Contractor price - lump sum or breakdown?

30 Replies

Curious to know how everyone is receiving contractor scope of work and pricing for rehab projects, do your contractors provide a scope of work with a lump sum total, or do they break down the items? 

For example, say you need drywall, insulation, windows, siding, minor plumbing and electrical,, etc., are your contractors providing a total cost, say $25k, or do they break it down like $2k for drywall, $2k for insulation, $4k for windows, $11k for siding, $4k for plumbing and electrical? 

Id prefer to see a breakdown for a couple reasons, first it helps me understand how much various items cost in my area so I can apply that to other potential projects. Second, if anything changes during the work or if I need to fire a contractor I have a better understanding of what is owed.

What I'm finding though is many general contractors wont provide a breakdown.

Any thoughts would be appreciated!

Breakdown into several chunks and then pays as you go. Pay the first installment when the first chunk is complete, etc...

Originally posted by @Ryan K. :

Curious to know how everyone is receiving contractor scope of work and pricing for rehab projects, do your contractors provide a scope of work with a lump sum total, or do they break down the items? 

For example, say you need drywall, insulation, windows, siding, minor plumbing and electrical,, etc., are your contractors providing a total cost, say $25k, or do they break it down like $2k for drywall, $2k for insulation, $4k for windows, $11k for siding, $4k for plumbing and electrical? 

Id prefer to see a breakdown for a couple reasons, first it helps me understand how much various items cost in my area so I can apply that to other potential projects. Second, if anything changes during the work or if I need to fire a contractor I have a better understanding of what is owed.

What I'm finding though is many general contractors wont provide a breakdown.

Any thoughts would be appreciated!

Always get estimates that are broken out for all the reasons you mentioned plus a few more! If he's not breaking out the items, are you sure your scope and his are the same? Either the GC is overcharging and doesn't want you seeing what he's charging per item or he's taking a SWAG at the price and hoping he does well. If he gets halfway through and his SWAG was low, you can bet he'll be hitting you up for extras. 

Another thought, is this for a property you own or something you're "looking at"? I get verbal ballparks all the time just to run numbers then, if I move forward, as part of due diligence period, I get an itemized estimate so I have a better idea of the actual cost. Newer investors don't realize how much time it takes a GC to put together an itemized estimate. I use a few GC's and won't ask them for written until I'm committed to the property so I'm not wasting their time. If you ask for written estimates on more than a couple properties and they don't get the job because you didn't move forward, what're the chances they're going to show up again to give you any more written estimates? 

The market is booming and any decent GC I know is super busy. Be respectful of their time and it'll pay off later with them dropping what they're doing to look at a property with you, once you have that relationship and have proven that you're not a tire kicker. 

@Ryan K. all of our bids are itemized. I believe this is the best way for both parties involved. 

We like our clients to know what their money is being spent on. A break down also shows that the contractors actually know what is involved in the project. We hear a lot about contractors not being able to perform what they say they can or will.

I would only deal with contractors that offer itemized bids or contracts.

Hope this helps!

When restoring fire damage, the bid I accepted was fully itemized.

Payments?  In Calif,  the deposit can only be 10%, and then we scheduled progress payments in thirds.

Thanks for all the responses. This is my primary residence which I intend to rehab, I'm already living in the house. I've dealt with individual subcontractors before and its straigtforward with the price for the work, and once i dealt with a general contractor for an insurance claim - significant storm damage - everything was obviously itemized in this instance. 

I'm getting estimates for the work on my house and the first general contractor just provided a scope with a grand total for everything, he is reputable but the price is high in my opinion and I have no clue which items are costing so much (of if he is just expensive for everything ) since he didnt break it down. I'm waiting for another general contractor to give me a price as well. If needed I'll get mosre estimates, or possibly just sub the work myself.

Originally posted by @Troy S.: 

The market is booming and any decent GC I know is super busy. Be respectful of their time and it'll pay off later with them dropping what they're doing to look at a property with you, once you have that relationship and have proven that you're not a tire kicker. 

