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Negotiating with Contractors

Updated: Feb 27

**Negotiating with Contractors - YouTube Summary:**


1. Rob Hefner of Old Glory construction management discusses the nuances of negotiations with general contractors.

2. Successful general contractors often bid 35% overestimated labor and material costs due to four primary reasons:

- **Labor & Material:** It's challenging to perfectly estimate costs. Unexpected issues, especially in older homes, can lead to increased expenses, such as discovering mold or termites.

- **Overhead:** This pertains to the added costs based on client needs. For instance, clients seeking design help or wanting to visit showrooms will face higher charges compared to those who require basic handyman services.

- **Risk:** Contractors may price higher to accommodate the potential risks of job uncertainties.

3. Direct and clear communication helps in avoiding misunderstandings and unexpected financial surprises.

4. Understanding the specific factors affecting a construction job's price aids successful negotiations.

5. The closing analogy emphasizes understanding your environment: "Never take a hockey puck to a baseball game." If you need assistance, contact Old Glory Construction management.


Negotiating with Contractors - YouTube


Transcript of Negotiating with Contractors:


Transcript:

(00:01) hello again this is Rob Heffner with Old Glory construction management I'm a general contractor and I'd like to talk to you for a minute about negotiating with those evil general contractors a quick Google search will show you that most General Contractors at least are successful ones bid 35 percent and up over estimated costs and material of labor and material there's some very good reasons for that that generally fall into four categories the first of those categories is labor if you perfectly estimate the job and

(00:34) there are no surprises you get your labor about right and everybody walks away happy material same thing if it's a perfect estimate a perfect bid as far as what you think your cost will be me as a general contractor I mean then everything works out well on that end problem is that never happens especially in older homes you open a wall expecting just to replace some a hole in the sheetrock and find termites and mold and end up replacing a whole lot more than that all of those things have to be to some extent accounted for because I don't

(01:09) want to have to come back to you as a homeowner every time I go 10 or 15 dollars over what I thought I would have to pay for something those asking for for more money conversations rarely turn out well and they're always uncomfortable for everybody involved so labor and material the next item is overhead consider overhead and how it influences the total price of the job as really a factor of what you want if you want design help color selection if you want to go to a showroom to make your selections and all that kind of stuff

(01:45) then you need to be prepared to pay a little bit more money on the other hand if you just need somebody to do some handyman work around the house there's a lot of great handyman out there one of those guys can absolutely help you out usually at a cheaper price because he has much less overhead than the big companies do [Music] the last item we talked labor we talked material and we talked overhead the last one is risk remember what I said earlier about perfect estimates always make money well there's a risk involved So to

(02:19) avoid those unpleasant conversations a lot of times as a general contractor will be a little bit higher to help accommodate what some of that risk of things changing there's ways to work together to mitigate that risk but those affect your budget and they affect my time and we both want to be able to plan for that adequately there's a lot of things that go into it there's a lot of things on the playing field and all have different importance when you're negotiating a price for a specific construction job

(02:54) but if you don't know what kind of a field you're on it's hard to be successful never take a hockey puck to a baseball game not at least if you're expecting to win this is Old Glory construction management if there's anything we can help you with give us a call [Music]



Old Glory Construction Management


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