Construction lingo can lead to confusion before your job even begins. This often creates cost overruns and frustration.
This article tells you what to look for in a construction bid so you can avoid surprises.
Anywhere you see something you don’t understand you should expect to be surprised by a cost that you didn’t anticipate. If you don’t know an acronym or brand name or word in the bid, just ask. That’s the goal of reviewing the bid with a contractor.
Here are 9 common communication issues that can cause you pain that is easily avoided:
Allowance: This is a dollar value that a contractor has noted for something in your project. For example, your allowance for your bathroom tile is $2,000.00. If the cost of the tile goes up or down then you pay or save the difference. A large number of allowances means that the contractor is shifting the responsibility of getting certain products for a specified price to you. Be careful of more than 5 allowances in any bid and make sure you know how to buy something for the allowance price noted. Often times an allowance for windows is just a small fraction of the windows that you probably want to buy.
OPCI: Owner Provided Contractor Installed. You will be paying for these products and storing them on site for the contractor to install. The contractor is responsible for installation costs. This can be a great way to save money, but you certainly want to be aware of what you have to buy. If you buy the wrong thing or too little then the contractor is justified in charging you hourly to go out shopping for you.
PBO: Purchased by Owner. This is the same as OPCI.
NIC: Not in Contract. This is work that the contractor is not responsible for. You will have to accept a change order and pay additional money to get this work completed
By Owner: This is the same as NIC. You are responsible for all materials and labor to complete this work.
TBD: To Be Determined. There will invariably be something needed that costs you money. TBD should rarely if ever be part of a construction bid. The point of a contractor is to eliminate TBD.
Verify in Field or VIF: Danger! The contractor will verify if some work needs to be completed after he or she starts and it will then be your responsibility to pay for it. It’s better to pay them hourly to remove any VIF conditions before you sign a contract and before they start work. Be very clear that the site slope, soil conditions, plumbing, underground utilities, electrical are all included in the bid. We’ve heard contractors complain that the dirt was heavier than they expected. While possibly true, it’s their job to deal with that.
Existing Condition: The current condition of anything such as underground utilities, underground rock/soil issues, mold, asbestos, dry rot. These should almost all be determined prior to accepting a bid. For example many roofers will say that dry rot (which is a visible fungus) is an existing condition and is not part of their bid but they could easily look at rafters from outside and see that dry rot is an issue.
T&M: Time and Materials. The contractor will work by the hour and will bill you for their hours plus their materials and then will typically mark it all up by 15%. This puts all the risk on you as the customer and gives them an incentive to take their sweet time while running up both labor and material charges. There’s no reason to use T&M for anything other than a small job that takes just a few days.
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