Many people jump in blindly to complete a renovation or construction project without having the knowledge required to manage the project. Dealing with tradesmen and knowing whether you are getting good value for money from the service is difficult to determine without some basic understanding of what is involved. Contractors, just like any business, have overheads to run such as payroll, truck licenses, and general business costs. Each contractor puts a different value on his time. Here are several considerations that factor into your assessment of contractor cost estimating.
Labor costs can vary widely depending on the location and current market demand. In some areas, you are competing with other potential clients that may have larger budgets or projects. If there is a shortage of labor, you may find that the labor market is tight and job estimates are higher than you anticipated. It is a good idea to get three quotes for any work that is to be performed. You can use online databases to get an idea of fair market value or speak with local hardware professionals who will be able to provide some informed feedback for you to consider.
Insurance and operating costs also vary from region to region and are factored accordingly. Insurance for worker’s compensation and liability can cost up to 30 percent more in certain regions. Labor costs are more important to overall project costs than the price of materials and can contribute to inflated project costs if you do not do appropriate due diligence.
The price of materials is always a component of the total project cost. Contractor cost estimating involves an allocation to labor and material requirements. Often the materials will involve a mark up which contractors use to increase the margin they receive on the project. You should do some investigation to determine that the markup reflects fair market rates. It is best to get all estimates in writing with the relevant contractor before job commencement. This will allow both parties to know what is expected and to avoid any surprises midway through the project. It is also prudent to ask for receipts for all material purchasers. Should you require changes to the original specifications of the project, you should be aware that this may involve additional materials or labor. A condition that allows for this is something that you should consider before contractor commencement.
Managing contractor estimating is one factor that contributes to project success but so is managing the completed work. It is prudent to discuss weekly invoicing with the contractor and to negotiate terms based on completed work. You do not want to get into a situation where you have paid upfront and the contractor partially completes the job before being enticed elsewhere. Paying based on completion keeps both parties working together towards the fulfillment of project requirements.
Taking a proactive approach towards contractor estimating can help you manage the project more efficiently, effectively, and with fewer surprises. You might consider doing a course at a local community college if you are likely to be extensively involved in contractor quoting and estimating. This is a great way to become more knowledgeable about the subject.