Bought a ~80 year old home- original windows, needs some work. Interviewed 5 local home reno contractors - most being whole-project guys. Most had similar-general-ballpark estimates. Felt best about one personally.

Now after the design work is more or less completed, he gave us a revised, detailed cost estimate that was well above before. Well, we had added some things, dropped others.

Here’s the question. In the revised, detailed estimate, the last line is profit for the company which is 1/4th of the total (or plus 1/3 more over all the line item costs added together).

The costs include stuff like new windows, new exterior door, “project management”, “general expenses”, electrical work, etc - all increased by 33% down in that bottom line. The contractor buys windows and doors from the manufacturer (and adds on 1/3rd as profit in that final line), He hires an external electric sub, etc who does that work, then adds on 1/3rd. He charges us to oversee the project (and adds a third). And so on.

We’re struggling with this. We’re not opposed to him earning a profit, but on _materials_ cost? On subcontractors, when he already has a separate line for project management (and then adds a third to that)?

Anyone been through this process recently?

a GC puts a profit on everything. Thats why they should be carrying huge insurance. Which you should insist on seeing.
YMMD where you are, but my experience they are mostly greedy dishonest fks. Many low bid to get the nod, then hand you a much different $.
Make sure your contract has a finish-by date with a sizeable fine per day late. I guarantee you, wherever you are, he has more than one job going on.
A friend waited 2 years, albeit during pandemic, to get his 8x8 bath finished in Manhattan. Nothing extravagant or hard to find about it.

My dad was in construction in Manhattan. He taught me well.
I GC'd both houses I've had. Still had a couple of losers, but nothing horrendous. Saved a bundle.

Around here, it is easier to find good interior contractors. Exterior contactors is another thing entirely. Windows, roofs, etc.
Cabinet maker was a cheap bastid. He used side mounts for drawer slides rather than under mounts.

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Quod suus via crustulum saxum

I have a vague memory that the 33% market was supposed to cover the “general management,” etc.

At the end of the day, it all comes down to your choices. Do you want to restart the process and find somebody else? Do you want to try and negotiate with this general contractor? Etc.

We used a highly recommended general contractor for complete renovation of two bathrooms, kitchen, interior doors and trim, and some painting. At the end of the line items for all the individual labor and items, he had 10% for overhead and 10% for profit. I did not consider that to be unreasonable as he absorbed some additional costs when things were delayed or had to be procured from a different supplier. In the case of a few things where we wanted a more expensive item than was in the original estimate, he only charged the price difference and did add incremental overhead or profit.

How busy are you? do you WFH or is your work flexible enough that you can take some time off?

If yes, you can hire direct contractors for various jobs. Find a reputable contractor to replace the windows. Find another one to replace the door. Of course you have to be there when the work happens, but you can save a lot.

That’s a great way to turn a home renovation into a nightmare. Herding cats is child’s play compared to scheduling and supervising subs. Without a gc watching them, they will cut corners in ways that won’t be apparent until years later. But you will save a few dollars up front.

Pics of house!

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Quote
special
How busy are you? do you WFH or is your work flexible enough that you can take some time off?

If yes, you can hire direct contractors for various jobs. Find a reputable contractor to replace the windows. Find another one to replace the door. Of course you have to be there when the work happens, but you can save a lot.

Well, I'm retired, and have always been a bit of a DIYer. And we're in no great hurry. My neighbor, who is a mid-to-higher-up in a (different, commercial) construction company has encouraged us to be the GC. You can do it! he says.

I don't think these people are trying to cheat me. I'm just having trouble with 50%-over to-nearly-double-the-original-estimate trouble when I'm paying 33% more for [windows/doors/electrical/other subs] than I would be if I just hired them directly instead of through this guy.

Can you be a little more specific?

Say the window (material cost is $1000).

