Whenever someone decides to have some work done they get several bids from competing contractors because that is what they heard someone say a long time ago. There are two problems to consider:
Good / Fast / Cheap - Choose Cheap & Fast or Cheap & Slow! Expect the project to Late and over budget!
Base costs - Taxes, fuel, cell phones, nails, glue and small parts are the same for all contractors; no savings here
Labor - Cheap labor makes mistakes and causes damage because they are learning, by experience, on your project!
Material - Price is King! So they buy and install cheap material!
Tools - Cheap tools take more time and the finished product may be hard on the eyes but they have to cut costs!
Trucks - Rickety old trucks and vans may break down which means the job may take longer but costs have to be cut!
Office - They work out of their house or truck; so called no-overhead
Cheap Construction Manager - Biggest baddest construction worker. Also the bill collector. Also acting as a "Working Project Manager" which means the company is attempting to save money in the short run and ends up losing money in the long run. Assembling parts and building something takes a "Tactile" mindset. Running a project is "Strategic". Put another way no man can serve to masters as he will hate one and love the other and the inevitable outcome is the Peter Principle which leads to a construction train wreck.
Invoices - Make no sense, total cost may exceed the bid and you will pay the contractor to avoid violence!
Warranty - Cheap contractors cannot afford warranty work because they are "One-Hit-Wonders" never to return
Good / Fast / Cheap - Choose Good & Fast or Good & Slow! Expect the project done on-time and on budget!
Base costs - Taxes, fuel, cell phones, nails, glue and small hardware are the same for all contractors
Labor - Skilled labor costs more, produces more work faster with fewer mistakes which means a quality project
Material - Quality and reputation are King! Skilled labor can install quality material faster than cheap material
Tools - Quality tools and equipment cost more and will produce a product that is easy on the eyes and lasts longer
Trucks - Reliable trucks and vans means the job is done quicker and with fewer delivery issues
Office - Skilled staff and office equipment provides for effective communication
Qualified Construction Manager - Has construction background and formal training in project management. Most professional construction companies with good reputations will have people with credentials like PMP assigned to oversee projects.
Invoices - Are Pay Applications that make sense because they show a history of costs and payments made
Warranty Work - Is a marketing cost because the first project is the beginning of a relationship
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About The Author:
Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System is based and continues to evolve and improve. Check out our Contractor Success Map Podcast on iTunes and Follow Randal on Google+