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Discussion Starter · #1 ·
I hope this is the right place to ask this. Seems like the closest match.
so a little background.
wife and I purchased a building to move our small business in (don't want to pay rent for the next 20-30 years).
we need to remodel this place to fit our needs. this is the first remodeling project for either of us.
we hired an architect and the city has approved our plan.
so the next step is contractor bidding. We had a dollar figure in mind and so far all the bids are quite a bit higher than our planned budget.
a Realtor friend said that contractor bids are negotiable because the bids are always higher than realistic and that contractors expect the owner to make a counter offer.
so my questions for you guys are
should we make a counter offer? how low?
we are thinking about subcontracting some of the jobs ourselves. Most likely we'll end up doing some subcontracting ourselves to save $.
the estimates are, according to the contractors, based on the specs specified by the architect. Should we ask the architect to pick less expensive materials/designs.

thanks in advance for the answers.
 

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its a combo...talk to your architect, he should have experience with bids and where things should be. that being said, this is a favorable market for you (too little work for contractors)...sounds to me like you have some negotiating to do
 

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CoLiKe20 said:
...
we need to remodel this place to fit our needs. this is the first remodeling project for either of us.

Talk to other people in your business or trade group to learn similar stories.

we hired an architect and the city has approved our plan.
so the next step is contractor bidding. We had a dollar figure in mind and so far all the bids are quite a bit higher than our planned budget.

How did you develop this dollar figure? Did you share it with your architect, and did he or she work from budgets developed by contractors? Realtors are a poor source of budget pricing.

a Realtor friend said that contractor bids are negotiable because the bids are always higher than realistic and that contractors expect the owner to make a counter offer.

Maybe with joe sixpack working out of the back of his truck five years ago, but most of the for-real contractors these days are bidding very carefully.

so my questions for you guys are
should we make a counter offer?

Doesn't cost anything to try, but I wouldn't expect anything to come of it.

we are thinking about subcontracting some of the jobs ourselves. Most likely we'll end up doing some subcontracting ourselves to save $.

Unless you have any experience, you won't save any money doing this. There are a lot of pitfalls along the way.

the estimates are, according to the contractors, based on the specs specified by the architect. Should we ask the architect to pick less expensive materials/designs.

This is a place where you, the architect, and the contractor can work together to get more bang for your buck. While it would be cool to have every high-zoot thing that the architect picked, the job can probably be done for less money with less deluxe finishes, for example. Lighting can get pretty spendy, also.

...
Good luck.
 

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Just to add to 10ae's sage advice, every place I have worked on houses has an "A" list of subcontractors, who tend to work serially on the nice projects.

If you wanted to act as your own GC, and hire the subcontractors yourself, what you need to do is find one of those "A" list subcontractors--and then ask the first one you are sure is good who he would recommend for the various parts.

If your architect has done local projects they may be able to recommend one or more guys...

Acting as your own GC also gives you the opportunity to do some parts yourself, depending on how comfortable you are with DIY.

Another alternative is to hire someone to act as GC/project manager for a flat fee, and have them supervise and hire all the subs. I have read about this approach but not tried it.

I can't stress too much how important it is to find the right guy(s)--way more important assuming the prices are pretty close.

In our case, we were recommended to one GC/cabinet maker/finish carpenter by our realtor who has lived in the area forever and who really "got" our house--turns out he knew the family that built it, and provided leads to some excellent subs. The second lead came via the realtor as well for a plumber; he in turn recommended an electrician (and it turns out they all knew and respected each other, including the heating/ac guy we found and the roofer we will end up using).

None of them are cheap, however.
 

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Reread this & realized you are talking about a small commercial project--I would suspect the same advice would hold...

Things that raises costs in commercial projects that are often overlooked is more rigorous inspections, tighter code requirements, more attention from OSHA and the rest (including the fire inspectors, etc).

Also the costs associated with trivial stuff like waste disposal, parking, delivery of materials are all higher assuming this is in an urban area...

A small example--we are outside NYC and the floor guys locally charge around $5- $7 s/f for a basic floor refinish. The same jobs go for anywhere from $10 to $30 s/f in Manhattan & downtown Brooklyn--some based on quality, but a lot of the difference is based on the annoyance factor.
 

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Hippienflipflops said:
its a combo...talk to your architect, he should have experience with bids and where things should be.
It always surprises me how many projects are over budget, and not by a small amount. Somebody isn't being realistic, but it's hard to say who (likely a combination that adds up). I sell commercial lighting and we always get picked on because our stuff costs so much, but somebody told us what to quote. This stuff is like the grocery store model, high dollars but very low profit margin (on a good sized job, we're usually making less than the sales tax rate). We love it when people want us to come back with something cheaper because we usually bump up our margin by doing this. I know we're not alone either, having been included in a few email chains about change orders with more info than I probably needed to know. The electrical contractor, general contractor and others will throw on a few bucks for themselves here too (not unfair, but not the savings it could have been had it been the original plan).

