DC7Designs

Client needs a bid for new build after fire

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Has anyone had to bid a projected cost for a bank to approve the rebuild  of a new house (owner designed)?  I will be drawing the plans for the new build and making the owner design more accurate for the purpose of getting a permit.  She has a contractor to build the project, so I'm only bidding the design.  Will I be held to this bid strictly?  My prospect cannot pay me anything at all until the bank issues the check.  What step does this happen?  How can I avoid doing work for free?  She wants the burned remains to be demolished this coming Thursday, Nov. 29th.  She may want to use part of the existing foundation if it is structurally sound.  I know I need to go on site to take photos and measurements where possible.  Any thoughts?  

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Does the Owner have Insurance?  If so the Bank just disperses what is approved/paid by the Insurance Company.

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Yes, she does, but the bank requires paperwork before disbursing funds.  That is the bid and some other docs to sign.  I just don't know how to bid with so little information and a graph paper plan drawn by the owner-builder.  

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Customers pay me from personal funds... the work you going to do does not cost 10-100k, whatever you charge you should get the money upfront, this way you don't have to chase them around for your money and them coming up with a bunch of excuses.

 

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File "notice to owner" with the clerk of the court when you and client sign a contract.  This will help you preserve your lien rights if the client does not pay. 

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I have been stuck in this hell for years. Insurance pays the bank fraction of the value. The insurance companies are crooks that cheat and lie to get out of paying large expenses [e.g. LibertyMutual] assisted by their attorneys [shysters], engineers [charlatans] and dirty judges  that help these crooks. In the end  the funds disbursed to the bank. As insured, you are better off using these funds to payoff the property, get rid of the original mortgage and get new loan. Crooked bank will also apply forced pace insurance doubling your mortgage payment when no valid structure left.

 

The bank sends 3rd party to inspect WHEN the work completed @ each stage. The con docs are required, but not considered as a valid reimbursable expense. Normally, It is a GC named in the loan who can draw the funds. IF you are lucky bank allow homeowner issue a payment instead of disbursing to a GC. A lot of banks do not because they are worried about HO disbursing funds to himself. 

 

Saying all of that, outline the work you will be doing and the cost. Get HO and the builder to agree on the price. Consider reducing the price or at least be in line with low level prices, ask HO if she/he can pay it. Provide the documents and apply for mechanical lien. Expect to make NOTHING. 

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Here in California a contract is an enforceable agreement so if another party agrees to a cost for the job that cost should be collectible. It's usually a matter of when, but we designed and rebuilt a house here in CA after a fire and the insurance company paid us our agreed upon price and it went pretty smoothly. They happened to have USAA insurance which was a remarkable company experience.

 

No way could any foundation be saved here in CA but maybe it's different in TN and the extent of the fire.

 

You state you "don't know how to bid" the job and sorry but that problem can be solved only by experience and diving in with a lot of risk on your part. But risk is many times required for a reward, even if that reward is a valuable (maybe even expensive) teaching lesson. Advice from others is pretty worthless as we can know nothing about the actual relationship but be assured it will most likely cost you a lot more than you think in time and energy to create a reasonable proposal and collect your payments.

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11 minutes ago, Chief16Designer said:

Whatever bid you have in your mind ,multiply it by 3 to 5 times more or tripple it, the insurace plays hard ball 

Must agree other than the great experience we had with USAA who actually insures its clients and not tries to simply profit off them...

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I am guessing it might be more profitable for you pass on work you're not qualified to do.

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The owner should cover your cost without involving the insurance company as approval for payment.  You are really asking for trouble to do it any other way.  Don't get pulled into the world of insurance approved draws.  If you have a homeowner that says they have no funds to pay for plans, I would decline the job.

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Unless they can pay me as I draw the plans, everything is ok, if not then I wouldn't draw it. the Insurance does give them money up front. The bank won't fund it until all their things are done. 

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3 hours ago, parkwest said:

I am guessing it might be more profitable for you pass on work you're not qualified to do.

What makes you think she's not qualified?

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I am qualified to design the house and have a structural engineer with whom I consult with on all projects that involve the structure.  I've trained in AutoCAD, but switched to Chief Architect because it is so easy to do.  Interior Design school requires drafting and modeling experience and I've been drawing additions and remodels for two years now.  I've done a couple of full house plans, again with my structural engineer making comments about that portion of the work.  As an interior designer, my qualifications are sound, but I do not build the house.  I could hire contractors to do the work (as I do with remodels) in order to act as the owner-representative, but if I understand what she has said, she wants to do this herself.  She has a guy chomping at the bit to do demo this week.  I feel she needs to wait until the design is complete.

 

Anyway, I am selling design services and homeowner assistance, not design-build projects.  That is what I am bidding on.  

 

Here is what I've estimated (with really no clue how many hours it will take):

 

Estimated time for Lawson project (Phases 1 & 2 Only):

The estimated time below is just an estimate; You will be billed at the hourly rate for hours worked.  The final total could be more or less than quoted, depending on a number of factors including thorough planning, number of changes in the plans, etc.  Be sure you think through all the details possible and communicate them at any time via email so they are in writing.  List all desired changes in bullet points at your earliest convenience.