Troy hit the nail on the head.  The reason your insurance claim damages were broken down into very detailed estimates is because it's required by the insurance company in order to arrive at a settlement amount for the claim.  Most non-insurance jobs will likely not be estimated in as much detail.  I would ask for at least a break-down by trade (or category), that way you will know what each phase will cost. 

Another alternative you could do is hire someone like me (a public adjuster) to give you an estimate based on exactly what you wanted to have done.  Most PAs will charge a flat rate to create a very detailed estimate - exactly like what you received in your insurance claim.  I imagine you could have it done for $300 or so, depending on the complexity of the job. Most of us use Xactimate - an estimating software that is supposed to value each line item according to the pricing for that specific zip code (that is debatable at times).  Then, you could redact the prices and shop out the estimate to as many contractors as you'd like.  You'll have a thorough scope of work and any contractor who agrees to do the job will know exactly what you expect to have done.  They won't have to spend as much time (as Troy S suggested) in creating a scope, as they will simply be giving you their price to do the job per your own scope.  You could ask them to break it down by trade, so you know exactly what they're charging for each category.  You'll also get an idea if any of the GCs is way out of the ballpark in pricing compared to what Xactimate's valuation is.  Doing it that way might get you some quotes from busy GCs who perhaps wouldn't have time to create a scope.  Just an idea.

Tavisha Grant, Public Adjuster, Property Claim Adjusters, Phoenix, AZ

I wouldn't give a customer a itemized breakdown on a bid, but they would get an itemized list of everything we are going to do and even list stuff we are not going to do. If I'm hired I will provide a "schedule of values" which roughly breaksdown the different parts of the job. Its not exact but gives an idea.

Originally posted by @Tavisha Grant :
Originally posted by @Troy S.: 

The market is booming and any decent GC I know is super busy. Be respectful of their time and it'll pay off later with them dropping what they're doing to look at a property with you, once you have that relationship and have proven that you're not a tire kicker. 

Troy hit the nail on the head.  The reason your insurance claim damages were broken down into very detailed estimates is because it's required by the insurance company in order to arrive at a settlement amount for the claim.  Most non-insurance jobs will likely not be estimated in as much detail.  I would ask for at least a break-down by trade (or category), that way you will know what each phase will cost. 

Another alternative you could do is hire someone like me (a public adjuster) to give you an estimate based on exactly what you wanted to have done.  Most PAs will charge a flat rate to create a very detailed estimate - exactly like what you received in your insurance claim.  I imagine you could have it done for $300 or so, depending on the complexity of the job. Most of us use Xactimate - an estimating software that is supposed to value each line item according to the pricing for that specific zip code (that is debatable at times).  Then, you could redact the prices and shop out the estimate to as many contractors as you'd like.  You'll have a thorough scope of work and any contractor who agrees to do the job will know exactly what you expect to have done.  They won't have to spend as much time (as Troy S suggested) in creating a scope, as they will simply be giving you their price to do the job per your own scope.  You could ask them to break it down by trade, so you know exactly what they're charging for each category.  You'll also get an idea if any of the GCs is way out of the ballpark in pricing compared to what Xactimate's valuation is.  Doing it that way might get you some quotes from busy GCs who perhaps wouldn't have time to create a scope.  Just an idea.

Tavisha Grant, Public Adjuster, Property Claim Adjusters, Phoenix, AZ

 Tavisha, yes I understand the insurance is a special situation and I'm not looking for that level of detail - I was just pointing out a prior experience. All I would like to see is the breakdown per trade or major items as you mentioned, for example "$2500 to drywall 5 rooms including ceilings". I could care less about material cost, labor rate, overhead, etc.

I've seen more than one instance where someone I knew ran into an issue with a contractor that provided only a grand-total cost. In these cases they were not happy with the work of the contractor in the middle of the project and fired them, which turned into a major mess because there was a dispute over the amount owed - neither party had much to rely on for cost of items, ect. I'd like to avoid this situation.

I alway like an itemized bid but it is more common to have lump sum on commercial construction I do.  You can ask for a schedule of values at the beginning of the project. When things change (and they will) you already have set price.  I would have a 10% retainer held back from the contractors payment during construction. This is paid at the end when contractor is complete. Make sure the contractor is bonded and has insurance.

