Lately I’ve had a lot of clients musing about home renovations so I thought it prudent to do a piece on hiring a contractor. It can be intimidating, and this is especially true if you’re unfamiliar with their industry language or lingo.
A great deal of the typical contractor jargon relates to the process of setting the price for the home renovations. If you can speak with authority about the cost of the job, the process for hiring a contractor becomes less intimidating. Here are a few key terms to help get you through the home renovation process.
Contractor Estimate
At its core, every price a contractor provides is an estimate of the labor and materials it will take to complete your project. For an estimate, the property owner merely tells the contractor what they would like to have accomplished. The contractor is then left to to describe what you will see and give allowances for items that make up the price. In residential construction, an estimate or proposal generally is not a firm price.
The alternative to an estimate is a bid, which means the contractor or subcontractor gives you a firm price after examining the scope and details of the project at hand. Detailed bids may vary greatly from contractor to contractor if they are not provided the same project information. The size of the company may also affect their bid as a small one-man operation will have far lower overhead costs than a company with many services and employees.
Rough Order of Magnitude
The Rough Order of Magnitude is useful in narrowing down and selecting the contractor with whom you want to work, but it doesn’t tell you exactly what your project will cost. [It] usually entails allowances based on square foot and unit costs, and extrapolation from other projects of similar size and scope, but no specifics.
Cost-Plus / Time and Materials Contract
When a contractor [has a realistic] estimate as a basis for a construction contract, it is usually called a time and materials or cost plus contract. The “plus” in the estimate is a contractor’s markup for overhead (sometimes called a contractor’s fee) that is applied to some or all of the costs of the project.
Key Takeaway for anyone planning Home Renovations
While the theory of getting multiple quotes or bids for your home renovations seems to be of
high importance to most people, it is even more important to make sure the general contractors are providing the same scope of work, high-quality workmanship, and quality products and that they will be around after the sale to provide follow up and warranty service if needed. It’s important to choose a licensed contractor, with good references, and a history of quality work who can trust to guide you through the home renovations process.
Remember too, home renovations can be rolled into your mortgage for the least expensive way to finance them. Call (403-804-7002) or email (susan@ashtonmortgages.ca) me to get more details.
Happy renovating!
Source: Litchfieldbuilders.com
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