Knowing Our Numbers

Inside Strite

Every now and then we confront the perception in our market that “STRITE is expensive.”  Our usual reply is that we’re simply realistic.  “Knowing our numbers” is more than just a point of professional pride at STRITE — it is part of the value we bring to our clients when we undertake a remodel project.

Knowing what things cost, based on years of experience with a wide variety of remodel situations, comes from tracking every cost for every project we’ve ever completed.  This knowledge benefits our clients in two very tangible ways: it makes for an accurate estimate at the outset of a job (which translates into a fixed-price contract), and it ensures the absence of “change orders” through the life of the project.

From our perspective, change orders are too often used as a way to cover a contractor’s mistake in estimating a project, or in failing to anticipate a problem along the way.  If we neglect to budget for a detail in our description of work, we don’t issue a change order — we simply make it right at our expense.  Mistakes have their consequences, but those consequences should never be borne by our clients.  Learning curves are a cost of doing business.

What STRITE does have to cover the possibility that our clients will expand the scope of a project is what we call an “additional work request,” or AWR.”  Note that unlike the change order, the operative word in AWR is “request.”  There are points in any project where a client might want to address a wish list item that wasn’t part of the original description of work (DOW).  Say, for example, that as part of a kitchen remodel we are replacing vinyl flooring with hardwood, and the client decides that they’d really like to take out the carpeting in the adjoining family room and extend the hardwood into that space as well.  If it wasn’t part of the DOW, it becomes an AWR.

In putting together a job estimate, we generally counsel our clients that additional work requests will probably make up between three to five percent of a job.  This means that for a $100,000 project it is realistic to expect that a client might choose to add $3,000 – $5,000 in additional requests for products (think appliance upgrades), materials (how about granite instead of tile), and services (could we just go ahead and bump out that breakfast nook and pick up some more space in the kitchen as long as we’re reframing).  Industry wide, our percentage of AWRs (vs. change orders) is very small, which suggests to us that our planning and estimating phase in the description of work process is thorough…and that our numbers weren’t based on inadequate allowances designed to jack up revenue or “buy the job.”

When remodeling companies fail to “know their numbers,” they either shift the burden of their ignorance to their clients, or they lose money.  Either way, they most likely don’t stay in business for very long.  So while it may sound a bit arrogant, we feel very confident in stating that if we tell you that a remodel project will cost $20,000, and someone else tells you the price is $10,000, you need to be wary.  At the very least, you need to ask, “Do you know your numbers?”