Discussion on Contractor Estimates/Contracts
 

The example cited was meant to create some perspective on the subject. I fully understand the legalities and differences between an owner and employee. You can absolutely compare the two since both have the ultimate goal of making money while reducing the expenses to do so (for example employees who drive company owned, state owned, or government owned vehicles to and from work). Both feel they should be compensated for their time yet it is all right in the opinion of many here for one to go uncompensated? Seems like a double standard to me. The average business owner works 60 to 80 hours a week. Typically only 30 to 40 are "billable hours". Yet some here feel even more time should be donated for free. People go into business to make money not donate their time (read into this time = money) and skills.

Broken knee you where self-employed for a short time and handed out "plenty" of free estimates. How many of those freebies resulted in work? How much time did you spend away from your family pricing jobs that you never had a chance of landing because the people where not serious and you had no means of distinguishing between who is and who is not interested? Charging a small fee for those estimates would have helped you figure that out and also would have set a value to your time. Did you ever stop to wonder why you where only self-employed for a short time?

There are no huge profits in the construction industry. Whoever said that is misinformed. The average successful construction company has a profit margin of 10% to 15%. Some may manage 20% to 30% if they are in high demand. The average retail store makes 100% profit and marks up merchandise 200% to 300%.

Nap,
You are incorrect the cost to do estimates will be passed on to the contractors clientele either in the form of overhead or directly but it will be passed on. If it is not passed on the company will fail within five years. Most construction companies fail well within the five year period regardless for a variety of reasons. Only restaurants have a higher failure rate then contracting businesses.

Just so you know I'm not defending the guy who offered free estimates then wanted compensation when he didn't get the job. That is b.s. If you are going to charge then you should be upfront about it.

. but their business is not to sell job quotes.



retail stores make 100% profit? Construction company making 10-30%. Sure would like to know where you are located. Contractors typically look for a 4% profit around here and I would like to know what you include in "retail. " Grocery stores operate at around a 10% net profit and I do not believe you can show me a single general merchandise retail store that has a 100% net profit. Walmart operates on around a 3%- 3.5% profit margin and they are one of the more successful and profitable retail markets.

Did I say anything to the contrary? I know what you are referring to but you are taking it out of context. My post was in the context of free or fee quotes to the customer, directly. In a "free quote" the contractor pays for it but of course, the customer pays for everything ultimately, including the coffee served at the office but you surely do not send him a bill for that.

context man, context.

what makes you think your quote is worth anything to me. That is YOU (the contractor) attempting to obtain work and providing quotes is part of the game. If you don't want to quote my job, fine, I'll accept that but you will also not have a chance to do the work.



You are either in business to do the work you claim you do or you are in the business to work up and sell quotes. Choose one.

I am off on Walmart? That is odd since I got that from their financial statements they are required to provide to the government by law which are required to be correct.


and if the "average" profit for a contractor is 10-15 %, why do so many go out of business?

Oh BS. YOU qualify a potential client. If you cannot do that, you shouldn't be a contractor. Of course there are some that will burn you but you need to read your potential clients better then.

YOU FAILED to specify you only meant home centers. Do you really want me to chase their financial reports and prove your wrong there too?

here is something that it does not take a financial analyst to translate so I am hopeful you will understand the statement. It is in a financial planners article on Home Depot:

I not seeing that 100% you want to tout.

Rather than trying to simply call be a liar, support your claims.

because if you are a contractor, my project, and the thousands like it, are what you are in business for.

Actually, since you apparently feel that a possible job is not worth anything to you, apparently you are in the business simply to sell estimates.

what a brilliant business model. I can see your adds now:

Want an quote on a building project? Call ARI001. We don't want the project of building it ecause that isn't worth anything to us. All we want is the opportunity to sell you a quote.

Gotta love the mindset of some folks.


Oh, BTW:

NO. You are 100% wrong. Failure to accurately price the job in a QUOTE will result in a loss of profit, and possible a loss of actual money, to the contractor. You do not get change orders simply to try to jack a price in a quote. That is why I differentiated a quote from an estimate and I would NEVER pay for an estimate. It it worthless, both for the build and in court. It is ONLY and estimate.

failure to accurately estimate a job will result in one of two things:

making you look like a complete idiot or a scam artist.

You really want to argue, don't you. You continually fail to support your position yet you state I am wrong. You want to make wild claims that you cannot and will not support. I make a statement that is supportable and you cry that it is not true. What a brilliant strategy to support your position. NOT.

If a person pays for an ESTIMATE, they are a fool. An estimate is not legally binding and therefor is worthless. If you are not willing to provide a QUOTE, then what reason do I have to believe your pricing is anything close to being accurate and proper? None.

first, you are wrong. Second, you are wrong.

.

next thing you are going to post is:

"well, that's how I do it". Keep qualifying your answer and eventually you might be right.

my statement was a general statement referring to building projects. Of course there are going to be projects you do not want not can handle.:whistling2:

make up your mind. Either you provide quotes or estimates. They are two very different things and I am glad that you will stand behind a quote because you can be held, legally, to that quote. An estimate is worthless.

edit: at that point, I don't care if you make profit or not. You provided a quote and, if you are doing the work, are bound by the contract incorporating that quote. If you do not make a profit, it is your fault and your problem, not mine.

