People often ask me why our company logo is a pineapple.  Let me share with you a description  I found on a postcard about the history of the pineapple and American tradition.

American colonists began importing the pineapple from the Caribbean in the 17th century.  Due to its seemingly exotic qualities and rareness, the pineapple soon became a symbol of hospitality in early America.

I should listen to my gut…

After 16 years in the business, I should know better.  I think the siren song of a new prospect ready to start a project made me ignore my instincts to not rush an estimate.  My motives were good: provide a potential client with an estimate for their home, get it done in a timely manner and try to be as realistic as possible with the numbers.  Unfortunately, the result was a bloated estimate that made me look silly.

This does bring up another aspect of my industry that drives me crazy.  When handed an incomplete set of drawings by a client asking for a competitive bid, there are two directions one can go.  Price EXACTLY what is shown on the drawings or price it knowing there is missing information and try to fill in the blanks.  Pricing only what is shown will result in a “low” bid, but it also forces change orders once the job is under way.  In a fixed price world, this leaves the client vulnerable to the contractor’s “black box” pricing.  What once was a low winning bid suddenly has snowballed into a budget blowing nightmare. 

On the other hand, my thorough estimate may result in a higher bid that becomes paper shredder fodder.  As a professional, I want my client to have realistic expectations from the onset and in the long run, the homeowner wins.

So when using incomplete drawings and specifications, beware of your own siren song enticing you to select the lowest bidder...

 

This may be true for wine and cheese, and it was true for interest rates over the last several years, but signs are now pointing to interest rate increases.  On top of that, materials are also on the rise fueled by a recent (and seemingly sudden) increase in new home production.  

I read an article on HBH.com (library.hsh.com/articles/mortgage-rates-radar/rates-take-leap-on-economic-faith.html) that says mortgage rates are now pushing 4%.  The article goes on to say that rates are expected to continue to rise due to the Federal Reserve purchasing less mortgage-backed securities.  The bottom line is that these historic low rates may be fading into the sunset.

Coupled with the increase in mortgage rates is the fact that material costs are rising.  According to Engineering News-Record, the average price for a 2x4 in May was up 10.9% from last May.  Even more telling is the average mill price for softwood lumber, used to frame homes, was up 44% from a year ago according to Random Lengths located in Eugene Oregon.  Here in Virginia, my suppliers are only guaranteeing their prices for 15 days because due to the volatility of the supply market.  

Waiting to build a new home used to mean lower prices, but not anymore.  Indications are that your new home is less expensive now rather than next year.  So, let the wine and cheese age, but consume the building opportunities before they really stink!

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Why is an Owner Representative (OR) so important?  Home construction and remodeling is an emotional, expensive, time-consuming and complicated industry.  But it can also be fun, fulfilling and a great investment.  The focus of my blog today is scope development.  

When someone considers a new home or remodeling their current home, what is the first thing their closest advisors (who most likely are not in the business) tell them to do?  That’s right; get three bids – which is great advice if you have already determined exactly what you want done to your home (scope).  In order to set this up, indulge me while I share what typically happens when someone wants to build or remodel:

1.    You schedule three builders to come to your house at three different times.
2.    You spend an hour or two with each one walking around, talking about your wants and needs (about 6 hours of your time in total).
3.    Maybe the contractor jots down a few notes, takes some pictures and even sketches a couple of ideas on a notepad.
4.    Two to three weeks later, the bids start to come in – though you probably had to call each one once or twice to find out when the bid is coming in.  This is more time you have to spend – maybe an hour total.
5.    Finally, a meeting with each contractor is made to review their proposal – again at least an hour for each for a total of 3 hours.
6.    I can almost guarantee that you will have three separate bids that look completely different from each other.  Now you have the task of breaking down each bid in order to get an “apples-to-apples” comparison.  Every allowance, assumption, specification, exclusion and note has to be analyzed.  This can take another 2-3 hours of your time and can be very taxing.
7.    At the end of the day, you throw your hands up out of frustration and choose the guy with the cleanest truck or nicest shoes and hope for the best.

To sum up, you’ve spent about 12 hours of your time (some of it time off from work) and sign a contract not really knowing what you are going to get.  In the end, you will endure endless questions from your contractor, change orders, extended schedule and a blown budget.  It may be a great product in the end, but did it really need to be this difficult?  No – but only if you engaged an Owner Representative first.

The OR is the single source for meeting with you and developing the scope of work that is clear, concise and most likely within your budget.  The best part is you have spent a fraction of the time developing it!  Now you are armed with one document you can send to all three builders.  Questions and comments are sent to your OR, who answers them on your behalf.  Once all three bids are in, the OR will analyze them and present them to you in a way that makes it easy for you to make a decision on whom to select.  As a side note – builders appreciate this service as well because it is less work for them, they are dealing with a professional who speaks their language and is readily available to answer questions.

You’ll find that the money you invest with an Owner Rep is well worth it knowing the 12 hours you would have spent is reduced drastically and results in a better end product – three proposals based on a clearly defined scope of work.

The Owner Rep’s work doesn’t have to end here; our services can be implemented throughout the entire build process.  I’ll write more on that another day.  In the meantime, please send me an email or comment on my blog for more information.  Better yet, contact Jonathan Caron Construction today to help you develop your next project.