In this series of blogs, we are going to be addressing a few different subjects.
The first subject we are going to talk is about proposals, and the different types of proposals you may be receiving from different types of remodeling companies. We will talk about cost plus proposals, proposals before design is completed, and proposals after the design is completed.
What type of proposal that works for you and your project will depend on your needs. From my view point, all of the proposal has advantages and disadvantages. There needs to be a clear understanding of what you are getting in each type of proposal. This will eliminate any unwanted surprises during your remodel.
Cost plus proposal; in this type of proposal the contractor will essentially being showing you all the costs, labor, and materials. You will have a predetermined cost for base labor, and then a fee will be added on top of that. This fee will vary from contractor to contractor, it can be a little as 15% and high as 50%. Typically, it is 25%. So, if the base labor is $65 an hour, then you would be billed with a cost plus of 25% for hourly cost of $81.25. Typically, the labor progress is paid out on a weekly or bi-weekly term.
How Do Materials Factor in to the Proposal?
The same principle holds true for materials. If the cost of materials for the job will be $10,000.00 then you will pay the contractor $10,250.00 with a cost plus of 25%. Along with the material cost, do not be surprised if you are charged an hourly rate, or a flat rate delivery charge on materials.
Now, when is a cost-plus contract beneficial for you? That is a good question? First, it depends on you and your personality. If you are the type of person that wants to know the cost for the project up front, this is most likely not for you.
If you are the type of person that does not really know what you want, and you have a budget that can afford some unknown issues that may arise, or you don’t really know what you want, then cost-plus is for you. In other words, you might be completing a whole house remodel and want to get the demolition completed so you start working on the design. Instead of hiring a contractor, or design-build firm to complete the entire project, you might just hire a demolition crew to complete the demo. With a cost-plus contract, you may be able to get the job started sooner.
Next week we will talk about the pros and cons of free proposals/ estimates and what to watch out for in these types of proposals. As we move forward with these blogs, keep in mind that any of these proposals will work for any project you have. From a kitchen remodel, basement finish, to a whole house remodel.
If you have a remodeling project on your mind, give Excel Builders a call at, 612.524.5804
We provide remodeling services in the Minneapolis/St Paul, Twin Cities metro area, including the Minnesota cities of: Chaska, Chanhassen, Eden Prairie, Excelsior, Wayzata, Minnetonka, Minneapolis, Plymouth and Edina, MN.