Contractor Fees. Explained

Posted by webmaster

Oct 15, 2015

When you ask your San Antonio Contractor for a bid, you can bet that it will include the direct costs of construction plus a mark up. 

Some contractors show their mark up clearly while others build the mark up into the overall cost of the project.

Mark ups generally cover the overhead and profit but it's not uncommon for mark ups to include a wide range of expenses that contractors incur while doing business. This may sound unfair but if he doesn't build in certain costs, he cannot be solvent.

What kinds of overhead costs are you paying for and how do those fees benefit you?

  1. Insurance. General Liability, Worker's Compensation and other insurance are considered overhead. DO NOT work with a San Antonio Contractor who cannot show you their Proof of Insurance. Your Contractor should also have Proof of Insurance copies from the subcontractors they hire.
  2. Labor burden. Payroll taxes, worker's comp, and other benefits add up to what's known as the labor burden. That's the overhead cost of having an employee. This burden is a benefit to the homeowner if the employee is paid well, attends construction related education classes, and so on. This translates to a workforce that is better trained and happier.
  3. Transportation. This can include everything from going to and from your home to the delivery and hauling of materials. The upside for homeowners here is that the markup costs include a fleet of vehicles working for them.
  4. Communication. When your San Antonio Contractor arrives with his iPad taking notes and photographs or your Project Manager communicates to suppliers with his smart phone, look at this not as a luxury, but as a sign that good communication is a high priority for the company you hired.
  5. Warranty. This is not a line item figured into each project. That means warranty work is funded by net profit generated by the Contractor. Contractors that warranty their work (and not all do) pay these expenses, a nice benefit to the homeowner.

Tags: san antonio , general contractor , bids , warranty , communication , general liability , professional remodeler