Outlier Reno Estimate

@resident2 and Neogrec: resident2 asked if the GC was a carpenter. it seems that is where most GC’s come from (if i were a successful plumber or electrician, why would i want to become a GC? just more headaches, me thinks). but the sad thing about what you are both alluding to is that down the road, we may just have a bunch of “managers” running around supervising not crafts people, but installers. i am afraid it is almost that way.

i know this has nothing to do with the OP’s post. but you both hit on something that we should all be aware is changing around us as we write.

stevecym

in General Discussion 5 years and 10 months ago

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mstamib

in General Discussion 5 years and 11 months ago

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We are looking at a gut reno in a home that has some structural issues and needs some specific structural remediation, including shoring up, steel beams, and some joist replacements.  We had four contractors provide estimates based on the plans.  Three came back very close to each other (around $650K or a bit higher) and one came back substantially lower ($450K).  The low estimate is about the same as the other three for work that will be sub-conned out (like electric, plumbing, etc.) but is cheaper all around on everything else, including the structural remediation.  The low estimate also came back more quickly and is rougher and less detailed, in terms of presentation.  

For context, the contractor with the lower estimate, who is more of an “old-school” type of guy than the others, is reputable, experienced, and when pressed, was confident in his estimate.  But while we would love to get the work done at the price he quoted, we are inclined to consider his estimate unreliable, given how consistent the others were.  

I’m interested in whether others think we should d isregard his estimate.  The three higher estimates are outside our budget, and we would not purchase this property if the reno will cost that much.  What is a normal amount of variation in estimates, and is it a red flag for one estimate to be a lot lower than the others?

resident2 | 5 years and 11 months ago

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Whenever you are planning on working on an old house that needs structural as well as complete new mechanicals etc always have a contingency budget of at least 20% no matter what the original estimates come in at. Also get time estimates. Time is money! Especially when you are carrying the taxes, insurance, interest on your money, another place to live etc etc….
Do not go into this if you do not have all the above squared.
All that said. In choosing a contractor you have to be able to communicate well & at least start out confident that you have chosen the right person to be “living with you” for the next 18 months +. This person will be in your life for a very long time.
The contractor that has quoted the least: “who is more of an “old-school” type of guy than the others, is reputable, experienced, and when pressed, was confident in his estimate.”
Is probably a Carpenter? by trade. If this is the case look into working with him over the others. Get references of prior jobs, go see them if at all possible (should be).
Many “new school” contractors are more administra tes than contractors. I have met “Contractors” that claim to be contractors that come from a “white collar” back ground, (wall street, bankers, even architects & Lawyers!) put on a great sales pitch, great presentations etc. But have no idea how to communicate with their workers, scheduling, dealing with problems without hiring a further white collar guy (engineer etc) to tell them how to do the job etc. Their estimates come from computer programs & they add on or subtract according to how much profit they want, or the need to get the job.
A good contractor is a Carpenter. You need a Carpenter on the job from the beginning of the demolition all the way through to making sure the plumbers & electricians do not make your house look like Swiss Cheese etc to the finishing.
An Old school contractor probably has long time relationships with his crew; they cannot stay in business if they do not. And because of that scheduling and time moves along much more smoothly.
Also be prepared to visit the job site regularly throughout the process. If you do not have the time to do so, then again … do not do it!

Lurker | 5 years and 11 months ago

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Walk away from the low estimate. Sorry, it’s not a slight difference, it’s a $200k diff which means he is in over his head or will be cutting corners—hiring unlicensed subs, or not carrying insurance, or skimping on the engineering details to “do it the way i’ve always done.”
If you’re concernd you’re missing a deal get another estimate. You’ll never regret the 2 week wait, but will always regret signing on to the wrong person. (We did that and thought we were just lucky! Till he ran out of money and stopped working and we ended up paying the same amoutn as the middle bid…. after years of hassle).

