Comprehensive Guide to Remodeling Estimates and Contracts

1. Chapter 13Estimates for Remodeling Work

2. Introduction • The remodeling business is different from new-home building in a number of ways. • The remodeling contractor usually deals far more closely with the customer. • There are generally no architects or designers between the homeowner and the remodeler. • Often, there are no drawings to inform the builder what is required. • The remodeler is dealing with structures that are in place. • Much of what is required may be seen and physically measured, but some items cannot be properly assessed because they are concealed. • There is generally more uncertainty with remodeling.

3. Contracts for Remodeling Work (1 of 2) • Lump sum contracts • If the scope of work is well defined and the owner has no wish to get involved in the construction process, this is probably their best option. • The builder needs an accurate estimate to make a profit because of the the risk involved. • Cost plus and management contracts • This makes it easier to make changes. The owner can even design the project as it is built. • Builder/construction manager works for a fee. • There is less need for an accurate estimate up front. • A rough estimate may be called for before work begins. • Or possibly, the builder agrees to a maximum price.

4. Contracts for Remodeling Work (2 of 2) • Unit price contracts • It is used when the amount of work required is uncertain. • Builder will quote a series of unit prices and be paid for the actual quantities of work completed multiplied by these unit prices. • In addition to the cost of the work, unit prices have to include the builder’s overheads and profit. • Combination contracts • For example, the builder is paid a lump sum for the main part of the work; paid unit prices for underground work; and paid cost plus for extra work.

5. The Remodeling Estimate • Steps in preparing an accurate lump sum estimate • Clearly identify all the work to be done. • Measure the work to be done. • Price the work. • Because scope can be uncertain, estimator needs: • A clear outline of what the owner wants • A detailed analysis of the existing building • A detailed plan of what has to be done, and how it is to be achieved

6. Measuring the Work • Measure the work in accordance with the rules described in previous chapters. • Measuring demolition work • Work is measured from information available. Where information is lacking, the estimator shall specify any assumptions made. • Dust curtains, temporary partitions, and such are described and measured in square feet. • See Chapter 13 for further rules of measurement for demolition work.

7. The Remodeling Takeoff • Make lots of sketches. • To define the existing conditions • To outline the new construction required • Specification notes are also useful to indicate what has been allowed for in the takeoff. • It is important to inform the homeowner about what work is included (and not included) in your quote. • On larger jobs with multiple buildings, it is best to proceed building-by-building; then room-by-room in each building. • Sometimes estimators use a simple checklist to ensure all aspects are considered for each room on the project. • See next slide for an example.

9. Pricing Labor and Equipment • In the remodeling sector, much of the work is completed by the builder’s own workers. • Productivity of labor and equipment depends upon two main factors. • Job factors and labor and management factors

10. Job Factors • Weather conditions • Especially roofing and landscaping • Access to and around the work area • Poor access may limit equipment use. • Size of the project • Larger jobs are generally more productive than smaller jobs. • Complexity of the tasks involved • Complicated work will be less productive. • Location of the job • Availability of materials locally, etc.

11. Labor and Management Factors • The estimator needs to be aware of these factors and adjust prices according to project circumstances. • Quality of supervision • Good supervision is very important to attain high productivity. • Motivation and morale of the workers • High productivity is possible only with good workers. • Good tools and equipment • Productivity suffers if tools are too old or poorly maintained. • Experience of supervisors and workers • If supervisors and/or workers lack experience, high productivity will be difficult to achieve.

12. Labor and Equipment Productivities • Productivity records from past jobs are the best source of productivity information. • Otherwise, you can resort to publications such as Means Cost Data. • Keep a summary chart of historic productivity rates. • See next slide for an example.

14. Pricing and Summarizing • Pricing materials • A list of materials can be compiled from the takeoff onto bill of materials, or recapped with labor and equipment onto pricing sheets as described in Chapter 9. • Pricing general expenses • General expenses should be similar to a housing job. • Use a general expense sheet as a checklist. • Price the items required. • See example (next slide). • The summary and bid • The estimate is summarized and the bid prepared in accordance with the principles discussed in Chapter 12.