Home builder is building a 3000 sq ft home, and asked me to give him a price. I have a set of plans and the home is large. Never having bid on a project before, I really have nothing to go by but a price of 2.25-2.50 per sq foot, to build it to code and everything else a t&m price. My problem is that I don't have the capital to lay out for the material at this time. I really don't want to go into home building as it is too cut-throat and demanding, but one home at a time would seem to be manageable , and I wouldn't be jeopardizing my service oriented business.
I explained my lack of experience in contracting to the h.o., and he asked me to bid anyway.
What should I do to ensure that I don't get ripped off? I am not out to make a killing, I just want to ensure that I get my hourly rate, and reimbursed for materials? Any advice would surely be appreciated.
Thanks

How would you feel if you worked three weeks out of the next four and had a material invoice due with no check from the builder? Does this sound like something you want to low-bid for?

(Just my jaded opinion)

Dave

Honestly, do you have a contractor friend who can do this house with you?

One who has the credit with the supply houses to get the material? Experience doing these installs?

You'd be surprised at how much this will affect your service business. This house will take you 2-3 times longer than you figure.

If you want to do it on your own. Go to your local supply house and talk to them about credit. Get ready to work 18 hour days for about 2 months. 8-10 on this house, the rest on your service customers (if you let them down, they will do somewhere else)

Get a sizable deposit before your start the project (1/3-1/2) this will give you some working capital.

Bust your ass.

I'm getting cold feet already. I wouldn't consider taking a job on like this without a contract gone over by my lawyer, that I don't have anyway, and considerable up front money from the homeowner. I also got advice while working for a contractor in the past who reminded me of all the times he had been ripped off. Best to leave this one alone, I guess. How do I tell the homeowner that it is too much responsibility and risk for me to handle without sounding like a wimp?

Don't sweat it. They weren't going to have you do the job. They just wanted your bid to talk the regular EC out of some money.

Dave

Talk to your local inspectors, they are great for this type of thing. They may know the builder, know his track record, and may know other trades who have done work for him before.
And it's free...

Capital? Look into business credit lines from your bank, use what you need and pay it off...

Don't start pulling wires in walls until the plumber is completely done, same with HVAC. Same with the framers, otherwise you may be installing and uninstalling/moving wires because of them, make sure this is known to the builder first.....

Dnk...

"one home at a time would seem to be manageable"

It never happens that way! There will be 4 due at once and then none at all for some (unpredictable)amount of time.

"I just want to ensure that I get my hourly
rate"

Not happening, unless your hourly rate is $15-$25.00.


OH, OH,... and don't forget to take your heart medication!!!

[This message has been edited by Redsy (edited 04-13-2006).]

Didn't we just have a thread about business plans?

If home building is not part of your plan...that is, if that's not what you are set up to do, then turn it down. You can't be all things to all folks, so don't even try.

If you can't afford the risk then don't take the job. If it's not you area of what you do then it is better to pass.

Kinda sounds like you don't know how much time or materials it will take you. Without that your dead in the water on bidding.

Maybe it would help you more if you figured the number of days it would take x what your days labor is. Plus material, waste, warenty, MU, etc.

Don't just copy what the other guy is charging. Maybe the HO trusts your work and is willing to pay much more then $2 for your services?

LK,

do you use a factoring company? or does your regular bank to it for you?

what % are you paying at your bank? I learned about this a few years back from a customer in the garment industry. He was paying around 0.75%

I've had about a half dozen or so, of these new house deals and I have taken the H.O. to MY bank for a credit check and had the H.O. use my bank for financing. It works for me and the bank likes it because I'm bringing them more business. I have worked a few deals with the banker to put some "seed" money up front to get any extra materials for the job that I don't normally have around the shop, if the H.O. has the proper line of credit. The bank also gives the H.O. a bit of a break on interest rates as well, so everyone wins a bit.

The best part is that I can rest easy when I know I won't be getting stiffed for the work because the banker has done all the background stuff on the client before the real work starts and I know the H.O. actually does have a valid credit rating.

As to your estimating of the job, that's a whole other issue. I have a very good supplier that wants to sell his stuff so he keeps me up to date on prices about once a week.

A 3,000 square foot house around here in Alberta will probably take about $3.50 to $4.00 per square foot for the material. I charge by the hour on these kinds of jobs, so you can work out an estimated time for your work. It helps a lot to have a helper for new stuff and NEVER do the rough-in until the lugans are done with plumbing and HVAC.

New house construction pricing takes a LOT of detailed work. I have even added up the price of cable staples into my work. Estimating is an artform to me and I ususally add a cushion for those ever present "unknowns" that always come up. I use 10% and it's never gone south on me yet. The only job that I took that went over estimate went over by 1.5%, which I agreed to eat because I won't back out on a contract price.

Hope that helps.

CheckPilot...
"$3.50 to $4.00 per square foot for the material. I charge by the hour on these kinds of jobs"

I think it is less than $1.00 / sq. ft. for material. Around here, you can get about $1.50-$2.00 sq. ft. for large volume builders, and about $2.00-2.50 for small, custom builders, excluding options.

BTW,

I agree you can't bid by sq. ft. Unit pricing is the only way to go. Although, afterward you can calculate the sq. ft. costs

I politely explained to the homeowner that due to the price of materials I could not undertake a job of this size at this time, and I recommended my former employeer to him as the best custom home builder in the area. I will stick to my service work and forgo the big money building business.

Thanks for all the advice you guys have given me.

Festus