I’ve talked before about our ten cardinal rules, the top ten things a construction-related business owner needs to do to succeed. I want to talk about rule number six, “You shall get written quotes on all items that exceed $300 on your estimate.”
Let me share a story. A coaching client called with a problem. His salesperson sold a high-end kitchen remodel and didn’t price out the exhaust hood installation. The salesperson assumed the install would be minor; they were also influenced by the homeowner who insisted it wasn’t a big deal.
It was a big deal. Without getting too technical, the hood range for the project required make-up air dampers when the hood is in use. The contractor brought in two different HVAC contractors. The first had zero interest in the project. The second quoted $2,250, and that didn’t include the dampers or running all the necessary cables.
I probably don’t need to tell you that the salesperson is no longer employed by this contractor. This wasn’t the first big omission they’d made in an estimate, but it was the last.
The contractor met with the second HVAC contractor. The owner was present at the meeting and argued that $2,250 was way too high and it should only be about $400. The discussion went from bad to worse; the homeowner got upset with the contractor and told him that he’d do the install himself. The contractor called to ask my opinion.
Under normal circumstances, I believe letting a homeowner do their own work in the middle of a project is a bad idea leading to nothing but problems and delays. In this situation, I didn’t think it could get worse. The exhaust and makeup air system weren’t well designed and there are still several questions about the install. I suggested he let the owner do the job if they wanted to, provided they could keep the project on schedule.
The contractor took it a step further and had the owner get the permit. He also suggested the owner call the inspector and request a meeting at the job site so the owner would know exactly how the inspector wanted the installation of the exterior blower and interior exhaust hood completed.
Mistakes like this don’t just cost you money; they affect your reputation and your credibility. It doesn’t take long to ask a specialist for their input, and if you send them photos of the project and are treating them fairly, they’ll take the time to send you a quote.
When you aren’t sure, ask questions. It’s cheaper to ask questions than to eat the cost of the problems that can show up later. That’s part of the thinking behind Cardinal Rule #6. Talk to experts. Take the time to track down details before you quote a job.
Is $300 still a reasonable number? I believe it is, but it’s your call. If your jobs are large and a $500 or $1,000 error won’t put you under, make it a policy to get written quotes on all items over that dollar amount. The question is: how much can you afford to lose? You can wipe out the entire profit on a job and more if you don’t estimate carefully and accurately.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations.
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