I was cruising my local Craigslist the other day and noticed a few adds by “handyman” types who were peddling their fix-it-all services for as little as $8/hour. Now, I realize that things are bad in my local area. Official unemployment figures for our area are several points higher than the State overall, which in turn is higher than the National numbers. But…  $8/hour? Really?

Some readers may remember my article from a few years ago entitled He Can’t Do It For That where I point out the potential problems customers can find themselves in when hiring someone who doesn’t know the difference between running a business and working for wages. Now, some may say, there’s a big difference between hiring a contractor for a major job and hiring someone for a small job like changing a light fixture of fixing a leaky toilet. Thing is, the rules of running a business don’t care how large the ticket price is. They remain the same.

Consider, if these folks are charging you, the customer, $8/hour to work, then here in California their “take home pay” is going to roughly $4/hour (the cost of payroll runs nearly 50% of wages paid here in California, and unlike employees, the self-employed have to pay it all themselves). Out of that $4/hour they have to pay for the gas and upkeep on the truck that brought them to your house, they have to pay maintenance and upkeep on the tools, they have to keep their truck stocked with the long laundry list of consumables that you, the customer, never get charged for like plumbers putty, pipe dope, tape, screw caps, screws, nails, saw blades, sand paper, solvents, rags, hand cleaner, and so on. And we haven’t even touched the “back office” overhead that even a one-truck Johnny has in the way of forms, bookkeeping, sales and income tax, and what not. So, after all of that, what would be left?

Let’s work a simple example: I’ll pretend to be one of these folks. Let’s say I come to your house to reset your leaky toilet. You’re 10 miles away and my work truck gets 14 miles per gallon (about what a Toyota Tundra gets). I show up. The clock is running.

• Once the toilet is up I discover that the seals on the supply line are shot. You’ll need a new one.
• I head to the hardware store to get you one. I’m working for only $8/hour dude, the clock is still running.
• The hardware store is 3 miles away. That’s a 6 mile round trip.
• I get back, reset the toilet with a new wax seal, hook up your new supply line, and I’m done.
• Total time for the job? Let’s be generous (to me) and say 90 minutes. An hour and a half.

So you own me $12 for my labor. Assuming I’m smart enough to mark up the wax bowl seal and the supply line, I might make another $2 there. So my gross income on the job is $14. After the tax man takes his cut, I’ve made $7. That’s $4.67/hour! Half of minimum wage! I ran my truck 26 miles total to do your job and get back home. At 14 mpg on my truck I burned 1.9 gallons of gas. Our local gas price (as of this writing) is $4.15/gallon, so the gas I burned in my truck cost me $7.89.

So already, without even figuring in overhead costs on my truck for things like insurance, lube oil and filters, tires, and so on, I’m in the hole. And I haven’t even begun to touch the cost of tools or consumables! (How many rags did I go through in lifting that toilet, for example? Or, did I have to add screws to the closet flange because it was loose?) And we’re not touching the cost of bookkeeping and accounting.

Now, ask yourself: What if something had gone wrong? What if I had dropped the toilet tank and cracked it? I owe you a new tank, if I can find one. Probably I’d have to buy you a new toilet. A cheap toilet runs $100. I’m working at a loss; do you really think I’ve got the resources to buy you even a cheap $100 toilet, never mind the nice one I just broke that probably cost 4 times that?

Unlikely!

Or, what if I had no idea what I was doing and totally screwed up the job? I’m working for (roughly) 1/8th the rate a licensed plumber works for, after all. So the probability I’m at least partially clueless is very good.

And because I, in this fictitious example, am unlicensed and unbonded, if something does go wrong you really have no recourse against me other than small claims court. But even if you won your case – and you probably would – your chances of collecting on the judgment are very small.  You didn’t hired a legitimate business working on a legitimate business model that allows a margin of profit to accumulate to cover little jobsite contingencies such as a broken toilet. You hired someone whose gross labor rate doesn’t even cover the bare costs of running the business, never mind leaving any money to take home to the family.

But that’s the very real risk you take when you hire a non-professional to work for you at or below minimum wage.

handyman, repairs

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A tweet went through my stream this morning asking the question: Should you install DIY solar panels? My immediate reply was: That depends on your technical skill level. That solicited a comment from a follower that DIY panels are not recommended. “Sealing / Optical clairity [sic.] / Serviceability / Time,” the follower said.

All are valid points. Jurisdictional restrictions not withstanding (I’ll get to those in just a second) none are reasons not to do the job yourself if – and only if – you have the technical expertise to do so. You should always buy the best quality equipment you can afford. Always. That’s true whether you’re talking about a coffee maker or solar panels.

That said, of course I’d prefer you hire me to do your installation for you. What contractor wouldn’t? But many will go further than that. They’ll go out of their way to make things sound as impossibly difficult as possible in the hope that you’ll feel like the process is so technically complex, so fraught with potential disaster,  that you’ll feel like you have no choice but to either do without or hire a professional. Hopefully them. Building industry lobbyists have become absolute masters at taking advantage of our screwed up tort system to manipulate municipal fears of home owners doing DIY projects. In some jurisdictions (like San Francisco, for instance), home owners can do little more than paint their bedrooms and change light bulbs. For everything else a licensed professional must be hired. And I mean that literally!

