Qualified Remodeler Magazine

APR 2016

Qualified Remodeler helps independent remodeling firms to survive, become more professional and more profitable by providing must-have business information, namely best business practices, new product information and timely design ideas.

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entire room. "Unless you have a written scope of work, you might end up painting the whole room because they expected it or you might have a homeowner disappointed you're paint- ing only one wall," he says. "Te estimate is of what we think we're doing. We just have to ensure that is what the client thinks we're doing too." IN THE ongoing debate amongst remodelers of whether you should charge for estimates or not, Weidmann argues for charging. "If a homeowner was paying an architect to de- velop a design, the architect is paid. If they were pay- ing a designer to assist in selecting materials, the de- signer is paid. But if they bring in a contractor, they're expecting the con- tractor to provide his expertise for free," Weidmann explains. "Our ex- pertise has no val- ue. Why does that change when you get into construction? It needs to change. If people are going to run a professional business, they need to act like professionals and professionals charge for their time and expertise." | jobs combined throughout that period and we spent $49,000 or $51,000, we're pretty close," he says. "But if we budgeted to spend $50,000 and actually spent $70,000, we have a problem and we go back to try to assess what the problem is. "Are we underestimating the quantity? In the sheetrock example, it turned out we were pricing the original work correctly, but we were going back and doing additional work to complete the project for many jobs. So we add a fudge factor into it. We were of by 10 percent so we added 10 percent to our pric- ing then. What we fnd is over time we correct problems in one area and prob- lems creep up in another area." Whereas build- ers can tell cus- tomers to the pen- ny what it will cost to build a home, remodelers have unique situations in each job, there- by making it im- possible to provide that to-the-penny estimate. Surprises always arise. "Tat's where the detailed scope of work is so important," Weidmann explains. "We draft a scope of work that describes what we will do and what we will not do. Ten we can go back, walk the job and see if there is anything we missed." Detailing what you will not do during a job helps manage expectations on both sides. If a project encroaches into a room and afects one wall, the contractor might plan to paint only the afected wall whereas the homeowner might assume the contractor will paint the erhaps one of the biggest processes to streamline in a company is esti- mating. Understanding how much a project will cost and what you need to add to costs to make a proft —then communicating that to customers — is vi - tal. You don't want to have high slippage or grippage. Dan Weidmann, CR, president of Roswell, Ga.-based Weidmann Remodeling, says ac- curacy is the biggest hiccup in estimating. Tis includes numbers for cost of material and cost of labor. "In addition to plans, we do a very detailed scope of work that breaks out all of the project elements item by item," he explains. "For most of our projects and trades we have unit pricing," Weidmann continues. "For ex- ample, we know what our electrician charges us per unit, per switch or per light fxture. We build estimates using unit pricing. Where we do not have that information we bring in trades to quote the job. Because we have a very detailed scope of work, they also know what we are asking them to price." EVEN THE most carefully considered esti- mates need some wiggle room. "In the process we know we will miss some things or we'll have inaccurate information on pricing," Weidmann says. "So we build in a contingen- cy, which is a percentage of the nonallowance items. Te goal is to have slippage or grippage of no more than 1 to 2 percent throughout the course of a year." Constant vigilance in assessing the individ- ual costs that go into an estimate is necessary. Quarterly or every six months, Weidmann's team evaluates areas where estimating was of and modifes them as needed. Weidmann provides sheetrock as a material cost example. "If we estimated $50,000 of sheetrock in all Develop Accurate Estimates Establishing a detailed scope of work and being aware of costs are essential to developing a strong estimate By Laurie Banyay P The estimate is of what we think we're doing. We just have to ensure that is what the client thinks we're doing too. QualifiedRemodeler.com QR April 2016 19 PROFITS: NARI Recertification QR has teamed up with NARI to create a convenient way to earn credits toward your recertification. After reading this issue's article, take the test for CEUs at QualifiedRemodeler.com/10441422.

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