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Bazkla 04-07-2009 07:30 PM

Overhead Fee
Is it customary that a kitchen remodel expense would include the contractors 12% overhead on absolutely everything: Materials purchased, subcontractors (both of which I could understand), but his own cabinetry building work as well. Even including the time he charges for consultation w/us, which I think is a bit "out there" anyway. Thanks for any guidance on this.

Five Star 04-07-2009 10:25 PM

usually theres a fee for consultation. but its usually a flat fee for a layout and time spent. most of the time that fee is rolled into the signed contract.(depending how your contrator handles this)

i usually take a flat fee come up with a design then if the h/o decides in a resonable amout of time and signs a contract with me i deduct that fee from the contract price

first off id have a flag up if the guy told you his mark up!
markup and profit should be incorporated in his hourly price like all buisnesses of this nature

joasis 04-09-2009 09:41 PM

12% is a fair fee, and a bid would not typically have the would be a one price deal. It sounds like your contractor is doing a cost plus, which literally means the "cost" of materials and labor, plus the fee (12%) for the management of the job....

I charge 15 - 20% for similar jobs.

AtlanticWBConst. 04-12-2009 06:01 PM


Originally Posted by Bazkla (Post 256580)
Is it customary that a kitchen remodel expense would include the contractors 12% overhead on absolutely everything: Materials purchased, subcontractors (both of which I could understand), but his own cabinetry building work as well. Even including the time he charges for consultation w/us, which I think is a bit "out there" anyway. Thanks for any guidance on this.

Simple answer = Yes. it's pretty much standard industry practice.

Longer answer:

As Joasis sated, overhead fees are the norm. I charge 20% for materials. That cost covers a lot of expenses (some of it gets delivered.....some of it gets picked up and transported to the job = time+fuel use = $$$) . Additionally, the overhead fees on the subcontractors cover my time to manage and cor-ordinate their work (Phone calls, communication, meeting with, reviewing, inspecting, coordinating, things that are done for the hired subs, etc).

Example: I am starting a master bedroom and master bathroom remodeling next week. The home owner has agreed to GC the work, using his own plumber and electrician. I will do everything else. I am NOT supposed to pull the permit. However, he has taken up much of my time, with the permit application, including, having me fill out 50% of it. Normally, I charge additional overhead to cover that time. It's taken approximately 2 + hours of my time, during the day, when I am supposed to be at other jobs, or doing other things for my business (and I don't have any extra time, as we are currently deluged with work right now).

In the afore mentioned situation, the Home Owner, is supposed to coordinate the other subcontractors, and take care of the required inspections. If he calls me to be involved, or I get a call from the local building inspector to be present at any inspection - my additional charges will be billed to him (over my contracted work agreement cost). FWIW - I put that in all my contracts (such things are extra). I have no problem helping out home owners (as can be seen by my time on here). But, once such a project (Home Owner as GC) starts involving more of my administrative work - my time, gas, and other things, (and is beyond what is laid out and agreed upon) it's time to submit additional overhead charges.

However, on the other hand, if I have a project, where we are the GC, then the additional charges are part of the overall cost, and it's all set up like that from the beginning.

Gary in WA 04-12-2009 08:24 PM

With that, he's replacing a bad cabinet, or a leaking faucet down the road, or his sub's poor installation. Does your doctor charge for consulting, or dentist, or investment broker? Time is money. He is charging you for his expertise and experience, literally years of it. It's similar to the answers on any forum, you know the ones I mean, they didn't even understand the question correctly. )I hope I answered correctly.....) Be safe, GBR

Bazkla 04-13-2009 02:15 AM

Thx, all for your answers. Let me explain a bit what is going on here that raises the question. One of the items slated on the kitchen remodel was that the contractor, who is doing the carpentry work himself, in addition to making the cabinets was to make an "espresso bar" that is really more a piece of furniture than a cabinet. My initial instructions were that a magazine picture which I made available to him was what I wanted the piece to look like as much as possible. My initial instructions also stated that, if he thought it was going to run very high in cost, then discuss it with me first as I could just as easily find a piece 6' wide for the space at auction and incorporate it rather than start a build from scratch. So, one day, I walked in and there it was -- looked absolutely nothing like the piece in the magazine. (For example, the magazine picture showed at least 10 small drawers plus 2 larger drawers and 2 larger opened doors. His piece had a total of 6 large drawers. This was never discussed with me nor was his price which he says ended up to be somewhere between $6-8K -- not a small amount in my book, certainly something warranting discussion prior to starting in. The piece is not finished yet and has caused the entire project to be delayed. I admit my responsibility should have demanded a drawing, price, etc. before he started. I believe he has a great deal of responsiblity for the product he presented. He will only go so far as rebuilding the cabinet I want out of plywood (the original is alder), paint it black and charge only his hourly rate and give me a break by not charging his normal 12% overhead on his work. He has charged his time AND overhead on two occasions when he came to our house to discuss this whole mess. The end result with his "graciousness" would be that I would be paying $12K+ for a plywood cabinet that, had I known it would cost $6-8K before he started, I would have found some pieces at any number of auction houses in the area at substantially less. I should add, the main problem with the piece which precludes me from using it at all, is that it simply looks like more of the cabinets he already built only stained a dark brown instead of the cherry wood color. It should look markedly different to contrast rather than similar with the other cabinets making it look like someone simply stained it incorrectly. Perhaps this will give you a bit clearer picture on the overhead question. I feel his overhead on his own work is ridiculous - it should be part of his price as he is not "coordinating" schedules, etc. as with subcontractors which is really what the overhead fee covers (in my understanding.) Additionally that his solution to eliminate his "overhead" only on a mistake as a solution to sharing culpability and working our way together out of a mess that will cost more money as well as the time and overhead he charges to consult over the matter of how to handle the problem to conclusion.

Tscarborough 04-13-2009 07:39 AM

Piss poor planning = piss poor performance.

Get all work in writing, and have detailed plans for everything before you sign the contract.

What does this have to do with Do It Yourself, anyway.

kfer 04-13-2009 11:21 AM

I think the percentage you are given is quite reasonable but charging the percentage on the labour which is provided by the contractor is not reasonable.

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