"But how on Earth can that be $150,000? Surely it's no more than $90,000!"
Shouted a member of the audience at an AIA event in New York recently.
The man had just finished describing his Manhattan apartment renovation and was venting his frustration about how his project apparently could not be done "for less than $150,000".
Homeowners frequently get sticker shock from contractors and don't understand how their project can be so much higher than their expectations.
Here are the two major cost factors that influence any and every home improvement project.
Quality can affect the price by 225%
Not a typo.
Two homes can have the exact same layout, same facilities and features, but one can be remodeled using high quality materials and with the best of workmanship and be frice (or whatever comes after thrice) that of the one remodeled using inferior materials and workmanship.
The standard quality grades used to determine the quality of homes in America go from "E" (cheapest quality at 55% cost relative to average), all the way to "SS" (Ultimate Quality at 275% cost relative to average).
That's a full 225% difference!
You are investing in a General contractor
Hiring a tradesman for a remodel over a professional general contractor (GC) can be tempting, as it seems as though it’s going to be cheaper. After all, GCs typically charge a markup of around 30% (or should be if they intend on staying in business for the project) while a one-man-band tradesman may only mark up the project by 10%.
But hiring a GC starts to look like a bargain when you consider where the money is going:
- Workers compensation premiums - If a worker has an accident on your project, the monetary exposure to a lawsuit can be devastating, not to mention stop-work orders and fines. Having a GC with workers compensation coverage protects you from this potential nightmare.
- General liability premiums - if your home gets damaged, or a family member hurt, by an accident during your project, you want the company you hired to be able to meet the cost.
- Office staff - GCs have a back office, meaning when they're on site or on the road, your project doesn't stand still.
- Project management fees - Let's face it, you don't have the construction management knowledge and experience required to rally multiple tradespersons. You also have very little leverage to get anything done. GCs have several projects on the go at any one time and employ the same tradespersons regularly. This gives them powerful leverage to get people doing what is expected of them.
- There is also tools and equipment, transport, training - the list goes on.
The next time you do a bathroom remodel or a kitchen remodel, be mindful of just how much quality affects the cost and be sure you're on the same page with your contractor about what "quality" really means to you both.
Be as clear as possible about exactly what you want and then do everything you can to hire the best contractor for the job.
That's the formula for remodeling success.