But America was founded by do it yourselfers. You want a house? You build it. Need a new spetic system? You dig one. That independent spirit is near and dear to the American heart and it is a shame that it’s being increasingly trampled by excessive government regulation and unscrupulous marketeers who play on fear to make a sale.

Hiring a professional to do the job for you isn’t the only option. Ethical professional contractors are usually quite willing to sell consulting time. By hiring a contractor as a consultant for your do it yourself project you get all the satisfaction that comes from getting your hands dirty on your own home, but you have professional backup if and when you need it. Or, you can do as much as you can yourself, and then have the professional come in to check your work and do the parts that are too technical. There are many options, and the contractors that would be worth your hiring in the first place are also the ones that will be more than willing to sit down and discuss DIY options with you.

Just keep in mind that no contractor is likely to let you work for them on your home. In most states the laws and regulations and our lovely legal system make such an option virtually impossible. In fact, even if only providing consulting services your contractor may require you to sign a release of liability. The reason is, in some states contractors are in the same boat as doctors. If we provide you paid consulting services and something goes wrong, we can be found liable even though it was you who actually turned the screws. Finally, don’t expect the contractor to teach you how to do the job. If you don’t already posses the basic skills and technical knowledge, you really do need to just hire the contractor to do it for you. S/he’s there to check your work and consult on details and code requirements, not to teach you how to do every step.

That said, if you’re the handy sort, go ahead. Get your hands dirty. It’s the American way.

DIY, do it yourself, renovation, remodeling

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I understand those country folks who simply do what they want to do with their own land. They want a house, they build one. They want a septic tank, they dig one. They want to remodel, they remodel, never bothering the hard working bureaucrats. In today’s world where the list of agencies one has to deal with, and pay, to permit a project seems endless, and where Big Brother Government seems to have intruded into every corner of our lives, I get it. I really do.

Unfortunately, this is the government we have elected and created. And while on the one hand I completely agree with Thomas Paine’s assertion that every man has a right to defy a government they believe has overstepped its authority, it must also be noted that Paine also willingly paid the price for that defiance. In fact, he got upset when another paid a fine that he flatly refused to pay! And, Paine encouraged others act likewise.

So what happens if you get caught having built a structure without the proper permits? Or, maybe you’ve bought a house that you later discover was built without permits? While the particulars vary, the theme remains the same. Beyond the fines and penalties which vary from place to place, essentially the building doesn’t exist in the minds of the agencies until it’s gone through channels. That means, the same construction documents that should have been filed when the building was built, must now be filed. And, since from the agency’s point of view this is new construction, the documents and the building must meet current code and regulatory requirements, not the codes in force when the building was illegally built. Some places are more lenient than others where things like septic systems and installed systems are concerned. But unless you’ve shown some contrition by hiring a professional to set things to right, the safest bet is to wager on the strictest enforcement possible. I know of one individual, who refuses to hire a professional, who has been trying to resolve matters for six years—and running.

Unfortunately, developing a set of construction documents for a building that has already been built is not as easy as doing it the other way around. One cannot simply assume the elements of construction like one often can with a remodel. The actual facts of the construction must be determined and then put to paper. This can requires walls to be opened up to examine header and framing sizes. Every door and window must be measured and cataloged. Wiring must be examined for sizing, proper circuit construction, and grounding. Plumbing and HVAC must be examined, the foundation examined, the lot must be mapped, the septic must be found, sized, and mapped; soils must be tested . . .  The list is very long. And since everything is installed, it takes time.

Then, after all the measurements and tests have been performed, all the required changes must be determined and submitted along with the ‘as built’ plans, to show what must be completed to bring the property up to current code before an official certificate of occupancy can be issued. And you can be sure all the regulatory inspectors will be watching every step of the way.

If this sounds daunting, it should. There is a lot of forensic work that must be done when the paper trail must be created after the fact. It may not be fair, but I suppose from the regulator’s point of view it’s all part of the punishment deserved for not being a good citizen and following the rules.

So if you find yourself in this unenviable position, consider the merits of hiring a professional to get you through it. The amount you have to pay that professional’s team to settle the matter may be considerably less than the cost of attempting to go it alone with a half a dozen very angry government agencies.

Now it’s your turn: Do you think the fees and penalties and sometimes outright punishment local governments met out to those who skirt the rules are fair, or foul?

So, you spend $140,000 on a deep energy renovation (DER) and, after a few years of doing the calculations, discover that you’re saving $2,000 a year on energy costs. Was that a good investment? This was a scenerio posed in the November 2010 issue (#214) of Fine Home Building. It begs the question, just how green is green enough, and what metrics should we be using to decide? When I posed that question as a discussion topic to a young contractor, he pooh-poohed the question as too easy and quipped: That’s up to the individual.

