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What to Know Before Signing A Remodeling Contract: Education Series #1

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Deciding to embark on a remodeling project is a major step that comes with equal parts excitement and nervousness. Spending money on remodeling feels nothing like the way we normally shop for goods and services. There is no set price for any project, and unseen variables, as well as products selected, factor heavily into the final amount of the contract you sign. Choosing a contractor to design and build your project requires both an educated leap of faith and complete trust between you and your contractor. Educating yourself on how the final contract amount is determined before you sign a design/build contract will make the process a lot less scary and make you feel many times better about the process you have begun.

Image by schwa021/Flickr/(CC BY-NC-ND 2.0)

Image by schwa021/Flickr/(CC BY-NC-ND 2.0)

Because the variables that drive the final cost of a design/build project are so many, the greater amount of detail in the specifications, the better. A contractor can provide a “ballpark” estimate based on similar rooms or projects they have done in the past, but without looking closely at a space, taking measurements, drawing detailed plans, and obtaining final product selections from you, a ballpark estimate is just that – an estimate. While a ballpark is generally the best way to initially determine if tackling a project is within your financial reach, it should no means be taken as a final price. The ballpark can end up lower or higher depending upon the final scope of the project.

After you’ve decided that a project is feasible and within your budget, the next step is to hire a designer, architect, or design-build firm like White Crane to draw up the final plans for your project. Plans should not be considered final until you have selected all of the fixtures and finishes to be used on your project, nor should plans be considered reliable for building until the trade partners who are actually performing trades such as carpentry, electrical, etc., have had the opportunity to review your plans and to walk through the space to be remodeled.

During the walkthrough, experienced trade partners will be able to identify any possible issues that may arise during the project and call them out, along with any associated increase in their cost, in their bid. Once the walkthrough is complete, the trade partners will gather the specifications of your project, complete with fixture and finish selections; the final plans as drawn by the designer on the project; and knowledge uncovered during their inspection in order to submit a fixed price bid to your contractor.

Without the information gathered during the design process and in the walkthrough, trade partners will not be able to submit accurate bids, which is where “allowances” come into play. If a trade partner has not been given a selection, or if one hasn’t been made, the estimate they submit to your contractor will instead include a specific dollar amount set aside to cover each missing specification. The contractor will prepare the final construction contract based upon this amount and, once the price has been agreed on and the contract has been signed, begin the work.

Image by chris/Flickr/(CC BY-NC-ND 2.0)

Image by chris/Flickr/(CC BY-NC-ND 2.0)

In this case, trouble begins when the electrician has allowed for a $100 pendant light fixture in their estimate to your contractor, but you fall in love with a $400 pendant light fixture. Just like that, the electrician’s estimate, and the final price charged to you, increases by $300.00. Add up light fixtures, plumbing fixtures, etc., and the contract you have signed for $25,000 could easily become much more. In some cases, allowances will be necessary, but they should be kept to a minimum.

Familiarizing yourself with the nuts and bolts of how a design/build contractor comes up with the final price of a remodeling project will help you make better decisions when it comes time to begin the process for yourself.