Q&A / 

Job Pricing -Time & Material Method

DEAR TIM: I just received three bids for a major remodeling / rehabilitation project for my home. I have an excellent set of blueprints and written specifications for the work. Two of the contractors have suggested doing the job "time and material". They indicated that I would save money in the long run. I'm not quite sure I agree. What do you recommend that I should do? L. M.

DEAR L. M.: I recommend that you meet with the two contractors who have suggested this method and ask them a series of hard questions. A time and material job, in your case, could become a financial nightmare.

Based upon the facts which you presented to me, I do not feel that your job is a candidate for the time and material approach. Time and material jobs seem to work out for the best when there are many 'unknowns' about a job. Because your plans and specifications are so complete, there is virtually no speculation attached to your remodeling project.

Job pricing

A major problem associated with time and material projects is one of accountability. It is easy for workers on the job to loose the incentive to be as productive as possible.

Mistakes made by workmen can be buried in the cost of the job. Material waste can become a problem. The temptation for dishonesty is exceedingly great.

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Time and material jobs, when performed by honest contractors, do permit a homeowner to pay exactly what a job should cost. Certain remodeling jobs may encounter hidden defects.

Planners may make false assumptions regarding the existing structural soundness of an existing home. Water or termite damage may be discovered. Poor soil conditions may exist at the construction site.

However, professional contractors almost always know when these things may be encountered. They can discuss with you these aspects of your job during the bidding stage.

Those areas of the job which may have hidden costs can be approached on a time and material basis. All other aspects should be quoted as fixed costs like a regular bid.

There are certain jobs which do work well in a time and material format. However, I highly recommend that a 'not - to -exceed' figure be called for if you must do business this way.

With such a figure, you, the homeowner, have some form of cost control. A time and material job with no cost control is like a financial time bomb waiting to go off.

I suggest that you ask the following questions to the contractors who wish to work 'time and material': What aspects of the job are unclear? What is prohibiting them from attaching specific time estimates to specific tasks?

Why can't material costs be accurately forecast? If certain tasks remain unclear, or hidden conditions exist, what is the worst case scenario for that aspect of the job? In other words, how much will that aspect cost if everything possible goes wrong.

Finally, if you must do a job 'time and material' let me make the following suggestions. Obtain specific material costs and quantities. Obtain a list of workmen and the labor rate that each will be paid.

Arrange for close monitoring to make sure that each person did, in fact, work the amount for which you are being charged. By all means, insist on a not - to - exceed number. The contractor should be able to predict the worst case scenario.

Always obtain at least 2 - 3 estimates. Different contractors may have a more innovative approach which can possibly save you time and money.

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