Truly. But that doesn’t mean “the individual” has the knowledge and expertise to make informed decisions.

Some time before I started this website I was called out to a lovely house that a couple had just purchased. It was a sprawling ranch style home built shortly after the end of the War. But whom-ever designed it was obviously not from Earth, since they thought the afternoon sun in the northern hemisphere was to be found in the Northeast. That’s where the sun room was located. It was a lovely sunken room with some of the biggest plate glass windows you ever saw set in redwood posts, two sets of hand made double doors also set with thick plate glass, and a natural stone floor that had been polished smooth. There were two double wide entrances to this lovely room. One from the formal living room and the other from the kitchen.

The lady of the house called me because, even though her new home sat on top of a sunny hill, her heating bill was $500 a month. And that was in the summer time! In the winter it topped $1,000. She and her husband had already dumped over $20,000 into a new kitchen before even moving into the house and, after reading about double pained windows and the efficacy of insulation were afraid they were going to have to do a very expensive DER, a message three other contractors had confirmed. Something they just couldn’t afford.

After a quick walk around, snooping here and there, I put the brakes on the whole DER idea. There were just too many other problems that needed to be addressed first, before ripping off siding, tearing into walls, and making that oh-so-fun walk down window lane at the hardware store.

That sun room was high on my hit list. It didn’t take thermal imaging to realize that it was a major heat sink—or, more accurately, cold sink. Being in the Northeast, it was cold even in the heat of summer—which was when I inspected the house. There was probably a ton of plate glass in that room, and you could see daylight under the thresholds of the double doors. In fact, you could see daylight under all the outer doors except the main entrance, which had obviously been changed. The furnace was original equipment. When it was installed, natural gas probably cost a half-cent per cubic foot. And of course, there was no insulation anywhere.

After letting the homeowner wind down while I inspected things, I sat her down with a pencil and paper and had her make out a list:

1. Weather seal all the external doors and repair the thresholds and door sweeps as necessary.
2. Install insulated curtains around the sun room. (A trick I learned from my mom who had a similar problem with big old plate glass windows.) In the winter time, close the living room and dining room doors to the sun room. In fact, weather seal them too, to help create a more complete barrier.
3. Insulate the attic.
4. Pitch that old furnace out into the street and replace it with a new Energy Star model. And make sure the HVAC contractor re-seals and insulates all the duct work. If they find duct work that’s bad, replace it. In fact, I sent them to my preferred HVAC trade contractor because I knew he’d treat them fairly and do a good job.

I made no money on that job. The husband of the house was rather handy, so everything but the new furnace was well within his ability. Nor do I know exactly how much they ended up spending. My estimate was less than $10,000. I did learn that the work reduced their energy bills by about 68%, and the cost of the work was paid off in energy savings in less than two years.

If you’ve been reading along here for awhile, you might remember that one of the first articles I posted was about life cycle costing. In that article I talked about something called Q*: The optimal point where energy savings and the cost of the work to achieve those savings, plus the maintenance cost over the long haul (the life cycle cost, or LLC), meet. Q* is, therefore, an economic calculation that may not serve the interests of those whose primary goal is not maximizing economic efficiency, but rather environmental impact. But for those who are seeking maximum impact for their dollars, Q* is absolutely critical, if very hard for a layman (and even many contractors) to compute.

Moving from the far left edge of the graph above to as close to Q* as I could get without breaking their budget was my (informal) goal as I analyzed the house and provided guidance to this particular family. Did we reach Q*? I certainly moved the needle, but I doubt we got very close. To be honest, I didn’t do the math. I didn’t have the actual numbers with which to do the calculations even had I wanted to. But I think I came closer, if on the left side of the graph, than the over-kill in the first example did on the right side of the graph. Even adjusting for inflation, the folks who dumped $140,000 into their DER will take 44 years get their money back.

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Written by Holly C. Bertsch.

Originally posted on Building Moxie… The Blog. What she has to say is just so important for customers to remember when looking for a contractor — whether for a new project or a remodel or repair — that I’ve reprinted it here with her permission.

Did you know that when you are interviewing a contractor, they are often interviewing you too?

It works both ways, much like a job interview should. Unless said contractor is desperate for work, they are often checking out your project and making a mental decision on whether they want to take it or not. By asking questions along with the usual first time formalities of an initial meeting, your contractor is drawing conclusions about your project, and how you, as a consumer, would be to work for. And believe me, I have turned down high paying jobs simply because a prospect did not seem as though they would be easy to work for (more on that later). I am not saying that I want a person to be a pushover, just accepting anything that we do, but I do want some understanding and flexibility — because without these things my job would be nearly impossible.

