Whether you’re changing cabinets or building a whole new home, you’ll want to know the costs with accurate construction estimates. Construction isn’t cheap, whether you do it yourself or hire it out.
There are several different standards for estimates, whether you get them from your builder, subcontractors, or direct from your local building supplier. Two of the most popular are Fixed-Price estimates and Time and Materials estimates.
Fixed-price vs. Time and Materials Construction Estimates
Fixed-price proposals, in essence, state that so much work will be done for so much money: “Three layers of roofing will be removed and replaced with 1,000 square feet of new IKO composition roofing, including starter flashing, ridge vents and underlayment for $5,000 plus tax.” (And come to think of it, Western Building Center is offering a great rebate on select IKO shingles.)
Once agreed upon, the price remains fixed unless work is added, subtracted or changed. For instance, upgrading to a higher grade product would increase the cost of the material and labor. Similarly, if there isn’t a plywood sub-roof, installing plywood under the roofing would be an added cost. Those costs would be documented in a change order, which shows the change in cost to the contract price.
In contrast, time and materials contracts (AKA T&M or “cost plus” or “estimate of cost” contracts) detail all the tasks associated with the project by line item, as well as general costs (also known as general conditions) such as supervision, cleanup, materials handling and a portable restroom; markup and tax; and sometimes costs like general liability insurance as separate line items.
In our above example, it would be a spreadsheet with number of hours and hourly rate, cost of the roofing, flashing, ridge vents, and underlayment separated and spelled out, plus markup and general conditions all as separate, distinct line items. Each type has its advantages and disadvantages.
Fixed-price proposals Pros and Cons
Fixed-price proposals have the advantage of a definite price that won’t be exceeded unless there is a change order, and it is usually based on a definite schedule with milestones and regular payments. Western Building Center’s blueprint take-offs, or Estimates of Material, are fixed-price (as WBC sells materials, not counting in labor costs). They are often used as guidelines for bank financing, because prices of lumber and other materials are constantly changing in the market. So to get a more precise figure, come by any local WBC store and discuss your project and timing. Our professionals will then try to nail down your quote–not counting labor costs, of course. However, your local WBC experts can refer the homeowner-builder or DIYer to the best subcontractors in the area. Most local contractors have long-standing relationships with WBC as their primary building supplier. Their estimates will most likely be more precise.
However, since fixed-cost estimates are a risk to some extent to the builder, they often justifiably add padding to the cost. And, if materials and the job itself are not defined with absolute clarity upfront with a detailed scope of work, the change orders can add up and get expensive real quick. Finally, any changes must be defined in change orders, which can be time-consuming.
T&M proposals Pros and Cons
On the other hand, T&M contracts do not usually build padding in. Everything is billed for just the actual hours, materials and subcontractor work it takes to build the project. The advantage here is that the homeowner does not pay more than what the contractor needs to complete the work well. Often, contractors regularly give clients a percent-complete document to show the estimate versus actual items billed and a running total for the project to monitor cost. It also benefits the contractor—they are paid for what it actually takes to build a project, regardless of unknowns. It can be difficult to estimate the time to carry out a task on a remodel or build an extensive custom home.
However, since T&M contracts do not have a firm not-to-be-exceeded amount, they can lead to cost overruns, especially if costs are not tracked intensively. The greater detail can be overwhelming to homeowners who aren’t sure how to read them or simply don’t want that much detail, and it often requires more paperwork.
Considerations
Depending on the type of estimate and company policy, estimates might be free, paid, or not started until the contractor is hired. Whichever type of estimate you agree on, it comes down to both client and contractor doing their due diligence to make sure everything possible is accounted for and unforeseen costs are built-in or have some mechanism to be solved. And keep in mind the building rule of thumb—“It always takes longer than you think”. Plan in advance and get professional advise (from your architect, your builder or your local WBC store expert) on which of the kaleidoscope of materials and methods to use. Be particularly sure on finish materials you’ll actually touch and see, like siding and countertops (as opposed to dimensional 2×4 lumber for the wall structure). Keep in mind that unexpected things (especially in a remodel) always turn up. You never know whether you’ll encounter a rotten joist while replacing the wall. So plan accordingly.
WBC’s in-house estimators have estimated everything from huge custom homes to sheds. Our estimates include complete material take-offs by locals who know what you need for snow load, insulation and the hundred other unique things for your area. Your estimate includes free local, scheduled delivery, great warranties, better quality lumber grades, time savings with post-sales support, a detailed material list, and millwork and framing diagrams. And your local WBC store is there to help with each step. WBC offers specials and rebates, lower overall costs, and savings with 30-day term accounts. Check out our Builder Services page for more information.
If you want a starter estimate, we have developed and put together several estimate inquiry forms to get in touch with our experts, as well as a number of handy building calculators. Our estimate inquiry forms include ones for roof trusses, floor trusses, cabinets, roofing, decking, and general building. These forms allow you to fill in basic information so that our estimators can quickly get a better idea of your needs. Try them out today!