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November 10, 2011

Ground Rules: Improve the "Remodeling Estimate" Experience - part 4

Establishing the ground rules is a vital part of any remodeling project, but is often overlooked or assumptions are made that lead to confrontation or disappointment. In the estimating process, before the agreement is finalized, the details of the working relationship need to be discussed and understood. Then these agreed details must be placed in writing in the agreement.

The first point is communication. Who is the contact person for both the family and the remodeler and for what aspects each person is accountable. In many homes there is one person that primarily handles the financial decisions and questions while another may have the final say in design or color choices. The remodeler should be able to provide a mini organizational chart or a specified contact list for access and communication. Homeowners that contact the wrong or multiple persons with a questions may get inaccurate or conflicting answers that cause problems for both the client and remodeler. How will the project progress communication be handled? Will this be done via phone calls, emails, posted job board, or face to face meetings? Will there be a regular schedule for these progress updates?

The second point is paperwork. How will any change orders be handled? Both parties should make sure any changes to the original work scope and/or plans be in writing, approved, and signed by both the homeowner and remodeler before performing the change. Is there a provision in the agreement that allows for the approving signature of just one of the homeowners? If the change order decision needs to be made immediately is there a provision for email approval to move forward with obtaining paperwork signatures subsequently? Homeowners and remodelers equally should never accept and act upon verbal discussions no matter how long and solid the relationship is.

Construction permits, when read aloud, sometimes sounds like "root canal" to everyone involved. Make certain that the process and responsibility of obtaining, paying for, scheduling inspections, and waiting around to meet the inspectors are understood by all. A note to homeowners: while it may sound advantageous to you when a remodeler tells you that permits are not required for your project, they are important for your safety and assurance and is often mandatory with a shared legal responsibility for both parties. When in question, call your township.

Then there is the money of course. Is the payment schedule clearly defined in writing? In our opinion, the progress payments should be tied to several work progress milestones and not dates on the calendar. Is the schedule fair and equitable to both parties? A remodeler having half the total amount at the start of the work is unfair, but so is the client holding onto a large sum until 100% complete. There should be a written process that addresses how the work and payments will close out. We suggest that when approximately 90% of the work is complete, there is a walk-through meeting with all owners and a field and office staff representative from the remodeler. At this meeting, a mutual list of items yet to be done and things that need to be fixed or changed should be agreed, put in writing, and signed. The plan should be for final payment to occur with the satisfactory completion of this list combined with applicable final inspections and approvals that the municipality requires. Also, what methods of payment are accepted and what is not? Who collects these payments and are there separate invoices, receipts, and reconciliation spreadsheets provided?

There is often a list of items for the project that require viewing, comparing, and final selections by the homeowner that might not be finalized at the time the agreement is put in place. Typically these allowance items are products that may entail a visit to a showroom; such as: plumbing fixtures, tile, lighting fixtures...etc. Allowances have estimated dollar amounts associated with their anticipated cost. Are future decisions or changes to these items, and associated payment adjustments, clear? How will allowance credits and debits be applied to the payment schedule? What are the time frames, deadlines, and consequences for delay in making final selections?

The next point is time. Are there defined start and completion dates? Is there a remodeler's penalty clause for late completion? Are homeowners held responsible for delays in access, decisions, and payments? Are there acceptable exceptions listed that are beyond the remodeler's control? We recommend that normal work hours and possible weekend work be discussed and agreed upon. The homeowner should expect a written anticipated progress schedule for the entire project before the work starts. There should be a method of communicating and updating this schedule, as it will almost certainly change due to outside factors and change orders. Homeowners should have an expectation of knowing daily what crews will be working and made aware if there will be a "no-work" day and the reason why.

Finally, don't forget the home and family! Does the house have an alarm system and how will it be handled? Who is responsible for access when the homeowner is not home, and how will they access the home (key, garage code, etc.).  It is our suggestion that an alternate door code, or a new lock be used during construction, and switched back after the work is complete. Determine parking arrangements, garage and driveway access plus location for debris, portable lavatory, and material deliveries. Do the children or pets need special attention or isolation? Will there be daily, periodic, and final cleaning for safety, comfort and appearance? Determine the reasonable level of expectation for site cleanliness and don't forget it is construction that usually starts with destruction.

