In case you can’t tell, the dapper gentleman in the clip art is reviewing a contract to remodel his kitchen. He’s never remodeled before, but is excited about the potential. At the same time though, he’s nervous; he is making a large investment that will impact how he lives in his home, and potentially how and when he can sell it. However, he doesn't know enough about the remodeling process to know what to ask. Luckily for you, you’ll never be like that guy because you have me.
Fixed Price Contracts
Almost every contract I sign with a client is fixed price. I prefer it for several reasons:
Time and Materials Contracts
A Time and Material (T&M) contract is one where you agree to pay a certain hourly labor rate (time), and a markup on the materials supplied (materials).
With a T&M contract, the final price is unknown when construction starts. That might sound a little scary. It can be, depending on the type of project you’re thinking about doing. If you need some shutters replaced, or a loose deck board screwed down, or new closet doors, a T&M contract would be a great way to go. They are easy to write, read, and sign, and the costs for those projects are easy to anticipate, so there shouldn't be any surprises during construction.
If, like the dapper gentleman above, you’re looking to remodel your kitchen, a T&M contract would be a very risky proposition. There are just too many variables involved. If the contractor you’re talking to says, “yeah, looks pretty easy, should be around 4 weeks,” but it actually takes 8 weeks because of unanticipated issues, your cost just doubled, and your expectations are destroyed, leaving the relationship soured. Nobody likes a sour relationship - unless you’re a Sour Patch Kid - but you’re not, so let’s move on.
Here’s how I typically use a T&M contract. I like to call it the “oh by the way list.” Let’s say I worked through the kitchen design process with the Dapper Gentleman, we’ve signed a fixed price contract, and construction has started. He sees how great the craftsmen are, and realizes that maybe he can get a little help taking care of the things around the house that haven’t gotten done. I’ll get a call from the D.G. one day and he’ll say, “hey TJ, everything is going great with the kitchen. I’m really happy with how it’s turning out. Oh by the way, while your guys are here, would you mind taking a look at a few things I’ve been meaning to get done?” This is the perfect situation for a T&M contract. We’re already familiar with the house and the project is easily anticipatable (is that a word? If not, it should be. For the sake of this post, it is). It’s just a matter of ordering the extra materials and spending the extra time.
I hope you can see that both fixed price and T&M contracts can be valuable tools, if you know when to use them. If you aren’t sure which would be better for your project, or want to learn how to get a new kitchen like the D.G., give me a shout.
Bye for now,