Contracts With Saga |
| BID or FIXED PRICE
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This is the traditional approach: a single bottom-line price for the product as described by drawings and specifications; a payment schedule is agreed upon, based on completed work. All changes are written up as change orders, i.e., modifications (incl. price changes) to the original contract.
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| HOWEVER, we prefer to do contracts that are based on actual costs; you get the receipts and know what you are paying for. Advantages:
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| 1. Your contributions automatically result in lower costs.
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| 2. Our overhead and profit fee does not have to cover the costs of over-runs, estimating, etc., and can remain low. (Most contractors mark up all costs 25 - 30 %)
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| 3. Changes in plan are easier to handle; if something is deleted you automatically will not be charged for it.
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| 4. There is no incentive for us to cut corners, rush through a job.
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| 5. The reponsibility for meeting the budget on a project is (properly) shared between client and contractor.
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6. Our relationship is co-operative rather than adversarial.
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| COST PLUS FEE
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This is the simplest, generally used for jobs under $50,000. The contract is based on an estimate (not guaranteed); billing, preferably every two weeks, is for the actual cost of material and labor plus a contracting fee (20%). A log of the labor for the period is included; our labor rates range from $20-$50/hr for carpenters, laborers are available at about $8/hr (current as of 7/16/07). Receipts are included for material and subcontractors. Twice-monthly monitoring of costs allows frequent course adjustments (e.g., to keep a project in budget). There is no penalty (or formal agreement) for changes.
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| COST PLUS/GUARANTEED MAXIMUM
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In order to provide a definite, bottom line cost (to satisfy a lender or for a client's peace of mind) we modify the system above by adding a contingency allowance (usually 5%) and guarantee that price. The work that is to be included in the guaranteed price must be specified, e.g., on an annotated blueprint, and any changes must be documented by change orders, contract modifications approved and signed by both parties. We recommend using the same billing and monitoring procedures as above. This, our standard contract for substantial jobs, has evolved: the bottom-line price is a range (e.g. $xx,xxx +- $3000) and contractor/homeowner split any difference in final price above or below that range.
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| ESTIMATES
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| Prliminary estimates are free; they are made by getting a lumber price and guessing at labor and subcontracts based on prior experience. They are usually not definite enough for contract purposes. A contract estimate (usable as a Sworn construction Statement for a lender) can be provided for a $35/hour fee. The usual range of time to do it would be 2 to 12 hours. It would include bids from all subcontractors, an itemized labor estimate, and allowances.
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| If you chose a bid or fixed price you are not billed for the bid (though the cost of doing it will be reflected in the price).
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