What to Consider When Bidding on New Construction Projects
Pricing new construction; is it worth it? Is it something that you want to get involved in? Anyways, I am Ron Ramsden and I am a DYB coach, painting contractor here in Massachusetts.
Years ago, I was bitten by that bug. Fortunately, I never jumped into it.
Quick story –I was called a couple of years ago to give them a price, there were 240 detached condominiums being built by one of the large manufacturers and they were bringing painting crews in, to each, about 80 of them each.
I started asking questions from day 1. I asked for a walkthrough, asked them for the budget, asked them for products and the guy stopped me in my tracks.
He said no, what we are looking for is ‘paint to cover’, and I said what does that mean, he goes, just paint it enough that it covers.
These were $460,000 detached condos, we passed, I am glad we did.
Anyways, a couple of questions you want to ask before you even get involved include;
What outcome are they looking for?
I know that we have asked to do residential painting and we are pretty particular of sanding between coats, vacuuming often, and dusting and sanding walls.
A lot of these are not in what we call the trades of blow and go, they don’t backroll, it is a spray.
I know the job we were looking at, the ceilings and the walls were all the same –colored the same time, no curtain, no back rolling. Everything was a spray, spray the trim separately, put them up and then you do your touch-ups, that’s what they considered a paint job.
Are they looking to use low or high-quality products?
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A lot of us who do residential re-paints are used to using very high-quality products. A lot of these times, they are using a contract to grade them. So, that’s one thing, because of you guys… in my case, I was used to using quality products and when you start using something less than that, it takes a lot more time and it takes a little learning curve.
And a lot of times, the guys are not happy with the results, so they spend more labor trying to get it to where they were, so you almost kind of dial down your crew, because that is something you want to do, it is not something I want to do.
What sort of time frame are they looking for?
Thirdly, you want to see the timeline for the painting. When do you get in, when do you get out? This is all for multiple homes being built, we work a couple new homes a year and it is all custom homes.
They are more concerned with quality than the rush, but when you are doing 80 homes, it’s hurry, hurry, hurry… You really have to have your processes down to the signs, the cocking, what do you cock? What don’t you cock? The ones we looked at, he said, only cock if it is a gap, if there is no gap, it doesn’t get cocked, because they are looking for speed and they are looking to save money.
If the builder can actually save a couple of thousand dollars a unit, and he is building 80 units, he has just saved himself $160,000.
Who’s responsible for the punch-list?
You, also want to ask about the punch list; who’s responsible for the punch list? And if you are responsible, what are you actually responsible for? You don’t want to be taking care of all the other trades, bangs and bumps and all the other things if it is not your fault, and especially if you are not going to get paid for it, because they can do a number on these things. Everybody is in there to get in there quick, get out of there quick.
Payment structure
Another thing you want to ask for is payment structure. Generally, they didn’t give us any payment money upfront, when you got to do something, a new construction. What they got to do is maybe they got to give you a couple progress payment or one progress payment, and then the final is net in 10, 14, 30, 60 days, you want all that in writing.
One other thing I would like to add too is also if you don’t have anything else as the PDCA, rules, and regulations of what is actually acceptable, for a paint and how they can inspect things like that.
Warranty is usually a year on the new construction, you want to make sure that you honor that, and if they are doing multiple homes, if you are into 3, 4 or 5 homes, and you are still waiting for final payment on the first one, it gets a little tight, so make sure that you are prepared for that.
Know your production rate
As with pricing, you have to know your production rates. I would love to give you some rates now. I am in New England and what’s in New England and California, Florida, and Texas, totally night and day.
You really want to know what is expected of you first of all, and you have you have to know your rates.
On this, we pre-painted all the tracks, trim, packaged it, stacked up in the garage, only one coat, but if that was on the house, it would have taken a little more work. So we saved some money that way and we were able to save some time. This is a time and material house, we didn’t bid it, we just get called in and it is a full time and material. So, on the custom home, I am not afraid to ask that…
But back to pricing on the new construction, you have to know what it is going to take to prime out the house. Generally, we can prime out a house in a day, you are out there spraying, you are tapping off and plastering off windows, you are spraying and backrolling if needed, is that in the budget?
What of the ceilings, so you can do your ceilings and prime all in a day, and then you switch over to your colors? How many colors are going to be in the house? All these are big factors, there is a very smaller margin we find on these new constructions, so you want to make sure that you guys are working very efficiently and you are not overproducing.
And I don’t say that in a bad way because we love to take care of our clients, so we want to make sure they are happy 110% of the time, but you got to understand that you are working for a builder, the builder isn’t the end-user, you have to make the builder happy and then you move on
You would probably get a call back, that is a great time for ‘meet and greet’ your customer, to go back and do a call back, that’s not a bad thing, that is probably the only time you will be introduced to the customer, and then you will have any interaction with them.
Maybe that’s the time you want to get their information and stay in touch with them. We used to do a lot of property management companies, which is similar to doing large track painting, we paint giant condominium complexes.
Although the checks are coming in when they come in, one thing you have to understand is, you are putting all your eggs in one basket for that period of time. If you work for a builder, painting, and I will go back to the 80 units. If we worked say, 4 months, 5 months, 6 months would be the… I don’t know, we didn’t take the job, but if you were wrapped up with that builder for 6 months and didn’t take any other client, couldn’t fill any other client in, what happens when that builder stops that or finishes that construction project?
You have 1 referral partner right there, it is only the builder who can refer you, but if in that time frame you painted 15, 20, 30 homes, you now have 30 satisfied clients who can refer you to their friends and family
So you got to look down the road, past that one check, it is very tempting, especially depending on the seasons that you are in, it is to take something like this one, but a lot of times, you should be signing a contract so that you have something legal to go back on if anything goes south.
Have specific payment dates in the contract
You also want to be as specific as you can be on those contracts that you are getting paid for. Additional work orders –you know additional work orders crop up all the time and what you might have looked at, now when you walked in, has crown holding all over the house and you weren’t prepared for that, but you also didn’t have that written down in your bid proposal.
So, be specific, I know I didn’t get into numbers, and I wasn’t going to get into numbers, I just wanted to give you a couple of points to watch out for;
Contract: make sure you have something that is going to tell you when to get paid in that contract, Products you are going to spec, and who is buying the product. We’ve had builders provide on some of our custom homes, they provide the products, but we make sure we know when the product is going in.
Anyway, those are a couple tips, I hope they helped you a little bit, thinking about new construction. Like I said, great to get into a custom home, you do 1 or 2 a year, new construction is usually a turn around with painters and don’t be that guy who gets sucked into this, and gets burnt in the end.
I am Ron Ramsden, I am a DYB coach, also a painting contractor here in Massachusetts. I would love to talk to you. Find me on Facebook, send me an email at ron@dybcoach.com, ask me anything, maybe we can exchange cell phone numbers. Have a great day…
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