NYC Renovation Chronicles: The 6 essentials of a good estimate

By Yoel Borgenicht | June 8, 2011 - 10:50AM

The Situation

You are ready to embark on a renovation of your apartment. You have been referred to several contractors and have found some promising ones online and are ready to get estimates for your project.

To avoid expensive mistakes, here's what you need to have the contractors include in their estimates.

The Deal

1. Detailed Itemizations

Each task should be listed along with materials and labor costs. This way you can make informed decisions about increasing or reducing the scope of work in certain areas depending on their effect on the bottom line. It also makes it easier to apply debits or credits to the contractor’s bill if changes are made during the job.

A client of ours previously hired a contractor to gut renovate their master bathroom. When the homeowner showed me the original estimate it comprised three sentences: Labor $20,000. Materials $12,000. Total $32,000.

The client had no idea what materials were or were not included, and there was no way to avoid a dispute regarding the scope of work. In this case, the client specified the position of the tub after the estimate was accepted and, of course, the contractor’s response was: “My estimate did not include moving the tub over there. That will cost you another $5,000.”

2. Payment Terms

It is important to know how your contractor would like to be paid to avoid a scenario in which the contractor takes a large deposit and never starts the job or works a few days and then is impossible to bring back to the job site, since you have paid him much more money than he has spent.

A good rule of thumb is to pay the contractor a small deposit (e.g. 10%) when the job starts and then progressive payments when certain milestones are met (e.g. 20% when the bathroom tile is installed).

I often meet up with clients whose contractor, after a dispute, walked off the job. The owner assumes that the cost of bringing in another contractor to finish the work is the amount of money they withheld from the previous contractor. Invariably it’s more than that, since not many contractors will walk off a job if they are out of pocket.

3. Schedule

Every day you spend out of your home is costing you money: Either you are renting somewhere else, you are staying with (and paying) family or, worse, you are living in your apartment during the construction, in which case you will need any extra cash for eating out, joining a gym or the Y, where you can use the showers, and therapy sessions.

A skilled contractor is a good manager of time and will be able to commit to a schedule of how long it will take to finish the job.

Really good contractors will stick their money where their mouths are and offer liquidated damages (i.e. financial penalties if they do not finish in time). If a contractor is not willing to do so, the price isn’t guaranteed.

4. Availability

Some small contractors take on only one project at a time and have a small dedicated crew of tradespeople. They may do great work, but if they are working on a long-term project right now, they may not be available to you for months.

A new client called our office in a panic last week seeking our assistance as a contractor she intended to hire was not available to work immediately. Her co-op restricted how many renovation projects could happen concurrently in the building and she was about to lose her window of time until next year. Luckily, we were able to help her and start the job on short notice.

5. Subcontracted Tasks

Your contractor needs to specify the part of the project his own staff performs, and what he sends to subcontractors. Hiring a contractor who subcontracts all his work may be fine if he has long-term relationships on which he can depend--but it shouldn't be a surprise.

One apartment owner I know hired a Philadelphia-based firm to renovate her bathroom. I was surprised to hear that a contractor from such a distance could effectively perform the work. She soon realized that he had subcontracted the entire job to a Brooklyn-based firm. She was furious, as she now had to deal with people she had never met.

When I started my firm, I subcontracted all my labor. I quickly realized that I could offer much better service if I hired a full-time crew of tradespeople who I could train and whose daily activities I could direct. Of course, some tasks such as plumbing and electrical work must be subcontracted by law. This is to prevent unlicensed workers from performing work that requires several years of training to do safely.

6. Due Date

When soliciting bids from contractors for a project, you need to state in writing the deadline by which their estimates are due. If you are not sure what is reasonable, ask the first few contractors how much time they need and use that as a gauge.

Once the due date is established, don’t even consider an estimate from a contractor who misses the deadline. If he flubbed this, how can you trust him to finish the job on time?

The professionalism with which your prospective contractor submits his estimate is the first indicator of how he will handle your job. Is it detail oriented? Was it submitted in a professional-looking manner on company letterhead via e-mail? Was it on time and did it encompass all aspects of the project?

If you have any qualms about the way in which an estimate was submitted, don’t hire the contractor. Renovations in New York City are expensive (like everything else in this town) and there are a lot of reputable people eager to earn your business.

So, don’t settle for a sloppy estimate because of the contractor’s seemingly low price or because you are anxious to get started. The consequences of hiring the wrong contractor can make your original renovation budget seem like petty change. Take your time to find the right firm that will provide you with a quality job.

Yoel Borgenicht is the president of King Rose Construction, specializing in high-quality commercial and residential renovations in the New York City metro area.

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