Importance of the Cost Breakdown 1. It’s hard to hit a target that you dont have. “Surprises” are almost never in the happy direction. 2. It’s hard to hold your crew and subcontractors to a budget that you dont have. 3. Your team will enjoy beating budgets and timelines and you’ll enjoy rewarding them for excellence. G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
Cos t Br Gre eakdo You enEar wn us ed b rs m thEq y uitie ay b e di s ffere . nt
1.
DEMO & TRASH HAUL
2. LANDSCAPE 3.
CONCRETE
4.
FENCES/GATES
5.
POOLS & SPAS
6. FOUNDATION REPAIR 7. EXTERIOR CARPENTRY 8. PLUMBING 9. EXTERIOR ELECTRICAL
Cos
t Co
des
Onl y
10. ROOF/GUTTERS/CHIMNEY 11. WINDOWS 12. STUCCO, DASH & MASONRY 13. GARAGE DOORS/CARPORTS 14. EXTERIOR PAINTING 15. INTERIOR ROUGH CARPENTRY 16. INTERIOR ROUGH ELECTRICAL
19. DRYWALL & PLASTER 20. INTERIOR CARPENTRY 21. COUNTERTOPS 22. INTERIOR PLUMBING 23. CERAMIC TILE 24. INTERIOR PAINT & RESURFACING 25. ELECTRICAL FIXTURES 26. MIRRORS 27. FLOORING 28. APPLIANCES 29. HARDWARE & SUNDRIES 30. MAKE READY TO SELL Other Costs Contingency 10% Insurance Utilities Taxes
17. INSULATION & SEALING
Interest
18. HVAC
Other Total
G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
Management Tools: Use “Unit Costing” Break costs in all trades Down to a “Unit Cost” Examples: Per square foot Per square yard Rough Final Per square Estimate Estimate Per each in 10 min in 1 hour Per lineal foot KISS do as much per Square foot as possible.
More Cost details coming soon!
G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
Management Tools: The Checkbook Method 1. You and your managing partner, (General Contractor or Project Manager) are both signatory on a joint checking account. 2. Thru Electronic Banking, you watch as he or she spends the money. All expenses go thru the check book 3. You put more money in via transfer as it is needed. 4. At the end, all the accounting is done. Your CPA will love you. G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time
Management Tools: Partnerships & Percentages My preferred option: (must be negotiated) 1. General Partner or Manager works on a profit percentage basis. (for their management services) 2. Keeps the Motivation Correct. (drive the executive function & decision making as low in you organization as possible) 3. Actual labor (if any)is invoiced separately to the job. G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time
Other Management Tools: 1. Excel Spreadsheets Google Docs Spreadsheets (Preferred, easier to collaborate) 2. Gantt Charts (online preferred) See Google Spreadsheet with ViewPath Gantt Gadget Will be reviewed soon on a Tuesday call soon.
G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time
Note!
You want to minimize hourly labor by using qualified subcontractors as much as possible. But if you have any hourly labor: Design a custom time card that makes it easy for employees to give you the correct information. Most hourly employees will work for the subs or the general contractor. The general contractor will probably have a similar system. Time Cards with cost coding are to be done daily. After the end of the day the memory seems to fade. (This memory fade almost never results Saving The Planet in a lower or more accurate number.) One House
G r e e n E a r t h E q u i t i e s . C o m
Š 2009
At A Time
Q. Who are the players? A1. We have found it best to subcontract as much work as possible. This is really the only way to control your costs. After all the bids are in, you will know your costs almost exactly and your profit --(if you sell the project as you have planned) A2. Subcontract all the “Big Chunks” of work: HVAC, Roof, Concrete, Tile, Granite, Paint, Windows, Drywall, Insulation, Stucco, Plumbing, Electrical, Floors, Landscape etc. A3. Then Contract a “General Contractor” to supervise all the subs in A2 above and do all the rest of the smaller jobs. This should be a fixed number so that all your costs are then fixed. G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
Q. What does the GC do (either himself or with his employees?) A1. Everything not done by subcontractors. Some examples might be: (some of these might be subs) Board-Up and Re-Keying, Demolition and haul to Re Store Finish Carpentry, doors, casing, base, crown etc Cabinet install, Hardware install Appliance Install,* Mirrors, Fixtures And mainly supervise all the subcontractors. G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time
Q. If subs do everything, what do I do? A1. Maintain the Energy-Wise aspect of your operation. Many will tempt you to take shortcuts. A2. Be finding the next project. A3. Market to get them sold quickly. A4. Continuing Education. On Real Estate, Remodeling and Energy Efficiency. A5. If you want to, you can help your community thru consulting with politicians & non profits. Habitat etc. G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time
Don’t Yield To Temptation: Avoid The “Grey Market” Economy Make Sure Your Subs Have: 1. Contractors License 2. Workers Comp Insurance 3. Liability Insurance Reasons: 1. Liability: Lose Everything... 2. Crackdowns Coming 3. Unfair to those who play fair. G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
Contractors, Not Employees Your Contractors Are Responsible For their employees: 1. Workers Comp Insurance 2. Legality for work (Citizenship, Green Card, etc) You dont want this contractor’s headache. Leave it for the Contractors!
G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time
G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time
Negotiate “Wholesale” Pricing Contractor Gets: 1. Consistent Flow of Work 2. No Sales or Marketing Expense 3. No Customer Handholding 4. Smooth Teamwork
Investor Gets: 1. Wholesale Pricing 2. Minimum Supervision Required 3. Speed, priority service
5. Referrals
G r e e n E a r t h E q u i t i e s . C o m
© 2009
Saving The Planet One House At A Time
Your Key Team Leader (unless you will be doing this yourself) General Contractor Now there are a lot of highly qualified small contractors available to do this type of work. Compensation can be: 1. Flat Fee 2. Percentage 3. Hourly (not recommended) 4. Combination You get what you negotiate! Be Creative. G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time
Somebody Has To Know Home Performance! 1. You are the best choice. Enroll in classes, read books, etc 2. The more Home Performance your contractor knows, the better for you. 3. Once you know enough Home Performance, you can specify the performance you require. 4. Especially HVAC, Shell, Insulation, & Window Contractors G r e e n E a r t h E q u i t i e s . C o m
Š 2009
Saving The Planet One House At A Time