2nd edit:
addressed with whom? surely you do not address this with the customer. It is none of their business and since you appear to be the only employee in your company, talking to yourself may be justification to have you committed. In either case, there is no discussion nor explanation of the profit with a customer.

man are you lost. It sounds like you just got out of a few of those classes. You need to go finish them where they tell you that although risk v. reward can be a justification for profit margin, I work on the principle that you make as much profit as the market will bear and when one is in demand, they can demand higher profit margins.

More proof of your ignorance. You are not REQUIRED to do anything not written in the contract regarding a situation where the scope of work changed. You can ignore the change and continue on with the contract until completion and be done with the project. If you decide to accept the alteration in the scope of work, you are still not legally bound to hand me anything. You can simply do it if you want. Now, if you want to contract with me for you to perform the alteration, then, depending on state laws and if the federal Statutes of Frauds would be applicable, you might be required to enter into a written contract with me but even then, you would not be required to hand me anything. You could mail it to me; you could have your child hand it to me; or any number of methods of deliverance of such a contract but by no means should you be under the mistaken impression that you must hand me anything.


bottom line is you are full of **** and only want to argue. You are a waste of my time, energy, knowledge, intelligence, and wisdom. Due to that, you can argue with yourself.

have a great Thanksgiving.

Attention Nap change orders
 

Nap,
As far as change orders go: Wrong again. I am legally responsible to document in writing any change in the scope of work and get the said addendum signed. Whether there is an additional charge for such work or not. This was covered in detail at a seminar I attended presented by DPOR (State licensing authority). I guess in your opinion they don't know what they are talking about.

Somebody has some serious issues!

Oh, so now you want to add qualifiers again to attempt to make your answers correct. So, here is your big chance to prove yourself correct:

provide (presumably) Vermont law or rules that require you to document, in writing, any change in the scope of work and additionally have that document signed and that it is to become an addendum to your initial contract.

the thing is; YOU do not know what they were talking about.




So, I await your proof of your statement.

Before you go running off on a useless search, realize that you are speaking of CHANGE ORDERS. A change order, unless contract states otherwise, is simply a proposal by the customer. It is not binding and is fully open to negotiation for all aspects of the performance of the work and costs. Of course a change order, if accepted, would be an addendum to your initial contract. A change order is the customers direction to alter some section of your initial contract. Unless contractually obligated to accept a change order, you do not have to perform any additional work or work different than your contract binds you to.

So, with that in mind, now run off and find your proof.

See page 7 at the bottom of the page.

www.dpor.virginia.gov/dporweb/What You Should Know Before You Hire A Contractor.pdf

or read here if you prefer:

The Board of contractors requires all changes to a contract be made in writing and signed by both contractor and consumer before such changes are implemented.

Change orders are not proposals by the customer. Change orders are exactly what they are a change in the scope of the work or contract if you prefer. They may be initiated by either party. A change order can be issued simply to indicate a change in time frame due to product shortages or to note additional work and labor charges necessary to repair hidden damage. If the customer does not accept the proposed repair cost then a change order would need to be issued reflecting time added to the completion date of the project while the customer found another party to complete the repair. The customer could refuse the change order but then risk breach of contract in the above situation. Depending how the contract is worded and the State laws the customer could then become liable for damages. As I said they went into great detail at the seminar and I have no intention of educating you as to everything that was covered other than to say it was extensive.

your link does not work.

. that;s funny because later in this very paragraph they describe them being exactly that


well, if they want to state the change order is a change to the contract, then most of what they say after this is legally incorrect


.I'll agree to that


that is not what they defined a change order as previously. A change to a contract cannot be "issued simply to indicate anything". A change to a contract must be be negotiated between the parties and agreed upon by all parties to the contract.


and that is a load of crap. Unless what you want to call a change order is an addendum, it cannot alter the time of completion or anything else.


.BS. It would not be a breach on the customers part, not even close. If the contractor fails to complete the project due to the problem, the customer may attempt to sue for a breach but the contractor can defend such an action on the unforeseen situation. If a court agrees with the contractor, the customer loses. If the court agrees with the customer, the contractor loses. Depending on how a contract is written, finding such an unforeseen problem may or may not be justification for either party to alter the contract and each party may be held to the contract.

Failure of adequate inspection does not require a customer to accept a change order. It more often requires the contractor to figure out how to comply with the contract due to their incompetence


and depending on how the contract is worded, the contractor may become liable for:

1. late penalties if included in the contract
2. liability for costs incurred by the customer due to the failure of the contractor to complete their contract as agreed upon.


You obviously do not have the legal knowledge to educate me concerning contract law. You obviously got a "cliff's notes" version of contract law and have no real understanding of what you speak.

what you have just described is a log of events and actions. Obviously any decent business person or customer should document all problems, discussions, and solutions concerning a project.


You would be better off sticking with swinging a hammer because you have no idea about contract law. You could easily cost your company a fortune in liabilities with your understanding of the law.

Try this link, it is actually on page 10 of the pdf document although it is page 7 of the of the body.

http://www.dpor.virginia.gov/dporweb...Contractor.pdf

This has been a very interesting read. I do have to say that I am in agreement with nap on this one.

To answer an earlier question I was self employed for three years and yes it took a lot of time away from my wife and kids. I had a good reputation for being fair. Reputation is what it is all about, that is something you can not buy.

My wife has always had health issues and I took the easy way out to get insurance. But then that is a whole different thread.

You say that like you expected something other than that.