Purcell Warns Homeowners of the Dangers of 'Cost-Plus' Contractor Bids

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Most contractors bid jobs on a 'cost-plus' basis, and homeowners can wind up paying much more in the end.

Remodeled kitchen in Edina, MN

Remodeled kitchen in Edina, MN

“Nobody likes unpleasant surprises,” Purcell said. “That’s why we have a totally different approach to our project estimates.”

Spring is a very popular time for home remodeling. But be forewarned: there are major differences in the way contractors bid and work on jobs, explained Tim Purcell. An award-winning Twin Cities home remodeling expert, Purcell just completed a job that had originally been awarded to a different contractor.

One of the most trusted home remodeling contractors in the Twin Cities, Purcell won the Best of Houzz Customer Satisfaction award honor in 2015, an award based solely on client reviews. Since 1995, Purcell has completed over 1,000 remodeling and renovation projects.

Stephanie Genung of Edina learned the key differences between contractors when she decided to remodel the first floor of her home. Purcell gave her true budget numbers based on the concept designed by Karen McKay, ASID, of Gunkelmans Interior Design. But she and her husband awarded the project to another contractor, who like the majority of contractors, budgeted on a ‘cost-plus’ basis.

Fortunately, before the project got fully underway, the homeowner realized she made a mistake in hiring the first contractor. “As soon as we signed the paperwork, things started coming up that were going to cost us more. I felt we were on the verge of being massively ripped off,” Genung said. “I went back to Tim with my tail between my legs. As soon as I hired him, this calm came over me.”

“I thought Tim would be the right fit,” McKay said. “Not only does he do beautiful work, he’s up front about the costs and the timeline. I knew these clients would appreciate that.”

Contractors often use a ‘cost-plus’ or ‘time-and-materials’ contract with first time remodeling clients to attract their business. But the homeowner takes on enormous risk that the costs will spiral out of control, particularly when the plans are not detailed down to the minutia. “There is little incentive for the contractor to get the job done quickly and on budget,” Purcell said. “The client almost always ends up paying more – and sometimes much more.”

In contrast, Purcell only works with fixed price contracts based on detailed plans and specifications. “Let’s face it, if your contractor is good at what they do and has the experience to back it up – there are no ‘unknowns’ and/or ‘surprises,’” Purcell said.

McKay and Purcell spent over a month with Genung and her husband redesigning the project to fit the budget. “Thanks to our technical knowledge, understanding of what finishes cost and years of remodeling experience, we know how to realize the owner’s vision for their home in the best and most efficient way possible,” Purcell said.

Purcell’s construction contracts include detailed project specifications with the exact materials and finishes that will be installed. Clients receive detailed construction drawings and color copies of every product and finish so they can visualize the end result. “Nobody likes unpleasant surprises,” Purcell said. “That’s why we have a totally different approach to our project estimates.”

McKay and Purcell worked together to modify the project so it fit within the client’s budget. For example, they changed the bathroom layout so it didn’t involve moving the tub and shower. They also modified some of the finishes – from high-end to more economical tile, from high-end granite to a more economical grade and minor modifications to the kitchen finishes.

“Everything was up front and there were no hidden surprises or expenses,” Genung said. “I’m beyond pleased; they did a wonderful job. I was even sad to see them go when they were done. I love my new spaces. We would definitely call Tim again without any hesitation.”

The lesson, particularly for clients who haven’t ever remodeled – pick your contractor before the design is created and have your contractor act as your financial partner to guide the design and finishes so they fit your budget.

“Let the budget dictate the scope verses the scope dictating the budget,” Purcell said.

For a copy of Purcell’s “Good-Better-Best” Kitchen and Bathroom Remodel Guides or a project consultation, contact Purcell at (651) 748-1304 or visit http://www.PurcellQuality.com.

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