Paying for Construction Tools

DEAR TIM: My contractor submits bills for labor and materials and I reimburse him. However, I'm noticing items such as $50 "Diamond Blade" and other tools on the bills. Is it normal for the contractor or the homeowner to pay for a special tool or blade that he chooses to purchase to use for the project? What about replacement parts? I want to be fair, but I don’t wish to be cheated. How would you handle this situation? Kimberly McL., Calgary, Alberta, Canada

DEAR KIMBERLY: Let me start by saying that you, as a homeowner, should pay for construction tools and equipment that are completely consumed on your job. Some examples of that are pretty easy to identify. Labor, materials, and other supplies like fuel for machines, sandpaper, certain blades, etc. These things become part of your home and/or can’t be used at another location after the job is done because there is nothing left or they are unusable.

Blades, sandpaper, chalk, masking tape, etc. are tools that can get totally consumed on a job and should be paid for by the homeowner. PHOTO CREDIT: Tim Carter

However there is a massive gray area and I hope that the written contract you have with your contractor spells out what’s to happen in certain situations. Believe me, it’s easy for you to get taken advantage of in a labor and material or cost-plus deal like you describe.

If I was working for you, this is how I would have negotiated the contract. First, I would have a small multiplier, similar to a sales tax, that gets added to every bill I submit to you. This small percentage, say one percent, covers wear and tear on the tools I already own and will be using on your job. This would even include wear and tear on my truck that I drive to your job each day. All of these things eventually wear out and the cost needs to be spread out proportionately over all the jobs where they are used.

This financial arrangement takes care of preowned tools pretty nicely. The multiplier that’s used can seem like fuzzy math, because some tools have a much longer lifespan than others. A truck may last ten years or more where a circular saw that’s used each day for hours may give up the ghost after three years. You’ll have to trust the contractor is not charging you an excessive amount for the use of his tools.

When it comes to new construction tools that have to be purchased for your job, I would have said in my contract with you that either you get the tool at the end of the job, after all - you paid for it, or I can buy it from you at a slightly discounted price deducting the wear and tear that was placed on it during your job. If neither party wants the tool, it can be donated to a local charity that uses tools or it can be sold in the open marketplace. It’s easy to sell tools using free online classified ad websites.

You can sometimes skirt this issue entirely and rent the needed tool. Why buy a tool if it’s only needed one day? The problem is that tool rental costs can soar if a tool is needed for a long time. Then it makes sense to buy the tool, but the ownership of the tool needs to be spelled out before it’s purchased.

In your case, the $50 diamond blade gets a little tricky. The contractor may not have owned one, and indeed needed it for your job. However, the entire blade may not be used up after he’s finished with it. It could have lots of cutting time left on it. In this case, I would have offered to buy it from you at a discounted price. If not, I’d leave the blade at your home for you to decide what to do with it.

Replacement parts for construction tools are another fuzzy area. Let’s say that while the contractor is at your house, the motor on his electric concrete mixer gives up the ghost. The part may cost hundreds of dollars.

There is no way you should have to pay for the cost of the new motor as it was wearing out for years when it was used on other jobs. It’s reasonable for you to pay a small part of the part cost as the mixer, once up and running again, will be used for your benefit. I say this assuming the motor will last for several years after it leaves your job site.

I’ve got some advice for you in the future. Try to minimize the number of situations where you use a cost-plus system of paying for a job. They are fraught with uncertainty and can cause all sorts of anxiety about what the final bill will be. Whenever possible always work with a fixed-sum contract where the contractor agrees to one price no matter what happens.

There are times in certain jobs, where there are unknowns. For example, a contractor digging a basement may have a rock clause in case he hits bedrock and has to blast or use special equipment that digs slower. In roofing work, there may be a clause to pay for rotted wood under shingles that can’t be seen until the roof is stripped off.

The trick is to identify just those parts of the job where the uncertainty lies and work those on a cost-plus basis. Once that part of the job is complete, then the contractor is back on his fixed-sum contract.

This arrangement gives you much tighter control of the finances of a job. You should be able to sleep better and you’ll not care how many diamond blades or sheets of sandpaper a contractor buys. It’s up to him to be frugal with the amount of money that you agreed to in the contract.

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