Another thing we look for in potential projects is: Is it even feasible? Are you thinking you can have champagne on a beer budget? Are you wanting to turn your only outdated 5′x8′ bathroom into a spa retreat (which we can do, if you are prepared for some serious inconveniences)? Are you wanting some HGTV miracle makeover to happen with no planning and in a very short time frame? Are you wanting to complete some of the project yourself, and are you capable of doing it in a skilled and timely manner? And . . . the most important, are you desperate to have this work done, now, no questions asked, no planning, no budget considerations? These all are big red flags to us. A good contractor works with time, planning, budget, and your dreams to make your project a complete success.

A well respected contractor also looks for problem customers. I am not talking about the type of customer who wants to stay informed and be really involved in the process. I am talking about the customer who wants to “run” a project, or considers themselves a general contractor. The one who wants to buy every single two by four and basically seems to think they know how to, well, run a project. These people usually have full time jobs, or are semi-retired, and fancy themselves as experts because they may have even “overseen” the building of their own home. They often demand a lower rate because they feel the “general contracting fees” should be waived.

We typically do not want to work with someone on a “contract basis” and/or someone who wants to be their own GC. This is usually because we end up wasting a lot of time doing their job as the General Contractor for them, in other words — scheduling deliveries, running to the store for materials, and dealing with otherwise poor planning on their part. We have been doing this a long time and we know what needs to be done, when and by whom. If you want our particular skill set, you can feel free to hire us at our company rate by the hour as sub-contractors for your project. Just know though that it may end up costing you even more, because we exactly know how to make a job run efficiently. After all, we do this every day. The amateur general contractor-type usually rubs a good renovation contractor the wrong way. (Remind me — I need to write a whole new entry about this alone, so forgive me for venting in this paragraph! –Holly)

What we look for usually is a customer who is genuinely interested in what will be going on during a project, has questions initially and along the way, and is willing to grant some type of confidence in us. It is a short-term partnership that is formed to reach your final goals, as well as ours. We want to see your project through to completion, to your full satisfaction, and with a full payment at the end because we stuck to your budget. Can you begin by relating your wishes and dreams to us, but still be willing to accept advice and realities?

A good general contractor will want to “feel out” an initial customer during a few meetings to determine if this is a customer they want to be working with. A not-so-good contractor may be all smiles, wanting to jump on whatever job you have – right away. This not-so-good contractor in general may also be a little too over-enthusiastic about your work. I am not saying that it is bad to have a person who is excited about your project, because we often get excited about certain types of work, but if they seem to be desperate, they may not be the contractor for you. A good contractor is usually booked at least a month to six weeks out or more. There may be extenuating circumstances when they are not, but remember, a good renovation takes planning and . . . time.

A good contractor will be looking at you, while you are looking at them. They will qualify you as a potential client. Sometimes, a contractor will not call you back or answer your emails. I have heard this complaint from customers of ours before. They call a few professionals, and never get a call back or they meet with said professionals and never hear from them again. Maybe the problem is your expectations or your attitude? Maybe they are just really bad contractors? Maybe you need to call more professional contractors. Or you can call us, no matter where you live, and we will give you our “always free advice” because we are good, honest, and receptive remodelers.

And this is my two cents.

On Thursday, April 22, 2010 the new Federal Renovation, Repair, and Painting (RRP) law became the law of the land. Much has been written about it, and most of what has been written is pointed at industry professionals. So, what does the RRP law mean to you, our customers and property owners.

It means a lot!

Are you affected?

If you own a building that was constructed prior to 1978, the law applies to you and will touch on almost everything you have done, from flooring to repainting to plumbing. Only jobs covering less than 6 SF (six square feet) on the interior and 20 SF (20 square feet) on the exterior are exempt.

Jobs that fall under RRP jurisdiction must be performed by a “registered company” and a “Certified Lead Renovator” (CLR), and you must be provided a copy of Renovate Right: Important Lead Hazard Information for Families, Child Care Providers, and Schools (PDF), and sign for receipt of the pamphlet. (The duties of the CLR are identified in 40 CFR 745.90(b). You can read the regulation here.)

What does this mean? Well, that’s a bit gray. It seems to mean that, unless your job site has been certified to be lead free, not only must the general contractor you hire be “registered” (with the EPA) and use a “Certified Lead Renovator”, it also seems that the firms s/he subcontracts with must be registered etc.—unless they’re not disturbing lead paint or dust. So for instance, if the general contractor clears away all contaminated dry wall, s/he could then hire a non-CLR plumber to come in and re-plumb that area. But if the plumber has to remove contaminated dry wall, then the plumber too must be a CLR. The difficulty is in the wording of the language. The square foot rule seems to be a trigger for the lead safe work practices, not the requirement that the firm be registered and the workers trained.

Owners of rentals should take special notice: Not only does the CLR have to keep certain records to prove they have complied with the law, you do too. You must provide your tenants with copies of the Renovate Right (PDF) pamphlet, and have them sign for it. I personally think you should also request copies of all lead practices compliance check lists and tests performed by your contractor for your own legal protection. Reputable firms should be more than willing cooperate as it’s in their best interests too!