Having been integral parts of thousands of residential renovation projects, the staff at Design Build Pros has many opinions and suggestions that they gladly share with homeowners and remodelers that want to improve the overall remodeling experience. Let us know if you have any questions and we will answer where and when reasonably possible. INFO@DesignBuildPros.com 

November 2, 2011

Improve the "Remodeling Estimate" Experience - part 3

This is the third in a series of blog notes on how to improve the experience of the "remodeling estimate" for remodelers and homeowners alike.

As a far home improvements are concerned, there is no official "how to buy" or "how to sell" books for homeowners and remodelers respectively. Add to that, unlike many other life decisions and past purchases a homeowner has little or no personal history to refer to or learn from. A person will purchase many cars over their lifetime and typically get wiser from each experience in preparation for the next. Also consider, homeowners are more likely to buy and sell a home than purchase a major remodeling project such as an addition or a new kitchen. Well over 90% of the homeowners we consult with have never personally experienced a substantial home renovation.

The remodeling contractor is not much better off. There is no official "remodeling school." Yes, there are national associations, professional groups, and consultants that offer courses and training, but not mandatory and/or standardized.

Painting the picture with a broad brush, there are three general groups of remodeling companies with regard to estimating and ultimately selling projects.

  • One group believes in presenting a robust scope of work and service for a 100% completed project based on history and experience. They will try to earn the order through thorough explanation of the process before, during, and after the project. They illustrate the potential pitfalls through cautionary tales. While this approach typically has the best interest of the consumer, homeowners usually have initial sticker shock and continue to get other estimates as a result. As time goes on, homeowners often forget some of the finer points of the scope and/or service and only remember the price in which to compare to other estimates. Homeowners that purchase from this group are generally pleased.
  • The next group presents a project scope that is not as encompassing as the first group. The initial investment amount will appear more palatable to the consumer. If the order is obtained, at some point there will be extras added to the project and price that were not initially included. Often the homeowner will end up with a project and experience not at the value level they had hoped for; or ultimately get the good project, but after some rough patches.
  • The final group is the fledgling, unscrupulous, or new company that seeks to obtain projects by virtue of being the lowest priced estimate. Lack of experience or training often leads to incorrect pricing and necessary tasks being overlooked up front. The low budget sets the stage for corner-cutting or a very bad experience. We have yet to meet a homeowner that has not personally known someone that has had an awful remodeling experience at some point, and often associated with this group.


Within those neat and tidy groups the solutions might seem simple. For example, a homeowner may say they plan on getting three estimates from companies only in the first group to make an "apples to apples" comparison. It's not that easy. There are three distinct components that make up a remodeling project - material, labor, and the company that will deliver the experience. If you planned to buy a Ford SUV, you could go to three Ford dealerships and compare the prices. The only variable will be the people at the dealership - the company delivering a small part of the experience. Ford is the main company, the SUV is the product, and Ford provides the labor or assembly. Now how about the apples to apples comparison when it comes to remodeling projects? There are 7,500 different varieties of apples with 2,500 varieties grown in the United States.

Legos
Let us look at it this way: the products are Legos, so therefore the consumer can make a true material comparison if all were specified. Now the assembly of those Legos, the labor, even if following a plan or blueprint with not be performed in the same fashion from one crew to the next. Then the clean up, pack up, communication, duration, and overall experience of the Legos, I mean project, is the biggest variable when it comes to residential remodeling.

If there was a standardized platform available that accurately depicted and detailed  the project and process for review, discussion, planning, and comparison then the playing field could be truly leveled. Great news! The staff at Design Build Pros provides a detailed project design and development service and package for either a homeowner or a remodeler anywhere in the United States. It is illustrated in a Youtube slide-show video. Copy and paste (or click) this link into your web browser to view: http://bit.ly/DBP-T2

Or contact the staff for more information at INFO@DesignBuildPros.com