So, I'd find the general contractor you want to work with. Be straight with them and see what they can do for the total project for a certain amount. You've got prints so see what they can get away with to "value engineer" without having problems with the building permit that was based on that information. But before you talk to them, decide what you can live with, what you can't, what specifically has to be done and what areas/projects can be unfinished for now (or that you'll handle yourself, but tell them about that) before you talk to them. Remember, it's the "change order" where everybody makes the money. I hope you don't live in my town after saying that. :)
 

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paredown said:
I can't stress too much how important it is to find the right guy(s)--way more important assuming the prices are pretty close.
Yes. For example, if a plumber and a mechanical guy "had it out" on a recent project, you don't want them working side-by-side on your project. Jobs are bid based on workers that are paid hourly. Some guys get more done per hour than others. Some guys work better with other trades (coordination is important, the bigger the job the more important it is). Some guys would rather use a 3lb hammer and a crowbar to install finish work, some guys want their miters to be perfect as a matter of personal pride.
 

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Discussion Starter · #9 ·
thanks to everyone for their time. sounds like we need to have a talk with the architect and the contractors.
I will update this thread when I got some more info/result so that (hopefully) others can get some experience from our experience.
thanks again.
 

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Get some T&M estimates

Financing may not allow time and material contract. However, if you get some time and material estimates you can get a feel for the contractors managemetn risk reserve. My guess is 20-30%. If you can take the risk, and, your bank will allow it, think about a time and material contract. Also, remember your architect and/or contractor will have a standard form contract for you. You will be the least protected party on this contract. Run it by your attorney....
 

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CoLiKe20 said:
a Realtor friend said that contractor bids are negotiable because the bids are always higher than realistic and that contractors expect the owner to make a counter offer.
so my questions for you guys are should we make a counter offer?
Everything is negotiable, but depends on the job and how the job was quoted. If it's a competitively bid job, contractors don't necessarily give an inflated price because then they wouldn't be the low bidder. Also, if the broker constantly tries to negotiated items down, if the contractor is smart, they will inflate the price just because of the reputation the brokers has.


Depends on the cost of the job, the larger the contract, the more room negotiations. But if it's just a $20k job, there is usually not a lot of wiggle room.

we are thinking about subcontracting some of the jobs ourselves. Most likely we'll end up doing some subcontracting ourselves to save $.
If you know what you are doing, have a good set of architectural plans, have a very concise understanding of the organization of construction project, and lay out specific scope of work that you will handle, then that could work. However, if you don't know what you're doing, you could end up costing yourself a lot more money and delaying the project.

the estimates are, according to the contractors, based on the specs specified by the architect. Should we ask the architect to pick less expensive materials/designs.
Yes, that's one way to cut the pricing. Some architect spec out high end, class A architectural features/finishes, when you don't have the budget for those items. For example, sure you make want prefinished African mahogany doors with an inlayed designed, but is it really that important when you can get field finish birch doors, for less money?
 

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j__h said:
However, if you don't know what you're doing, you could end up costing yourself a lot more money and delaying the project.
Definitely a case of time = money. Quickly.
 

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They aren't change orders if they take place before the execution of the contract, and therefore shouldn't add cost.

Sorry I picked on lighting, kykr13, but architects do like to choose fancy and expensive lights.
 

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10ae1203 said:
They aren't change orders if they take place before the execution of the contract, and therefore shouldn't add cost.
Right - but even before the contract, changes will cost a little more than they could have if whatever it is was included in the original conversation. Trust me... :) But change orders cost even more because there are more "layers" involved.

Lighting is always picked on - price, lead time, moving it because the plumber/sheetmetal guy need to run their stuff where the lights go. :mad2: But it pays the bills...
 

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Big time red flag here is wanting to do some of it yourself. Any contractor hears that and caching....the water cooled calculator comes out. If I'm bidding and I hear 1st time GC price goes up minimum 10%. (over an established GC) I have to bear your learning curve. And the extra trips involved.

DIY? T&M only for my part of it. No good way to tell how much is going to be involved. You're going to haul off some of it? Great. I'm on the clock at $63/hr. Plus travel. Plus tip fees. PLEASE call me. Most people don't realize how much is involved in debris removal & recycling. That's fine. I understand that. But there is no way you can be cost effective in your pickup taking 163 loads to the transfer station across town.

Find your GC and work with them & your architect to cut the Scope of work. That is how to reduce the cost
 

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Is this a fixed-price bid, an estimated budget, a cost-plus contract, or what?

Really good contractors devote substantial time to accuracy in budgeting. You should be able to review it on a line-by-line basis. You'll see which items are the problem, what assumptions are made about materials, etc.
 

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Discussion Starter · #17 ·
my wife is actually more involved than I am in this project - I'm too busy working and don't have as much time.
she's talking to the architect now to see if some specs/material could be changed. Also, she's going to talk to the two GC she likes/trust the most to work on the cost.
Most likely, we are going to subcontract the milling work ourselves. We may subcontract some other part but we'll talk with the GC before doing so. Being white collars workers, we don't have the slightest idea on how to DIY and will not be doing that (as scrapr mentioned).
we are fortunate as we have about 12 months window to have this project complete and most GC estimates are in a 2 month time frame. We do have a large time buffer to work on this.
 

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Discussion Starter · #19 ·
a little update.
we may be able to meet our goal by using less expensive cabinetry and defer some of the work for a couple of years (signage, other non necessary items)...
thanks again for the suggestions.
 

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Discussion Starter · #20 ·
a little update.
we may be able to meet our goal by using less expensive cabinetry and defer some of the work for a couple of years (signage, other non necessary items)...
thanks again for the suggestions.
 
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