Also, you cannot opt out! As originally written, Congress allowed property owners to opt out of complying with the RRP by signing a sworn statement that there were no children or pregnant women living in, or visiting, the building. But last year the EPA, the Sierra Club, the New York City Coalition to End Lead Poisoning, and others sued for stricter enforcement—and won. The EPA website says it has:

propose[ed] to expand lead-safe work practices and other protective requirements for renovation and painting work involving lead paint to cover most pre-1978 housing, and after certain renovation, repair, and painting preparation activities are performed to require renovation firms to perform quantitative dust testing to achieve dust-lead levels that comply with EPA’s regulatory standards. Renovations on the exteriors of public and commercial buildings will also be proposed to be covered and EPA will evaluate whether renovations in the interior of these buildings create lead-based paint hazards.

Whether the opt out rule is really gone or not seems to be something of a debate. However, you can get around the law by doing it yourself. Obviously the EPA highly recommends you follow the guidelines set forth in their Renovate Right (PDF) pamphlet. It is also recommended that you call the National Lead Information Center at 1-800-424-LEAD (5323) and ask for more information on how to work safely in a home with lead-based paint. (See 40 CFR 745.82. You can read it here.)

How will RRP compliance effect my job?

Obviously, it depends. If the site of a proposed job can be certified to be lead free, then there will be no impact at all. On some jobs the impact to those using the building will be minimal. This is especially true if there is easy direct access to the job site. On other jobs, however, the impact can be pretty dramatic. The EPA recommends, and your contractor may insist that:

• Alternative bedroom, bathroom, and kitchen arrangements be made if work is occurring in those areas of a home.
• Occupants use a different entrance to the building than that of the contractor. In fact, the entire work area and its communication with the outside should be kept separate from rest of the building as much as possible.
• You remove all furniture from the job site. Covering it up is likely not going to be acceptable—save perhaps for tables and other hard finished furniture with no drawers.
• Air ducts from HVAC equipment be disconnected from the system.
• For really invasive jobs where containment can’t be guaranteed: That you move out! (If you run a child care facility, it is highly recommended that you not only close the facility during construction, but that you implement all of the above in addition to closing.)

What’s this going to cost me?

The EPA claims all of this is only going to cost you between $8 and $167 per job. As usual, things out here in the real world look a lot different than they do inside those government cubicles. Little by little state General Contracting Associations are coming up with numbers and they’re not good. Estimates start at around $500 for a small kitchen remodel and go up to as high as 30% of the cost of a job. Which means RRP could add as much as $6,000 to a $20,000 job.

But that’s just the direct cost the contractor must add to the job. Then there are the indirect costs to you, such as: temporary lodgings, meals out, storage fees for furniture, down time to your business, and so on.

So, what do you think?

Thanks for asking. For those who don’t know: I’m a green design/builder. I’ve been around for thirty years, and I’ve spent more than my share of time in D.C. I could give tours through the underground tunnels beneath the capital.

I’ve been pretty vocal about my belief that this law is bad, bad, bad, and should be repealed. Not because it’s intent is wrong. Not because we should ignore lead paint and its related health issues, but because:

A) It probably won’t be enforced. The EPA has no funding for enforcement. It is my understanding that they are currently lobbying Congress for the necessary funding to open enforcement offices around the country. Given that the deficit is rapidly becoming the crisis de jour, I doubt they’ll get it. So in the end, responsible builders will follow the rules; the hacks will continue to be hacks and get away with it. Therefore, nothing will change; we’re no safer than we were. We’ve just spent more money and forced responsible contractors to take on more liability.

B) If the EPA does manage to get funding for enforcement it will probably make things worse rather than better. Like all Federal agencies, it’s a huge, top (management) heavy agency with no experience in construction, and no stake in local communities and their businesses. Its relationship with contractors will be adversarial, rather than solution oriented like that of the local building inspectors. (If you’ve ever had to deal with the IRS or the SSA then you know what I’m talking about.) Over time, EPA harassment can only drive up the cost of doing business and guess what: You, the customer, will be picking up the tab.

C) The States already have hazardous material mitigation and containment programs in place. Rolling a lead program into those systems would cost us (as taxpayers) almost nothing. And for that “nothing” we would have gotten a real mitigation and containment program with meaningful involvement and real enforcement through the contractors and agencies already doing that very work.

Now it’s time for you to tell me what you think. Have I forgotten something? Leave a comment and let me know. Agree? Disagree? Let me hear!

When the quote range on your job runs from $3,000 to $75,000 you’re in trouble. I actually got an email from an individual with that big of a spread for one, single job. He was using the spread to justify his amusement at how architects price jobs based on a percentage of the cost of construction.

He saw the spread of the bids he had received for his job as making his point. I saw something completely different in his example.

First, I saw a bid spread of 400%, which means total chaos. Either there were no construction documents what-so-ever, or they were little better than napkin drawings. Often the cause of such chaotic bidding is a complete lack of construction documents. The customer walks each bidder around the job site pointing here and there, explaining “exactly what they want.” Unfortunately, those explanations often vary wildly from one bidder to the next, so each bidder leaves with a different idea about the scope of work.

