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Archive for the ‘HONESTY AND CARING’ Category

Construction is built around contracts; the word “contractor” itself is evidence of the pivotal role contracts hold. A construction contract is more narrowly defined as a written agreement between an owner and a bidder covering the performance of work, by which the owner is obligated to compensate the contractor according to the terms of payment. Two styles of contract are used almost exclusively in residential construction: Fixed Sum and Cost Plus Fee. These two styles have practical differences, and these differences may end up saving you or costing you lots of money. This article attempts to compare and contrast these two predominant contract types so that you can choose the one that best meets your project goals.

Fixed Sum Contract

A Fixed Sum Contract, also know as a Lump Sum or Stipulated Sum Contract, is a contract which provides that the home owner will pay the contractor a specified sum of money for the completion of a project. The amount to be paid is determined by the bid from the contractor. The bid is an official offer from the contractor to furnish all labor, equipment, materials, overhead and profit necessary to complete the specified project. For example, a remodeling contractor might offer a homeowner a bid of $30,000 to remodel their bathroom. This dollar amount is based on the budget a contractor plans for how much he thinks it will cost him to do the job and how much profit he wants to make on it. The homeowner can accept this bid, sign a Fixed Sum Contract, and consider the work done for $30,000.

Every Fixed Sum Contract is a small gamble on the part of the contractor. In an ideal world, a contractor would be able to estimate exactly how much time, equipment, material and overhead would be necessary to complete a project. In the reality of the residential remodeling world, surprises and unforeseen challenges are a regular occurrence. For this reason, a contractor must shield his business from the risk of loss by including money for contingencies and unexpected challenges in his bid budget.

Pros: In a Fixed Sum Contract, the homeowner knows exactly how much the project will cost up front. They have peace of mind knowing that once they pay the stipulated sum, the work specified in the contract will be completed by the contractor without additional costs.

Cons: Homeowners pay the amount the contractor budgeted for contingency plans whether or not they are put in place. This means a homeowner may pay for work that is not actually performed or for materials that are not installed. Contractors who intentionally or mistakenly underbid a project are more likely to cut corners and perform sub-par work to make up for their losses.

Cost Plus Fee Contract

Cost Plus Fee is a contract under which the contractor is reimbursed for their direct and indirect costs and, in addition, is paid a fee for their services. The fee can be stated as a stipulated sum, but usually is stated as a percentage of cost. For every dollar the contractor spends putting the work in place, he charges the homeowner a dollar plus his contracting fee. If the construction project is complicated or takes a long time to complete, the contractor may use progressive billing to charge the homeowner at regular intervals for whatever job expenses occurred during that billing period.

Even though a Contractor under a Cost Plus Fee contract is not legally bound to a final price for the work, homeowners should still require an accurate forecast of construction costs. For this reason, contractors still have to build a complete budget for how much they think the work will cost. However, unlike a Fixed Sum Contract, tasks or materials in a Cost Plus budget forecast that are not installed are not billed to the homeowner, and conversely, portions that end up costing more than expected will be charge to the homeowner above the original forecast.

For example, the same homeowner who had their bathroom remodeled for $30,000 in the Fixed Sum example above might choose to sign a Cost Plus  Contract instead. In that case, the contractor might forecast construction costs at $25,000. The first month’s construction costs might add up to $5,000; month two at $10,000, and month three at $10,000, totalling $25,000. At the end of each month the contractor would bill the client for the construction costs listed above, plus his contracting fee, say, 20%. In the end, when the contracting fee is applied to each of the construction costs, the total cost for the project would be $30,000.

Pros: Time or material savings the contractor experiences on the job are passed on to the homeowner. When homeowners are offered a fair deal, they are more likely to have a good experience, recommend the contractor to others, and call them back for another project. With the security of knowing that every task will be paid for, contractors can do the job right without the pressure to cut corners in order to make a profit.

Cons: The homeowner has no guarantee of the final price of the project until it is complete. Additional costs due to complications or unexpected challenges are passed on to the homeowner.

Which Should I Choose?

As you may have noticed in the remodeling examples given for Fixed Sum and Cost Plus Contracts, though the contracts and billing procedures were different, the final cost of the bathroom remodel ended up being the same. So why does it matter which one you choose? A more detailed example will help clarify the differences between the two.

What if, in the $30,000 bathroom remodel listed above, the contractor predicted that demolition would take three days, for a cost of $1500. In both contract scenarios, $1500 would be budgeted for demolition. Now imagine the contractor finds the old bathroom materials were very easy to remove, and it only takes two days instead of three. The Fixed Sum Contract holder has already agreed to pay the full $30,000, so they do not experience any savings. On the other hand, the Cost Plus Fee Contract holder will save $500 because they will not be charged for a third day of demolition.

To be fair, this example could be reversed so the contractor estimates three days but it actually takes four to complete. Savings would then fall to the Fixed Sum Contract holder instead, because the contractor is responsible to complete the scope of work for the fixed sum. The Cost Plus Contract holder would most likely pay $500 above the forecasted cost for the additional work because it is necessary to complete the project correctly.

Unfortunately, some contractors are more concerned about making money than doing the job right. When faced with a shortfall in their bid, some Fixed Sum contractors will cut corners and perform tasks cheaply when it would cost more to do it correctly.

