Talked with a structural engineer about how we estimate jobs and it messed with my head a little

I was grabbing coffee last week with a buddy who does structural engineering on big commercial buildings. He was telling me how their firm switched over to some new estimating software that hooks into the BIM model directly. I run a small crew doing residential remodels, so I'm still over here using a spreadsheet I built myself in 2016 and a roll of paper. He said something that stuck with me: "You guys are pricing your time, not your risk." At first I thought that was just corporate speak, but then he explained how they build in contingency for every unknown variable. Made me realize I've been eating the cost of surprises like bad drywall or hidden rot for years. Anyone else out there run a small shop ever try to factor stuff like that into a quote without scaring off homeowners?

2 comments

2 Comments

karenw9016d ago

Have you tried just adding a flat 15-20% contingency line item on your bids? I started doing that a couple years back after getting burned on a few bathroom gut jobs where the rot went way further than I expected. Most homeowners won't even question it if you call it "project contingency" or "unforeseen conditions allowance" and lump it into the total. The key is to be honest about what it covers and refund whatever you don't use at the end, that builds trust and keeps them from freaking out at the upfront number. Honestly it's saved my backside more times than I can count, way better than eating the cost yourself.

the_sarah16d ago

I actually read a study from the Joint Center for Housing Studies at Harvard that said 40% of remodeling contractors get hit with cost overruns from hidden problems like dry rot or bad plumbing. It really made me think about how common that is, @karenw90. So your approach with the contingency line item seems smart, especially since it covers you without shocking the homeowner upfront.