Second, I saw a customer who wanted to appear more knowledgeable about the building industry than they really were, which blinded them to the warning flags the bid spread should have sent up.

If all bidders are getting the exact same information about the scope of work, the normal spread in a group of bids should be around 25%. Most of this spread represents differences in each company’s overhead costs, and an assessment of risk involved in doing the job, which the estimator builds into the price. A smaller fraction will be made up of differences in the desired profit margin and crew efficiency. The actual underlying costs remain pretty much the same for all bidders. Pay scales run within the same range, and in most communities the bidders will all be buying their materials from the same suppliers.

So what do you do if you have your job bid and the results are wild? Take a good look at your job. Ask yourself these three questions and consider the solutions:

• Do you have as set of construction documents? If not, this may be a sign that you need to spend the extra money to have some drawn up by a professional. Depending on the size and complexity of the job, you might also consider hiring a professional to manage your job and advocate for you. A construction manager can sometimes save you far more than they cost.
• Did everyone get the same information? If you didn’t have a set of drawings and specifications to hand all your bidders, did you work off of an outline? Unstructured “walk around tours” are nice and all, but you have to make sure you show the same things, and make the same points, to each bidder.
• Did you use the bidding process as an opportunity to gain information about your job? This is a really common practice. And it’s a mistake! Collect information first. Decide exactly what you want done. Pay to have construction documents drawn up if need be. Then get bids on those documents.

Once you’ve identified and corrected the problem(s), you’ll have to go through another round of bidding. Responses from the first set of contractors is likely to be mixed. Working up a bid is a lot of work. It therefore costs money for the contractor to do each and every one. So some will happily come and re-bid the job, others will decline. Be prepared. (This is one instance where a construction manager can be a big help.)

But I can guarantee, if you utilize the tools above, the results will be well worth the time, effort, and money in the quality of bids you receive, and therefore in the quality of building professionals you end up working with.

Back a couple of years ago, during the housing bubble, I heard a lot of complaints about how hard it was to get a contractor to even return a phone call, never mind scheduling the work. And, with that much work around, there were also lots of complaints about the high prices.

During the boom, understanding the difference between (self) employment and running a business was optional. If you knew how to estimate materials correctly and had an idea of what “everyone else” was charging for “similar jobs”, you were golden. That’s really all it took. Demand kept prices high, so even the least business savvy contractor was almost guaranteed to make money.

And believe it or not, that helped you, the customer. The contractor was making enough money to pay all the bills associated with the job. So even if the contractor you hired was a terrible business person, the chance that you’d get slapped with a mechanics lien by some subcontractor or supplier because your contractor didn’t pay them was reasonably low.

Not so today. Now that the bubble has burst, jobs are not so plentiful. Competition for those that remain is much higher. And while you may think that’s a good thing because it means you’ll get your job done cheaper, keep in mind that beyond a certain point, “cheaper” also means riskier. Sometimes, much riskier.

Back in February I told the story of a career carpenter, now self-employed, who was working for the same hourly wage he’d been paid as an employee.

Now you might think: “Wow! I can get this job done really cheap with this guy.” And, if all goes well, you might be right. Or, you might find out the hard way just how expensive this guy really is — not because he doesn’t know his trade, and not because he’s dishonest. Rather, because not being a business person, and therefore not knowing how to correctly price himself and his job, he leaves both himself and you vulnerable.

For an example, let’s suppose Mr. Carpenter here owes some back child support he hasn’t been able to pay (probably because he’s not really making any money on these jobs he’s doing). So, while he’s working for you the State decides to exercise its right to drain his bank account to collect. Well, Mr. Carpenter owes the Home Depot money for the materials he’s bought for your job. And the State just took the money and gave it to his ex-wife! They not only took that money, they also took the money he needs to live for the next month.

So now he has no money to pay for installed materials, no money to by food, no money to put gas in his truck to get to work (your job), and no money to fix any of his tools that might break on the job.

But all of that’s his problem, right? Yup — until it becomes yours!

Because in most states, Home Depot has the legal right to place a mechanics lien on your house for the materials Mr. Carpenter bought and installed in your home — whether he was a licensed contractor or not; whether the job was finished or not.

Now, I’ll admit that this is an extreme example. But in this economic climate, as contractors (and their former employees) get more and more desperate for work, you’re going to see more and more bid that are not just low-ball, they’re down right ridiculous.

In my article on how to choose a remodeling bid I provide some common sense ideas on how to at least winnow down the bids to those that make sense. Those same techniques will also eliminate individuals and contractors like Mr. Carpenter. Because this information is so important, especially now, let me repeat it here:

• If you have a bid that’s disproportionately low, throw it out. “Low balling” is a bidding tactic that some contractors use to get jobs that is, in my opinion, dishonest. Basically the contractor deliberately under bids the real price of the job in the hope of being the lowest bidder. Then, after s/he’s gotten the job and the work has started, s/he finds reasons to get you to sign Change Orders that progressively raise the price up to what the bid should have been in the first place. In some states, I understand a contractor can be disciplined for using this type of bidding tactic.