 

30 Hours for Principal & 3D Modeling @ $115.00 per hour                         $3.450.00

20 Hours for Senior Account Manager @ $95.00 per hour                           $1,900.00

10 Hours for Measuring/Construction Documents @ $115.00 per hour       $1,150.00

10 Hours for Administration @ $75.00 per hour                                              $   750.00

   2 Visits @ 54.5 cents for every mile of business travel driven:  

(49.4 miles one way    .55 X 49.4 X 2 = $54.34 per visit) x 2                        $    108.68

                                                            Estimated Designer Fees:                    $ 7,358.68

 

See attached Structural Engineer fees                                                           $_______.____

 

I think this covers my work pretty well.  The hourly rate reflects my perceived value.  

Thanks for the feedback!

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I would encourage you to proceed crossing all your t's and dotting all your i's as you seem to be very capable of doing. You did state you do not know how to bid the job, but I can't remember a job I did know how to bid and never let that stop me. Does every job turn out great? Of course not but you seem to be perhaps more capable than your original posts let on. Good luck and keep us posted if at all possible.

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There is a Contractor's Waiver of Lien that has a payment line to be noted and must match the bid.  If I put in the number for my bid plus my engineer's fees and the cost goes over, then I do not have the recourse to use the legal method of a lien to collect payment over that number.  I have not been in business long enough to encounter such a problem, so I'm inclined to trust that my bid is high enough to not need more and that if I did, it would be such an amount that the loss would be minimal - not worth such a legal action.  Thoughts?

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There's indeed some risk but that's the nature of life isn't it? I would imagine you'd be hard pressed to get any insurance company (or anyone in my world) to agree to a time and material estimate but a hard number also leaves the door open for you to out perform your number as you might do the job in less time?

 

A really great idea is get your number as close as you can using all your experience and skills, I mean really agonize over it, then wait until tomorrow and see how it looks/feels. At some point you have to commit or bail which is the nature of our business but letting a bid rest over night can add some needed clarity.

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Not sure about the laws in Tennessee but in Florida if you are only providing "labor" then you have lien rights that that would include work over and above the initial contract if you can document it.  A labor Lien proceeds any other lien including a mortgage.  When you file with the clerk of the court this lets the bank know you are working on the job and they will demand a release of lien from you for payment.  Keeps everything on the level.

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Normally, these are not competitive bids, as when lowest bid wins.  The bank usually wants a bid/ proposal for budget purposes.  Include all of your expected costs and add some for unforeseen changes.  In the Proposal, describe what's included but more importantly, spell out what is NOT included.  

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I added in $10,000 for the structural engineer (his highest amount to date) to get him covered in my bid.  Also, since she is acting as the owner-builder (her own General Contractor), I thought he could help act as a consultant.  Hence the highest cost estimate.  I also added in costs ($5k) for a "Trade Day" which I use for remodels.  I pay my trades their hourly rate in the beginning stages of a remodel to consult with them before I go past conceptual design.  With a re-build, I will do so virtually: sending each trade a copy of my conceptual design and get their input before I spend a lot of her money designing something that may have to change.  I pay these Trades for their time. 

 

She is on a budget, so I'm not sure she wants to do either of those best practices that I follow.  I recommended an "owner-builder" book for her to read.  She seems undaunted by the responsibility and Tennessee does allow this.  Anyway, I gave her a bid of $22,000 of which I expect to receive just over $7k.  This is a lot of money out of her budget, but since she doesn't have a GC, I felt it necessary to add these fees in just to have an allowance if we need it to consult my structural engineer or the trades.  I'm only asking for $1,000 retainer and I will bill my hourly rate right away, monthly.  I'll hold the retainer for end of project work and if paid for all of my time, I return any unused retainer to the client.  

 

I did see the house today.  It is ok in the basement.  My structural engineer couldn't make it but said that to demo it this week, just be sure the demo crew know what they are doing.  As you can see in the pics, the fire did not get down to the basement, but she does want to change the footprint of the house.  That's why I wanted to design it first before they demo it so we could base it off the current foundation.  Any comments on measuring this house?  I can measure the exterior fairly well, but I'm not sure what else I will need to gather other than foundation size.  Thoughts?

 

We shall see if I get the gig.  I may not want it if she can't agree to bring in my structural engineer at least for an occasional consultation and a review of plans.  That I really need.

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It appears, not to be that old (10-20yrs) so the City/County should hopefully have Full Records/Plans from the Original Build, the Owner may need to pull those for you though unless you have something stating you are the Owners' Agent. (as called here)  I would definitely talk to the City/County before Demo, as here a Demo would require a Permit but more importantly any new Codes may effect the size and height of the new house, which may effect the build of a completely new Structure but not the structure of a Remodel ,(grandfathered). What constitutes a New build and what is a Remodel may affect plans, eg the exteriors walls maybe needed for a "remodel" , not just the foundation... something to look into anyway.

 

M.

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You might want to check your numbers against the insurance company database.  The insurance adjuster most likely has everything priced out, or at least price guidelines to follow, and you might have a little trouble just pulling numbers out of the air for your quote.

 

Good luck and keep us posted on how it works out.

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Very true.  I haven't got an official bid from the structural engineer.  He needs answers to questions to make a quote.  If I don't get this one, it's really no loss as I am trying to grow another direction.  I just want to avoid dozens and dozens of free hours on fill-in jobs.

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7 hours ago, DC7Designs said:

Thanks, another reason to bring in my structural guy.

 

Yes , One off them should look at the house before Demo and determine what if anything is Savable, as mentioned above in some Jurisdictions Foundations cannot be reused...

 

M.

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