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Every time I
have a construction job that needs to be done, I go through the same
mental turmoil – should I get a firm bid or should I pay "time and
material"?
I’ve never quite
understood the fairness of bids. As I see it, there are three
possibilities when working on a bid:
I lose and the contractor wins
The contractor loses and I win
No one loses because for the first
time in the history of mankind the contractor estimated exactly
what the job cost him to do
Option No. 3 is
another way of saying "time and material." The customer pays the
contractor a set hourly wage for all his workers, including a surcharge
for overhead (workmen’s compensation, administrative costs, etc.) and
profit. Materials are included in the weekly statement.
Now that’s fair. It is what it
is; it costs what it costs. I’ve done it both ways, and while both bids
and time and materials make me uncomfortable for the sole reason that I am
spending a lot of money, I generally prefer time and materials. At least I
know I’m getting what I paid for.
I realize I’m giving up the
"win." But me winning means the contractor loses. I generally
like contractors. They work hard performing a dirty and difficult job.
Some of them even have families. A house, maybe a kid or two. One or two
of them might even have a heart.
I get no overwhelming joy
watching them lose their shirt at the end of a job. Maybe a slight twinge
of elation, but no overwhelming joy.
And besides, I get tired of
participating in conversations like this when a contractor knows he
underbid:
Me: Would you
mind moving that window one foot to the left? It will make a world of
difference.
Contractor: Not a
problem.
Me (two weeks later)
$4,652.42 to move one stinking window one foot!
Contractor: You’d be
surprised how much work was involved. I had to pull men off other work, we
had to reframe the headers, brace the joists, patch the sliders, search
for Shangri-La, give birth to quintuplets, blah, blah, blah. These change
orders can be expensive.
Worse yet is when the contractor
wins. They’re so happy you want to smack them right in the face. You
know they’ve won and won big when they start doing an extra something
for nothing.
"Well, the job’s all
done," they’ll say. "And by the way, I had one of my men sweep
your sidewalks, clean your gutters and drop your kids off at school.
Thought you might appreciate it, because we sure appreciate your
business."
"You greedy, conniving
bloodsucker," I generally respond. "How much extra profit did
you make off of me?"
That’s when they walk away,
laughing merrily off to the contractor’s hangout, where over a few beers
they tell stories about their latest pigeons.
Maybe I’m exaggerating a tad.
Bids can work out fine. And it certainly eases the stress factor to know exactly
how much the job will cost before you start.
One option I have used in the past is
to get a bid from a contractor that he guarantees he will not exceed, but
then still have him work on time and materials. If he comes in under the
maximum price, the savings is yours.
Most contractors have no problem
with this program. That’s because for some divine reason the time and
materials cost always comes to 99.99 percent of the maximum guaranteed
price.
"Hard to believe we were so
close," the contractor will say when his $25,474 maximum price came
in with an actual price of $25,472.50. "What are you going to do with
the $1.50 you saved?"
So I generally don’t
bother with bids of any sort. There are times, though, when they become
absolutely necessary. One is when a contractor would be working without
owner supervision. Another would be when you have no choice.
For example, in January, I’m
starting a large remodel-expansion of one of my retail stores. The project
is of such size that it requires bank financing. And banks aren’t really
interested who wins or who loses on a bid. They only want to know the
bottom line.
The words
"approximately" and "I would guess" don’t go over
well with bankers. I should know; I’ve tried.
So I’m getting bids. And as the
grossly inflated numbers start to roll in, it’s clear that someone will
once again win, and it’s not likely to be me.
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