  Another reason a contractor might submit a low ball bid is because they have no intention of doing the work! They take your money and disappear with it. This year was a particularly nasty one for transient operators.

  In either case, this isn’t the kind of person you want to hire.

• If you have a bid that’s disproportionately high, throw it out unless you can find a darned good reason for the high bid — or you and this person just really hit it off.
• That leaves you with a pile of middle bids that are all worth your consideration. All other factor’s being equal, I recommend picking the contractor you get along with best, not the lowest bidder — though the two may be the same. Because remember, this individual and his or her crew is going to be around five or six days a week for months on end! You don’t want the industrial version of your mother-in-law!

Good luck evaluating the bids for your project!

contractor, bid, bids, bidding, soliticting, remodel, remodeling, recession

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The design/build method of building isn’t exactly new. But it’s growing popularity in commercial and public construction has taken time to trickle down to custom home building.

And for good reason.

Design/build is a very different animal. Even if you’ve had a home built before, and so are familiar with the standard architect/design and construction contracts, design/build can seem as mystifying as it is attractive. The advantages:

• Design/build is usually a “turn-key” operation. Your building project is overseen by an architect or general building contractor who acts as your representative for the whole project: From earliest conception to handing you the keys.

  That can take lot of stress out of what is, for most people, a very stressful project.

• Because the project is under one firm’s management, the entire project is streamlined, which aids in budgeting control and time management.

  This reduces costs and decreases the amount of time it takes to deliver the project.

• You don’t don’t have to shoulder the burden for making decisions you might not feel comfortable with: Like selecting a good builder or plumber or making the testy bureaucracy come to the table so you can get on with things.

  Your design/builder is (or should be) a professional. S/he knows how the system works, and knows whose going to do a good job building your new home.

How A Design Build Contract Works

Unlike a standard construction or remodeling contract, where the contractor is handed a set of construction documents and asked to quote a price, the design/build project starts with no more than a budget and a conception. The conception is often no more than sketch drawn on a napkin over lunch. The purpose of the design/build process is to turn that napkin drawing into a finished project for the money in the budget.

To do that, the design build contract talks about phases of work, and uses control documents to allow you and your design/builder to manage each phase of the project with respect to the budget.

The first phase is the design phase: Here you and your design/builder turn your dreams into construction documents. In this phase your design/builder will be estimating prices for you from well known statistical data. Your design/builder will also be working with the various regulatory agencies to make sure that their requirements are met, and that there are no road blocks in the way that will prevent the project from ever seeing completion.

In my contract I call the first step in the design phase “project feasibility”: Can we build the house you want to build? Are there any impediments that will either be too costly or virtually impossible to remedy? Questions I like to answer for the customer before money starts being spent on designing a house that can never be built!

In design/build, project progress is usually controlled by a document called a “Notice To Proceed”. This is a document usually given to you by your design/builder, which you have to sign, that gives him or her your authority to proceed with the step. Along with the Notice To Proceed there is also usually some requirement that the design/builder provide you a budget estimate of what that phase of the design process is going to cost.

Personally, I break things up into three phases: Feasibility, design, and production of the final construction documents. That way, at any point along the way, you can stop if you need to. If fixing some site problem is going to bust the budget, we’ll end up stopping in the feasibility phase. If I can’t seem to get the floor plan to look like you want, we’ll never get past the design phase. You’re free to hire someone else to move the project forward. But if we make it through the first two hurdles, then we’re ready to nail down the final construction documents needed to begin construction.

Which brings us to the construction phase: In a linear sense, once the construction documents are completed, your design/builder will ship the plans off to the various suppliers and trade contractors who will be building (or bidding to build) your home.

In practice, the design/builder has usually already been talking to vendors and contractors about the project, so much of the preliminary budgeting and bidding work will have been completed by the time the building department signs off on the final documents.

In any event, when all the bids are in and the prices are known, your design/builder will present you the final price and time line for construction. This is usually done in the form of another (the last) Notice To Proceed with construction. This Notice To Proceed will look the most similar to a traditional construction contract, containing, among other things, the progress points at which you’ll be required to pay preset amounts on the project.

Until eventually you’re writing that final check and being handed the keys to your new home. Project, and contract, complete.

Things To Watch For

Unlike regular construction projects, your relationship to your design/builder is going to be a lot more intimate. There’s going to be quite a bit of back and forth as you make the hundred or so decisions that only you can make about your new home. At the same time, you need this person to be able to tell you when something just isn’t going to work for one reason or another. So your design/builder needs to be someone with whom you can develop a good working relationship.

It also needs to be someone who will treat you fairly. Be wary of contracts that lock you in early. I have heard that new AIA (American Institute of Architects) design/build contracts apparently make you pay a severance fee if you decide to let the architect go prior to completion of the project, for instance. This locks you into a relationship with a person you may hate to death, or forces you to pay a healthy fee to get rid of the git!

