Contractor Fees

I am hoping to finish renovations on my brownstone – we had to terminate the original contractor and architect with the project 60% finished.

We have a new architect to take over and a new scope of work/drawings. I am now interviewing contractors.

What should I expect to pay percentage wise in general conditions? I am finding the contractor I liked best is willing to CM the trades (so he wouldn’t be marking them up hypothetically) and has his overhead/general conditions fixed price at roughly 33% of the line items we are bidding out. This 33% includes the following line below. Is this in line with industry standards?

GENERAL CONDITIONS:
PM for Preconstruction Period
APM for Preconstruction Period
Laborer for Preconstruction Period
PM for 6 months of Construction Period
Site Super for 6 months of Construction Period
Laborer for 6 months of Construction Period
GC Materials for 6 months
Carting for 6 months
Plus:

OH&P (7.5%)
Plus:
Insurance (3.5%)

QueenAnne

in General Discussion 4 years and 7 months ago

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hkapstein | 4 years and 6 months ago

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In my opinion, unless you are very sophisticated and know stuff like how plumbing should be done and what it costs, I would strongly recommend you go with fixed price model. The general contractor is in a better position to know the right prices and obtain them from the trades. Now that said, if you don’t know the pricing he will be able to put more margin into it for sure. But that’s the game here. He bids it, if you see the plumbing is double what it should be, you can negotiate. If you don’t know how plumbing works, you have to look a the various GC bids, and hopefully identify one that is fair.

Now I do a lot of stuff where I just hire a trade contractor myself. But honestly I back it up by knowing how to physically complete the work. If I hire an electrician, and I know I can do the work in two days, I know what it’s worth, and if the guy no shows, I’m out a weekend. But if that’s not you, it’s better to let the GC deal with these guys.

QueenAnne | 4 years and 6 months ago

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These are all great points. I wonder, do you think a CM structure would be a good way to go?

hkapstein | 4 years and 7 months ago

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At the end of the day, you have a price, and you have what the guy is going to do. He built some extra room in there for himself, I’m sure. But you need a site super obviously for the permits etc, and carting. Personally, I’d say he’s going to mark up the trades either way, so I wouldn’t pay extra for trades at cost. He has to bid the work now that he will do later, so he’s gonna leave himself a little room for that. The exception might be if the trade work was done on time and materials, but I don’t recomend that. Without seeing the rest of the contract or knowing about the project, it’s hard to say what’s fair, but I think I would focus on

1. To what extent are the payments linked to the completion of the work. You don’t want to be billed for all this general stuff when no work is actually getting done.

2. Is it a fair price overall for the project? If one guy charges more fees and one guy charges more of the work, but the price is the same, that tells you som ething.

3. How are change orders handled? If you cancel a line item , will the general conditions be reduced proportionally? How would that work. What if you add something.