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Old 04-21-2011, 10:30 AM   #1
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Profit margin "to give" to builder in CT


Hi Folks:

I am building from scratch a 450 sq ft 2 car garage on slab, with 350 sqft bedroom above, reconfiguring 300 sq ft room for a new kitchen and adding above that existing room a 200 sq ft bedroom with 50 sq ft bathroom. So all in around 1000 sq ft new construction with 200 sq ft exisitng construction.

Me (as jack of all trades master of none) had opened up a credit account at local lumber and cement/gravel place (with a contractors discount). I plan to pay for all materials and just pay the builder for labor.

I estimate around $200K for the addtion, with $50K labor, $50K materials, $50K for Kitchen, $20K for bathroom and $20K profit margin to builder (who I am using all his men for all stages of contruction).

Prices here in Greenwich CT range from $200sft to $300 sft. As I stripped out materials from builder, and did not sign any contracts (nor is his forcing me too), I was to ensure him a profit for this job. What is the typical profit margin on a job like this? I was going to give him 15% if he stays within budget (both time and money) and go down from there.

Is this too little, too much, just want to give him a fair and reasonable shake on this project. You thoughts?

Regards
Daren

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Old 04-21-2011, 10:34 AM   #2
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Profit margin "to give" to builder in CT


His profit should be built into the labor rate he is charging you.

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Old 04-21-2011, 05:25 PM   #3
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Profit margin "to give" to builder in CT


It sounds like your talking about an incentive fee. His profit margin( what he needs to makes living) should be built into the rate, but if you want to make sure you can offer an incentive fee and scale it to schedule/cost (even a bonus for coming under cost/schedule if that's important)

Best of luck
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Old 04-21-2011, 05:34 PM   #4
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Profit margin "to give" to builder in CT


Daren
It varies but...
If you guys operate "Cost-Plus" or "Time and Materials" which it sounds like what you guys are trying to do then a hard fast 15% is typical if he comes in on-money and on-time. He could probably make more if he was rating and quoting the job.
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