Originally posted by @Jim Adrian :

I alway like an itemized bid but it is more common to have lump sum on commercial construction I do.  You can ask for a schedule of values at the beginning of the project. When things change (and they will) you already have set price.  I would have a 10% retainer held back from the contractors payment during construction. This is paid at the end when contractor is complete. Make sure the contractor is bonded and has insurance.

 90 percent of my work is commercial, and I expect a retainer,I wouldn't do a residential job that the customer wanted to hold a retainer on. Its just such a low margin its not worth it.

Get it broken down. Itemized if at all possible (it is possible, they have to do it when haggling with insurance companies).

I work for a major insurance carrier as a property adjuster and work with contractors daily. Majority of them use the same estimating platform that major insurance companies use, and I can assure you it is a line item breakdown system. If they won't give it to you, I'd advise you to look for a better/different contractor. 

With a broken down estimate, you can assure they aren't throwing in misc. items that are not needed to pad their pockets. 

- Russ

*If anyone has questions regarding contractors, repair processes, or would like me to glance over an estimate, let me know. 

Originally posted by @Scott Carder :
Originally posted by @Jim Adrian:

I alway like an itemized bid but it is more common to have lump sum on commercial construction I do.  You can ask for a schedule of values at the beginning of the project. When things change (and they will) you already have set price.  I would have a 10% retainer held back from the contractors payment during construction. This is paid at the end when contractor is complete. Make sure the contractor is bonded and has insurance.

 90 percent of my work is commercial, and I expect a retainer,I wouldn't do a residential job that the customer wanted to hold a retainer on. Its just such a low margin its not worth it.

 I dont to residential for a living. Holding the retainer is incentive to keep the contractor from no preforming.  At the end of the day you will still get the money. If not file a mechanic lien.  I deal daily with contractor that dont perform and it drives me nuts! Lol  

Its not the end of the day, its usually in 120 days. I have about 100k owed to me right now in just retainage on various projects. Luckily state projects only hold back 5%.

Originally posted by @Dawn Anastasi :

I would like a breakdown in the major categories.  For example, installation of windows as one line item, not necessarily per window.

 To clarify, this is what I see from GC's on rehabs in my area. Not itemized but price per category with brand/grade/type specified. I don't get price per window or per sheet of drywall, just a price for X amount of windows installed or drywall and finish of X, Y and Z rooms, etc. Hope this clarifies. 

@Jim Adrian Have you filed a lien? It's not easy to follow through, and it doesn't guarantee you will get your money. If the investor is doing an REO and buy & hold, they could hold that retainage forever. Sometimes contractors make 15% of the job after all is said and done, 5% take home and 10% of it you might or might not get paid is bad for business.
@Scott Carder Yay government! And their 6 month retainage period.
@Ryan K. Everyone is pointing you to the right direction, but they are missing one big thing. You are the client, you are the master. You need to tell contractors what you want. Any decent GC can fill up your forms, however, before you solicit bids, you will need to create them, I would go room by room and see what you need, or trade by trade. Each line item, you will need to describe what you need included or work done. A very detailed line item will get you apples to apples bid, if you have a list of materials, that will help IE all windows should be: Milgard vinyl windows, sliding, clear, low-e. You expecting the contractor will do this for you in a residential setting is mostly unreal, some of us gives out a breakdown as our normal procedure, but most cheap GCs wont.

I didnt read through all the responses as there are so many and are they informative and very detailed. I believe in the KISS method. Keep it simple stupid. 

My experience journeyman carpenter 10 plus years experience, contractor, ect. 

If you want to keep it cheap what you do is you get a general contractor to come in and itemize everything with his prices. Than use that as a base to sub everything out off craigslist or what ever you want to use. Price the material your self, if you can find deals, ect and just have the trades people come in to do the work. Way cheaper! I don't know about you but I don't pay someone 60 bucks an hr to go to the plumbing store to chase the dogs around while there getting items. 

Just an idea, some people may not agree with it but it'll save you huge!

