Transparent pricing in action
Eric and Allie, a professional couple in New York City, and their architect, were receiving bids from contractors to combine two Upper West Side apartments when terror struck: they realized they didn't understand what they were being charged for. A friend referred them to Bolster and within 7 days, Bolster showed them the true cost of their project upfront while ultimately saving them over $40,000.
Performance risk offset
Following the Bolster Process, Eric and Allie's exposure to standard contractor-performance issues was reduced by $912,647.
Essential costs itemized
Bolster's method for calculating indirect project costs revealed $26,228 worth of project-critical line items that the competition had left out.
Direct costs saved
Aaron abandoned standard practice and revealed his true direct costs which were $64,936 lower than the competition's.
Comparing contractor's based on their bids is like comparing athletes before a race begins - in both instances you're missing the results of their performances and so lack essential information from which to make a real comparison. With Bolster's TrueCost tool, we took Eric and Allie to their project's finish line and revealed their Potential Maximum Project Cost by comparing the bids once their exposure to each of the contractor's performance risks were included.
Interpretation of results:
It is standard practice for contractors to inflate their direct costs with a portion of their indirect costs (e.g. add 50% of their overhead and profit to your material costs) as they fear homeowners will not understand the true value they add in protecting, managing and delivering their project. Aaron did not need to inflate his direct costs because Bolster's method helped educate Eric and Allie on the exact indirect costs required to deliver their project successfully. The result was a complete understanding of Aaron's true value as a general contractor and direct cost savings totaling $64,936.
It is standard practice for General Contractors to add a fixed percentage on top of their Direct Costs for Project Resources and Overhead. Unfortunately theses costs are time-based and independent of the project's direct costs (a $50,000 kitchen does not require a supervisor for twice as long as a $25,000 kitchen). Not calculating these costs correctly could have been fatal for Eric and Allie's project and personal finances. With Bolster, Aaron's Project Resources and Overhead and Profit are itemized, calculated and priced from the bottom-up to reflect the true cost of managing and delivering Eric and Allie's project successfully to schedule.
It is normal to expect a 10% cost overrun but in approximately half of all projects cost overruns are between 40% and 200%. Also every year, 17.2% of contractors in New York go out of business taking 77,245 projects and $700M with them. Following the Bolster Process, Eric and Allie's exposure to cost overruns and contractor failure issues was reduced by $912,647.
With Bolster's Financial Guarantee in place, Eric and Allie are safe in the knowledge that Aaron's bid of $904,618 is the maximum they will pay for their project.
A beautiful renovation experience
As you can see below, Eric and Allie's project is still unfolding. You can follow the project live here.