Hello everyone,
We plan to start the shell construction in March 2021. The building site is in Baden-Württemberg, and for the basement plus one full floor and knee wall floor, we have shortlisted two construction companies based on the received tender prices through a well-known architect.
The tender was based on a fixed price. According to acquaintances, construction companies always include a certain (risk/error) buffer of several thousand euros somewhere in their offers in case something unforeseen happens during construction, so the project doesn’t become a loss for them.
Since our second child is expected in February (parental leave), I plan to contribute a lot during the shell construction. Therefore, we are now considering moving away from a fixed price and working with one of the two companies on a time and materials basis. But which one?
Company A has a price of 214,000 EUR and Company B 227,000 EUR.
In Company A’s offer, the cost for groundwork and masonry work is almost 40,000 EUR more expensive than with Company B (materials + labor costs). On the other hand, Company B has significantly higher site setup costs and a higher hourly wage (which would probably be important for work charged by time).
What questions would you ask the two companies during your discussions to make the right decision afterward? The companies will hardly admit where exactly they have incorporated their buffer.
I’m almost thinking I might manage to negotiate a better price with Company A if I contribute well because:
a) the site setup costs are low, which are usually fixed anyway
b) the hourly wage is lower
The problem is, I don’t know how much of the nearly 40,000 EUR difference in groundwork and masonry is for materials and how much for labor rates. Hm, can you give any advice?
Which items (besides the hourly wage) would you pay attention to if you were to build on a time and materials basis instead of a fixed price?
Many thanks for your suggestions.
We plan to start the shell construction in March 2021. The building site is in Baden-Württemberg, and for the basement plus one full floor and knee wall floor, we have shortlisted two construction companies based on the received tender prices through a well-known architect.
The tender was based on a fixed price. According to acquaintances, construction companies always include a certain (risk/error) buffer of several thousand euros somewhere in their offers in case something unforeseen happens during construction, so the project doesn’t become a loss for them.
Since our second child is expected in February (parental leave), I plan to contribute a lot during the shell construction. Therefore, we are now considering moving away from a fixed price and working with one of the two companies on a time and materials basis. But which one?
Company A has a price of 214,000 EUR and Company B 227,000 EUR.
In Company A’s offer, the cost for groundwork and masonry work is almost 40,000 EUR more expensive than with Company B (materials + labor costs). On the other hand, Company B has significantly higher site setup costs and a higher hourly wage (which would probably be important for work charged by time).
What questions would you ask the two companies during your discussions to make the right decision afterward? The companies will hardly admit where exactly they have incorporated their buffer.
I’m almost thinking I might manage to negotiate a better price with Company A if I contribute well because:
a) the site setup costs are low, which are usually fixed anyway
b) the hourly wage is lower
The problem is, I don’t know how much of the nearly 40,000 EUR difference in groundwork and masonry is for materials and how much for labor rates. Hm, can you give any advice?
Which items (besides the hourly wage) would you pay attention to if you were to build on a time and materials basis instead of a fixed price?
Many thanks for your suggestions.
N
nordanney2 Jun 2020 18:54s0nyHess schrieb:
Does that mean you wouldn’t build on a cost-plus/hourly basis? No, never, absolutely not. Neither do my professional clients.
How long does the tiler paid by square meters take compared to one paid by the hour? I hope this concrete example helps.
Maybe, but only maybe, you’ll get a few euros credited for your assistant’s support. But not much more. Either you take on a trade yourself (or parts of it) or you don’t. Everything else is a waste of time since you will never be credited with a price that makes it economically worthwhile.
Do you have any formal qualifications? Practical skills?
I think working as a laborer is difficult. You won’t get paid €50 per hour (about $54) for that. The shell builder also can’t declare you for tax purposes. Then the site supervisor might say the worker isn’t worth even €10 (about $11), that he is more of a hindrance, and resentment arises.
If you have the skills, take on specific tasks, like installing insulation or similar work.
You can’t really decide based on price differences in individual items. Company A might own their own machinery and include that cost in the individual items, while Company B has to rent equipment and includes that in the site setup costs.
I think working as a laborer is difficult. You won’t get paid €50 per hour (about $54) for that. The shell builder also can’t declare you for tax purposes. Then the site supervisor might say the worker isn’t worth even €10 (about $11), that he is more of a hindrance, and resentment arises.
If you have the skills, take on specific tasks, like installing insulation or similar work.
You can’t really decide based on price differences in individual items. Company A might own their own machinery and include that cost in the individual items, while Company B has to rent equipment and includes that in the site setup costs.
s0nyHess schrieb:
Company A has a price of 214,000 EUR and Company B of 227,000 EUR.
In Company A’s offer, the cost for the foundation and masonry work is almost 40,000 EUR higher than in Company B’s (material + labor). On the other hand, Company B has significantly higher site setup costs and also a higher hourly wage (which would likely matter for time-and-material work).
What questions would you ask both contractors in a meeting to help you make the right decision afterwards? Neither company will easily admit where they have included their contingency in the budget. Assuming neither is willing to give any discounts and the total cost is practically the same, it seems Company B has included a contingency of about 13,000 EUR in their different pricing approach—added to the total sum, which is rarely reduced by inexperienced planners. Time-and-material work requires skilled professionals—if a contractor quotes low here, I would question their reliability. However, it’s not clear where significant time-and-material hours would even be needed if the contract is for a shell construction and this is supposed to be fully subcontracted to the builder. I believe, firstly, that you are interpreting these offers with little experience, and secondly, the price difference suggests that the offers are based on insufficient or unclear documentation. In my view, both companies probably worked from a 3D layman’s plan and just attached some prices to it. I also don’t see a suitable role for an inexperienced construction helper during the shell phase—regardless of the overestimated expectations of well-meaning but unrealistic future homeowners.
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N
nordanney2 Jun 2020 20:12s0nyHess schrieb:
It’s basically just about the shell construction.And in case of doubt, construction defects are your own problem, since the builder might be, let’s say, "an unskilled person who insisted on helping and didn’t do it properly." That is the second reason why you shouldn’t do it yourself.Similar topics