At the same time, realize you need to treat your design/builder fairly too. It’s unreasonable to expect your design/builder to put a month or more of time into initiating the construction process, lining up subcontractors, vendor pre-construction materials orders and delivery schedules, putting together a construction schedule so the subs know when they’re expected to appear and so on, only to then be told you’re letting them go. Many design/build contracts, including mine, do expect some compensation in that eventuality. But that’s very late in the process. And long before all that pre-construction time gets invested, you should know whether you want your design/builder actually building your house, or whether you want to put the project back on a more traditional design/bid/build track and look for someone else.

Make sure your contract keeps you in charge! I can’t emphasize this enough. Don’t be bamboozled by some fast talking contractor or architect. This is your home and your money. Certainly there are rights and commitments on both sides, but in the final analysis your design/builder is, or should be, working for you. The contract should reflect that.

In the same vein, don’t ever sign a contract that locks you into your design/builder’s schedule. The schedule should be something worked out between the two of you, and documented via the supplementary documents attached to the Notices To Proceed as circumstances and conditions dictate.

Finally, maintain your self awareness: Building a new home is more stressful that most people realize, even using the design/build method. If you need a break, don’t be afraid to tell your design/builder you want to put the project on hold for a few weeks while you take a vacation. (Don’t over look the fact that your design/builder might need a break too. S/he’s only human, and burn out is as common in construction as it is in other high-stress jobs. But they probably won’t ask. You’ll have to “recommend” it.) If you need to sign a change order to make that happen do it! Believe me, in the long run, losing a month to take a breather will seem a small price to pay for the increase in quality and satisfaction you’ll have with your new home.

Good luck with your design/build project!

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Last night I was chatting with a friend who related the lament of a contractor who had just lost a contract to a “kid” who had bid the job so low, the older, more experienced contractor knew the young fellow couldn’t complete the job for the contract price.

It’s a perpetual problem built into our American construction culture. Journeymen and master craftsmen are pretty much expected to become contractors themselves. Young people, attempting to avoid the minimum wage racket of fast food, take classes in school, leverage that into a part time job after school helping a builder, then work full time in the summer. By the time they’re 18 they’re almost journeymen; by the time they’re 25 they’re senior journeymen at their trade, and are crew chiefs or construction supervisors.

Many will decide to become a contractor. And there’s the rub.

Yes, they know the craft. But knowing how to build a house has nothing to do with knowing how to run a business, or how to accurately compute the cost of building that house. They don’t know the difference between their hourly wage and what it costs the boss to pay them that wage, and they have no concept what-so-ever of what it costs to run “the back office.” And ironically, even given another ten to twenty years in the trade, they still won’t know.

This was amply demonstrated to me many years ago. I was called out onto a job site on which a master carpenter was doing a beautiful job of fitting a hand made, cherry wood arched door frame into obtusely angled opening. The man had thirty years experience in his trade. All of it spent working for a company in Sacramento. Finally, he’d decided to strike out on his own. One day I had the opportunity to ask him what he was charging the customer. His answer: $25/hr!

I was stunned.

He was working for his former hourly wage, oblivious to some rude realities that were going to catch up with him at tax time: All those taxes his employer had paid for so many years — or had split with him — were now his responsibility. And then there are the hidden costs of being your own boss: Vehicle maintenance, bad debts, adverting, the non-billable hours of work that go into paperwork and bookkeeping, broken and worn out equipment — all costs not built into an employee’s salary. All costs the Boss has to factor into the price of every job.

There is a double standard in the construction industry, as in so many other professions. We expect people to go from being employees to business experts in their formerly salaried position with with the wave of a bureaucratic wand. Upon issuance, the master craftsman is supposed to be an expert on contracting law; to know how to bid a job, how to make payroll, how to write at least three types of legal contracts and a half a dozen other routine forms, none of which he’s likely ever even seen prior to striking out on his own.

There is no easy answer. In California the State License Board fails dismally in its task of attempting to turn craftsmen into business people by teaching them what the State thinks they need to know through the trade and License Law tests. But at least it’s trying.

In reality, this is problem bigger than, California. It’s a problem in all the States. The same mechanism that works so well in teaching young people the building trades — apprenticeship — fails dismally at teaching them to be contractors, and for good reason: Turning a young apprentice into a valuable employee is in the best interests of the employer. Turning a valuable employee into competent small business owner creates a competitor for the employer. Few contractors want to see yet another contractor succeed on their turf. Let the kid learn on is own!

And who gets to pay? Unfortunately, the public. Contractor horror stories are at least as common as medical horror stories. All too often the bubbly home owner’s enthusiasm at discovering they can get that new kitchen at a price they can afford turns into a nightmare of delays and cost over-runs that have them scrambling for money from everywhere they can find it, just to get a usable kitchen.

Sadly, often it isn’t really low-balling; it’s simply a lack of experience.

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