Summary

These examples illustrate an important point – the key to getting the best quality and value is to select an honest contractor with knowledge and experience who can accurately predict construction costs. This will help prevent the common pitfalls of incomplete cost forecasts or shoddy workmanship. A thorough contractor will help you determine which contract scenario best meets your goals. A company’s reputation and experience may be more important than initial cost forecast in the long run.

Provided to you by Olson & Jones Construction, Inc. We want to educate consumers in order to protect them from fraud and ensure that they are satisfied not only with their finished product, but with the process as well.

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Referrals

As a service company, we rely on satisfied clients spreading the word to keep our business growing. It is so important to us that we’d like to thank you with movie tickets or even dinner for two!

1. WRITE US UP

Publish a positive review of our services on a public website like the ones posted here. Send us a link and we’ll send you two movie vouchers good for any Regal Cinema show!

2. HOOK SOMEONE UP

Tell someone you know about your Olson & Jones experience. If they select us to complete their project we’ll buy you dinner! Tell us about your referral and we’ll send you a $50 Restaurant gift certificate!

3. BOTH

 

If you complete both options, we’ll send you to dinner and a movie!

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Babysit Your What?

Olson & Jones has always prided ourselves on taking exceptional care of our clients. Last week we added another tool to our belt: Crustacean Care! Say hello to Smoothie, the toughest skinned client we’ve ever had!

Greg was working on an addition and the homeowners had a vacation planned. They left the home and the project in Greg’s hands, as well as the family’s pet Crayfish that needed to be fed. This is our first recorded case of an Aquarium Care Change Order.

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Once upon a time there was a hospital built in Portland especially for children. This hospital had doctors and nurses who did nothing but care for kids the way kids need to be treated.

A group of people from the community wanted to help support the work of the hospital, so they organized a special event that would not only thrill and delight the participants, but would also raise money that would go to making the best possible health care available to Portland’s children. The name of the event is The Storybook Playhouse Project.

Olson & Jones Construction heard about the event and wanted to offer their construction skills and imagination to the effort. The Three Bears Cottage is one of many playhouses that are being displayed July 24- August 14th at Bridgeport Village near Tualatin. Some of the playhouses will be given away by raffle, and the rest donated to local childrens’ charities.

The big event is the Storybook Ball happening at Bridgeport Village Friday, July 30th 6-9pm. There will be costume contests, games, food, and the premiere of the new Beverly Cleary movie Ramona and Beezus at the Bridgeport Theater.

(the photos to the right show Greg and Wes framing up the Three Bear’s Cottage, the truck that picked it up with Dr. Tunick from Doernbecher offering a hand, and a detail of some of the beautiful hand painted detail going on.)

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We are trying something new – a guide to some of the best summer getaways around Oregon. The Team at Olson & Jones compiled our favorite beaches, lakes, rivers, and mountains to create this list. Follow the links below and explore somewhere new!


summer recreation guide - barview jettyBar View Jetty, Tillamook. This is a popular destination with lots of camping spots, beach access and the jetty to explore. Great place to take a family.  -Darren

summer recreation guide - nehalum bayNehalem Bay State Park, Manzanita. Beautiful beach, lots of sand dunes to explore, and a very nice campground. Horse back riding tours are also available!  -Benjamin

summer recreation guide - cultus lakeCultus Lake, Bend. Charming lake with a campground and a lodge. Don’t forget to stop by Three Creeks Brewing in Sisters on your way! -Gwen

summer recreation guide - magone lakeMagone Lake, John Day. A low traffic place if you want to enjoy some peace and quiet around a spectacular lake. The lake is at 5000 feet, and Brook Trout fishing is a must.  -Rick

summer recreation guide - jones creekJones Creek, Tillamook State Forest. This campground is only an hour west of Portland on Hwy 6. Great swimming holes too. We’ve camped with a group of 8 families! -Leo

Eagle Cap Wilderness, Joseph. A stunning range erupts from the plains outside of Joseph. Great area for backpacking, but you can also rent vacation cabins.  -Frank

summer recreation guide - fort stevensFort Stevens, Astoria. So much to do! Biking, walk the jetty, or visit the beach and see the remains of the 1906 shipwrecked Peter Iredale still stuck in the sand. -Greg

summer recreation guide - hosmer lakeHosmer Lake, Bend. Excellent trout for fly fishing, peaceful and low traffic (no gas motors allowed!), and the occasional huge Atlantic Salmon!  -Jeff

Did we miss your favorite spot? Please, leave a comment below and let us know where you like to go. We’re always up for trying something new!

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Third-party managed customer feedback builds trust in your product. See what Olson & Jones is doing with GuildQuality. athttp://ow.ly/1Ylvp

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dust abatement tall wallAny homeowner who has undergone remodeling, either by their own hands or the hands of a contractor, knows that dust and construction debris are a big issue. From the beginning of demolition all the way through to final painting, the work area has a tendency to want to spread it’s dusty arms out over the whole house.

We’ve taken a hard-line approach to dealing with this problem on our work sites – whatever it takes, we keep the dust in the work area. This often involves building temporary walls to seal off areas of the house. It may seem excessive, but this preliminary work is absolutely necessary for the efficiency of the project and the sanity of the homeowner!



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