? Possibly withhold a little more for job completion? Maybe 15%.

_______________________________

2.5% upon commencement of schematic and engineering design ($11,250)

2.5% upon completion of schematic and engineering design ($11,250)

2.5% upon completion of construction drawings ($11,250)

2.5% upon obtaining all necessary approvals of plans ($11,250)

Total: 10% out ($45,000)


5% upon commencement of demolition work ($22,500)

5% upon completion of all demolition work ($22,500)

Total: 20% out ($90,000)


10% upon commencement of foundation work ($45,000)

10% upon completion of all foundation work ($45,000)

Total: 40% out ($180,000)


10% upon commencement of framing work ($45,000)

10% upon completion of all framing work ($45,000)

Total: 60% out ($270,000)


5% upon commencement of plumbing work ($22,500)

5% upon commencement of electrical work ($22,500)

5% upon commencement of insulation work ($22,500)

5% upon commencement of drywall work ($22,500)

5% upon commencement of tile work ($22,500)

5% upon commencement of roof work ($22,500)

Total: 90% out ($405,000)


10% upon completion of customer punch down list and job completion ($45,000)

David,

As a commercial GC we normally bill based off of a schedule of values and percentage of work completed each month. A schedule of values is basically what you have spelled out above.  So for construction you would have Demo, framing, plumbing, electrical, finishes, drywall, roofing, foundations. 

Another way to do that is to break out plumbing or larger cost categories into separate categories such as plumbing rough in, plumbing fixtures, plumbing finishes. Then when you have a plumbing rough in inspection that passes you can release those funds.

One thing to watch out for is "Front Loading" where the contractor will inflate say the demo category to have more funds released up front to help them fund the job.  

Lastly in my experience the owner holds a 10% retainage for the total construction cost until all the work is completed and the final inspection is passed, the architect or contractor does a final walk through and any close out documents are submitted.

Hope that helps


 Thank you for the reply. I'm going to propose some aspects that you mentioned.

Quote from @David Robertson:

It appears you are breaking down everything in 5% to 10% chunks.  Why not just use the actual amounts for the work that is being completed?

For example, you have 10% for demolition work for a total of $45,000.  Is demolition really $45,000?  If the demolition work is actually only $10k, your contractor will be overpaid by $35,000 on the first payment milestone.

I would breakdown your budget by specific scopes of work and pay your contractor based upon the actual dollar values being performed instead of arbitrary percentages.


 Thank you for the reply. This was what the contractor presented me. The actual number for the final payment was even lower initially so I had it moved to 10%. What you're saying about grouping by scopes of work makes more sense. That would be less invoices and payments also. 

Any feedback on this progressed-based payment schedule for a $450K remodel project?

Should there be more specific milestones like flooring, appliances etc? Possibly withhold a little more for job completion? Maybe 15%.

_______________________________

2.5% upon commencement of schematic and engineering design ($11,250)

2.5% upon completion of schematic and engineering design ($11,250)

2.5% upon completion of construction drawings ($11,250)

2.5% upon obtaining all necessary approvals of plans ($11,250)

Total: 10% out ($45,000)


5% upon commencement of demolition work ($22,500)

5% upon completion of all demolition work ($22,500)

Total: 20% out ($90,000)


10% upon commencement of foundation work ($45,000)

10% upon completion of all foundation work ($45,000)

Total: 40% out ($180,000)


10% upon commencement of framing work ($45,000)

10% upon completion of all framing work ($45,000)

Total: 60% out ($270,000)


5% upon commencement of plumbing work ($22,500)

5% upon commencement of electrical work ($22,500)

5% upon commencement of insulation work ($22,500)

5% upon commencement of drywall work ($22,500)

5% upon commencement of tile work ($22,500)

5% upon commencement of roof work ($22,500)

Total: 90% out ($405,000)


10% upon completion of customer punch down list and job completion ($45,000)

Total: 100% out ($450,000)

The city building department came back saying that there's a discrepancy with our property lines and are holding our remodel permit plans until its sorted out. Has anyone had a record of survey done in the SF Bay Area recently? The lowest price I've found so far is $3k. I've read older posts that have had it done for ~$500. Is the higher cost just another CA cost of living thing? 

Along with the record of survey is a requirement from the surveyor to get a preliminary title report. Anyone have a recommendation for that?

Post: Plan Check Comment: Land Surveyor

David B.Posted
  • Millbrae, CA
  • Posts 20
  • Votes 4

Hi Joe, thanks for the reply! I'm trying to dig through my files for any type of survey or document that would document the property lines. Fingers crossed.

I wish I could find someone in the San Francisco area to do a plat of survey/boundary survey for $500! The lowest price I've received so far is $3000 and it'll take 4-6 weeks to start and complete. 

Post: Plan Check Comment: Land Surveyor

David B.Posted
  • Millbrae, CA
  • Posts 20
  • Votes 4

I recently submitted plans for a backyard ADU and a kitchen extension project. The city reviewed the plans and came back asking for this:

Please provide verification from a Civil engineer, a Land surveyor or any other legal documents to show actual location of the property line.

From my understanding, they want something official to use as guidelines for setbacks since the ADU is close to the existing fence. The city wants to use offical property lines for the setback guidance instead of just where the fence is. Does anyone have experience or a referral for someone they've used for the same request? Could something else besides an expensive land survey ($3k is the quote I got so far) be used to satisfy the request?

Post: Large gap between competing construction bids

David B.Posted
  • Millbrae, CA
  • Posts 20
  • Votes 4
Originally posted by @Jayson Cain:

Hey @David B. ,

There's just too many ways contractors come up with bids.  The way I've removed any ambiguity is to actually write my own scope. Takes some time to write up, but saves a lot of back and forth with GCs. I present this to my top 5 contractors and I go through the scope with them as we walkthrough the property either in person or virtually. If you're a newer investor, this also shows that you're a serious client. 

 That’s a great idea! I could start a spreadsheet and list out what the higher bid has and ask the lower bid to make sure he’s covering all of those bases. 

Post: Large gap between competing construction bids

David B.Posted
  • Millbrae, CA
  • Posts 20
  • Votes 4
Originally posted by @Joe Splitrock:

 I understand. There is also value in the larger organizations. We used to use mom and pops for plumbing and HVAC, but it could be hard to get someone there quickly. Now I use a larger company with many service techs. They cost more, but they are easier to schedule and more reliable. The other factor in this market is finding material and labor. It may be easier for a larger company to get priority. It sounds like you understand the trade offs. Good luck!

Thanks Joe! I appreciate your feedback and taking the time to talk a newbie through some thoughts.

Post: Large gap between competing construction bids

David B.Posted
  • Millbrae, CA
  • Posts 20
  • Votes 4
Originally posted by @Bruce Woodruff:

It's important that you get a very long and detailed Scope Of Work from each company. Compare and contrast.....

Make sure that everything is in writing and priced out in specifics.

Bruce, mind if I PM you regarding scope of works?