What is the quote from the general contractor?

can you make a table like this for example

$1000 material
$300 labor
$300 markup on that material
=======
$1600 subtotal
$400 markup on subtotal
=======
$2000 final bill
+ $140 7% sales tax (just a guess)
=======
$2140


EDIT: and if you were to hire the window contractor yourself, the bill would look more like this
$1000 material
$300 labor
=======
$1300 total
+ $91 sales tax
=======
$1391



Edited 1 time(s). Last edit at 05/04/2024 01:31PM by special.

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pdq
I don't think these people are trying to cheat me. I'm just having trouble with 50%-over to-nearly-double-the-original-estimate trouble when I'm paying 33% more for [windows/doors/electrical/other subs] than I would be if I just hired them directly instead of through this guy.

to me, that is the definition of cheating. But if they have enough insurance, that is part of what you are paying for.
If a drunk roofer falls off your roof, that's the GCs problem (in theory).
You may also need to see what local laws require/desire as far as being your own GC.

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Quod suus via crustulum saxum

If you decide to be your own GC, insist on seeing proof of insurance from anyone you hire.

Seems as if you are already having reservations on this guy, you are better off reconsidering, at the very least get another quote with all the details from your second choice.

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The GC also makes sure that everything happens in the right order and within a reasonable time. If you do the jobs yourself, independently, there may be gaps when nothing can happen.

You might be able to save some if you procure some of the items yourself and have the GC remove it from the contract.

Quote
special
Can you be a little more specific?

Say the window (material cost is $1000).

What is the quote from the general contractor?

So, we don't have numbers where he splits out window material cost from window labor. He just has "windows" as a line item at a certain number, and then that becomes part of the total before + 33% for profit. So if the window was $900, he would add $300 for his profit.

To be (hopefully) clear, it's three parts line item expense, and then at the end, another 1 part profit. So 25% (one part out of four) of the total cost is his profit, or put another way, each line item cost (three parts) plus 33% of that cost number as profit (one part). This is true of every line item, whether they do the work or have a sub do it.

This is total bulshit and you should run away from this guy as fast as you can!!!


RED ALERT RED ALERT!!!

You are paying the GC to manage your project and pay his subs... it is up to him to negotiate pricing with those subcontractors that nets him a profit on the work that they perform. If he is going to add a line item at the end for an extra 33% for each sub for his "profit" then he is charging you twice!


I hate to say it but in the current environment where everyone and there brother thinks they can/should be doing a home remodeling project just like they see on HGTV it's the wild west and people are getting screwed over right and left!

There is so much work out there, and so few contractors that actually are concerned with doing QUALITY work, that it's super easy to get burned.

If you are contemplating a large project (anything over $50K) you should seriously consider hiring a lawyer to check out any GC that you are considering hiring.

I'm hearing horror stories about friends and family members about getting taken for tens of thousands of dollars on home reno projects, even from contractors that have come highly recommended by other people!

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Aloha, Ken


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I'm pretty sure I've seen a few contractors throw out large numbers since they're not really interested in the work. I recently got a $4k estimate on removing bushes - I could take them down with a chain saw in less than an hour. Obviously thats not the whole job, but still...

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A good GC is supposed to manage the timing, completion, and quality of the work done by subs.

For a big project, that's worth a lot, the caveat being you find a good GC.

If you were to do this piece meal, one project at a time, maybe you qualify as being a competent CG yourself.

If time is on your side, direct contracting might be a better way to go.

Either way, I'd be tempted to say 'Ya know...' and let this guy go.


Not that this is an option, because it very probably isn't, I always wonder the price tag on This Old House renos.

Is the home owner getting any break in costs because of the filming?

It always looks like they're getting top shelf work done.

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And hope is a lousy defense.

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Yeah, I occasionally see HGTV at the Y (don’t get it at home) while I’m on a stationary bike. They do whole home spruce-ups to renos for like $140K max.

Real-life (around here) is way more than that. Waaaaay more.

Most of the This Old House renos are very expensive, fancy work. They'll show simpler stuff too. You get a sense of which is which after watching the show for a bit.

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