slopefarm | 5 years and 11 months ago

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I agree completely with Lurker. The low bidder, at best, is working with very tight margins and has no room to handle surprises (there are always surprises). Low bidder will probably be cash tight, hounding you for progress payments, nickel and diming every little surprise into a change order, and risks walking off the job if costs rise. Of the three real bidders, go with the one that seems to have a strong track record with jobs the size of yours, has strong references, is easy to communicate with you, doesn’t give you goosebumps when you talk, and who you think will have the best daily on site supervision of the work.

slopefarm | 5 years and 11 months ago

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Also, I would temper R2’s “time is money” advice. You have to watch the quality of the work every step of the way. Mistakes get made and corners cut in the name of speed, even by good contractors. So ask for a time estimate, but make the quality of the work a part of every conversation. Speed, price, quality. At best you get two of these. Make sure you do not sacrifice quality, or you will be contending with problems for years after the work is done.

cate | 5 years and 11 months ago

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Make sure the old school guy has a valid, currently working license and vet his recommendations and recently completed work. Has he worked with the architects and engineers you are working with? Also, advance as little as you can — only what is absolutely necessary to reserve time and secure materials.

slopefarm | 5 years and 11 months ago

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Cate, would you actually consider the old school guy on an outlier low bid? I wouldn’t. but if I were to consider it, I would have a really thorough conversation about my concerns. Change orders, work quality, fear of him running out of cash, etc. It is very easy to let wishful thinking make youi hear the answers the way you want to hear them. I also wouldn’t do this without a completely independent architect who is good with the structural side of things and I would use a fraction of my savings to pay for extra site visits.

mstamib

in General Discussion 5 years and 11 months ago

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Thanks all-our instinct was to disregard the outlier for the reasons slopefarm and lurker mention. Appreciate all the insight.

intheheights | 5 years and 11 months ago

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My question – how are you doing a full gut renovation for that price??
My comment: If you already know you have structural issues be warned that you may need to hire an engineering firm to do a more detail analysis once you finish demo and take a look at the damage to the joists and joist pockets etc. Will the remediation cost be in additional to the bid? Try to clarify what is included on replacing damaged joists etc **now**. With structural problems you would be tempting fate if your contractor is cutting corners, especially if you have a neighbor who likes to call the 311..

mstamib

in General Discussion 5 years and 11 months ago

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I think the higher estimates are market for a house of this size and the simple reno we are planning. It’s already gutted and we have a structural engineer’s analysis and plans that include the necessary structural remediation.

NeoGrec | 5 years and 11 months ago

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I keep going back to Resident2’s comment about old school vs. new school contractors. This is surely at the heart of the matter. I know a guy who is a super talented high end GC in brownstone Brooklyn. He owns an exquisite brownstone he is still working on. He has two kids in college. He needs to make far, far more money than the guys who used to do these jobs. My GC from 20 years ago was a Polish mason who lived in Queens. His outgoings were so much lower. Judging by how our house has held up, I wager the quality of his work was just as good as the high end guy, even if he was useless with paper work and had never heard of a spreadsheet. It’s just a completely different world nowadays and one in which the barriers to entry are that much higher.

agdipierro

in General Discussion 5 years and 11 months ago

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Get references from the lowest bidder. Ascertain the amount you should expect in change orders. Find out if the GC has been honorable regarding his contract.

Guest User | 5 years and 10 months ago

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@NeoGrec can you give the name of the Polish GC you used?

stevecym | 5 years and 10 months ago

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@neo grec: over the years, i have tried to learn the business aspects of running a business and have hired people to work with me to help manage that side of it. it is very hard for some of us to meld the operations/craft side with the business side. in my case, i have given up trying to take care of the business side any more than i absolutely must. instead of a team of 4 or even 2 people, i now work alone and focus on the work side of it and while i will never hit the big time this way, i am able to focus on what i know and do best. sadly, when we try to move a craft into a real business, we always seem under pressure by time and money and the people around us to produce more with less and that is not enjoyable for someone who enjoys working with their hands and it is also not good for the customer. the other downside is, there is no one younger than me working with me to learn what i know and i am not getting younger and for someone who appreciates history, including the history of how things were and are done, this is a bad thing.