Investor and Real Estate Agent · Maize, KS · Member since 2014 · 270 posts · 53 votes
morning everyone !
I'm starting a new project where I have hired a project manager with the agreed terms:
A 4 man crew with one being the project manager will be there at all times ($70/hr for the 4 man crew).
My goal is to do everything possible on the front end and throughout to eliminate problems and challenges during the process from a time management ; construction management ; and from a contractor / landlord communication standpoint.
I recently completed a sizable rehab on a large 1904 built home (divided into a duplex) and paid the crew hourly. Looking back I would have to agree with @Peter MacKercher that paying hourly for a sizable project is a bad idea. I ran into the crew showing up and doing "work" but they lost track of the end goal of completing the project on time and on quality. Then when they had another project come up they were ready to get everything wrapped up and didn't get me to the finish line like we agreed. I had little leverage because I wasn't holding the last installment of their payment like I would have been if we had priced on a project basis opposed to a project basis.
Get everything you want completed clearing outline in a statement of work and have them bid the job. Spend significant time on this and ensure you have thought through everything, inevitably you will leave something out but get as close as you can. This is not the step to be lazy on and will pay you back for your thoroughness. Then you can go right done the checklist and ensure everything is done or they don't get paid.
I recently completed a sizable rehab on a large 1904 built home (divided into a duplex) and paid the crew hourly. Looking back I would have to agree with @Peter MacKercher that paying hourly for a sizable project is a bad idea. I ran into the crew showing up and doing "work" but they lost track of the end goal of completing the project on time and on quality. Then when they had another project come up they were ready to get everything wrapped up and didn't get me to the finish line like we agreed. I had little leverage because I wasn't holding the last installment of their payment like I would have been if we had priced on a project basis opposed to a project basis.
Get everything you want completed clearing outline in a statement of work and have them bid the job. Spend significant time on this and ensure you have thought through everything, inevitably you will leave something out but get as close as you can. This is not the step to be lazy on and will pay you back for your thoroughness. Then you can go right done the checklist and ensure everything is done or they don't get paid.
Professional · Noblesville, IN · Member since 2014 · 222 posts · 66 votes
11y
If you pay by the hour, you need to be actively involved. The manager could be getting in over his head and a legal mess could ensue when he comes for payment. You should establish a target budget and timing and have him work toward those and track closely. I can't imagine not having progress payments over a large job. More definition is better than less to avoid surprises to both of you.
Investor · Wichita, KS · Member since 2013 · 62 posts · 28 votes
11y
I have done a lot of project management in the corporate world and limited in the real estate world. But my advice would be to establish a bonus if the work is done earlier than estimated or a late penalty if the work is later. You have to be careful how you structure these though because they could try to take advantage of you. I would however suggest that you meet with you project manager at least a few times a week on the job site to verify that the project is progressing. As he builds confidence, you can move to a more hand off role.