@Kris Mcfarlane 1. How long do you think a GC will give free itemized bid, IF they even will write it down by line item. 2. If he buys the materials, is he going to get it right?  There are 10 types of everything, ie caulking: paintable or non paintable, silicon, polyurethane, polyethylene, etc. How many of his wrong trips until the sub throws a white towel and leaves? How many would strong arm him for change order for waiting time? 3. How many subs can stomach his pricing and his methods? He will be acting as Foreman where he is directing work, and Purchaser as he will be running to stores and buy materials, get it wrong two times then get it right the third, wasting 1 hour per person working on site, my normal work site is only 6, if I don't get materials on time, that's 6 man-hours per wrong trip.

Good for you if you know what you are doing, journeyman and all that, but don't expect someone who doesn't even know how to get line item bids to perform what you are suggesting.

Originally posted by @Kris Mcfarlane :

I didnt read through all the responses as there are so many and are they informative and very detailed. I believe in the KISS method. Keep it simple stupid. 

My experience journeyman carpenter 10 plus years experience, contractor, ect. 

If you want to keep it cheap what you do is you get a general contractor to come in and itemize everything with his prices. Than use that as a base to sub everything out off craigslist or what ever you want to use. Price the material your self, if you can find deals, ect and just have the trades people come in to do the work. Way cheaper! I don't know about you but I don't pay someone 60 bucks an hr to go to the plumbing store to chase the dogs around while there getting items. 

Just an idea, some people may not agree with it but it'll save you huge!

That's pretty slimy and being in the trades yourself I'm surprised you'd suggest that! You're not paying for their time to chase parts, you're paying for their years of knowledge, expertise and craftsmanship. 

Treating people that way won't build any relationships and you probably won't last long in this business if you use people and throw them away. This business is ALL about reputation and relationships. 

I appreciate the advice on trades @troy s, which trade did you obtain your journeyman or equivilant in? 

iif the prime contracts boarding/taping at 40c a sq ft and  can get a boarder at 25 sq ft he s pocketing 15 per square why not just cut out the middle man?

Paying a pc to manage the job on a 60 k plus reno absolutely. Paying a pc to run a 10k bathroom no. 

I do agree with the bit on reputation/treating people right, the number of contractors that will pull the wool over a home owners eyes is pretty high when quotes can range thousands or dollars even on a small job proced at 4k. 

Originally posted by @Kris Mcfarlane :

I appreciate the advice on trades @troy s, which trade did you obtain your journeyman or equivilant in? 

Welding and installing structural steel and non-structural steel and sheetmetal actually. At one point was a certified structural steel welder (stick) and also had certs for MIG and TIG. We mainly worked in Dupont, pharma and process facilities including clean rooms and I welded a lot of stainless lab hoods and exhaust. I also learned many other trades working industrial and commercial construction (I'd say I'm proficient at plumbing, sheetmetal and electric) for over 10 years before moving over to the management side of construction and maintenance. ~20 years in the trades on one side of the fence or the other. 

My point is, sure you'll trick a GC one time and save a few bucks but the job will take 3x as long, the quality won't be good and you've burned a bridge. How do you propose finding all these top notch subs? You may know a guy that does drywall or electric but what happens when you've rehabbed a house and the buyers mortgage company wants to see the permits you pulled for the $100k of work you did? It's starting to happen here in Philadelphia, especially when you bought a house for $100k 4 months ago and are now selling at $300k. What happens when the job gets shut down and then you need to pull permits anyway but now you've lost a month to finding a GC, getting bids, pulling permits, submitting plans, etc. Oh, you got all your drywall up and finished then got caught? Think they won't want you to pull down the drywall and insulation so they can see the framing, insulation, rough plumbing and electric? 

This is a business and if you treat it as such (build relationships, use good contractors, get permits, don't F people over), you'll do well. I realize where you're coming from Kris, you have the "I can do it better/cheaper/faster" mentality because you are capable of completing some or most of the work and know people that can likely fill in the gaps. I get it but it's not a business model. Roll those dice a few times and eventually you'll lose big whether it's a lawsuit for an injury on your job, getting shut down and having to redo a bunch of work, finishing a place and not being able to sell it since it's unpermitted, etc. 

I try and live by the golden rule of treating others how you want to be treated. Would you want to quote a job, line by line, build a scope of work, then have the homeowner take that and sub it all out?