How Are Remodeling Project Prices Estimated by Contractors?

A contractor considers many factors when estimating the cost of a remodeling project.

In this Complete Home Remodeling Guide we will go over the three main components of a contractors estimate and point out some of the considerations that go into each.

The three major components of your estimate are:

  • The size, scope and complexity of your project
  • The contractors overhead and the hours needed to complete your project
  • The complete cost of materials from tear down to finish

Scope of the Project

The first component is the room itself and what you are trying to accomplish with it. Are there a lot of corners, turns, trim, electrical, pipes or a major tear out of walls or floors? Will specially licensed technicians, special tools or equipment be needed to do this work? The contractor must consider fees, building permits, and costs to bring all items up to code and allow for any known conditions that must be addressed. Estimates are also based upon the condition of the room. What can be seen or assumed and not a whole room of rotten wood or mold that was totally hidden at the start. This scenario should be discussed up front before the project begins.

Contractor Overhead

The second area of consideration is overhead. How many man hours will be needed from start to finish. If 5 guys work 8 hours a day for a week that’s 200 hours on your project. The hourly rate is based upon what that worker brings to the job, is he a laborer, Carpenter, Electrician or Plumber? The contractor then must add in all his yearly costs of doing business divided by the hours he expects to work. The contractor has many costs some of which are insurance, bonds, taxes, fees, rent, accounting, legal and of course he needs to make a profit.

Materials and Supplies Cost

The last component is the material costs. There can be wide swings here and this is the one area that you have the most control. Do you want the $40 a square tile or will the $5.95 tile that looks just like it do the trick? Material prices vary and you need to make sure you and the contractor are on the same page here. The material costs can and will dramatically improve or explode your bottom line. Don’t price yourself out of the job by picking the most expensive items in every area, be selective.

The bottom line is an estimate is just that, an estimate. There may be some waste, hidden damage, a pipe that breaks and it’s all very normal and if you budget right it should all be ok. Use your estimate as a guide and budget in for some small surprises that come with most jobs.

Get at least three estimates for your project. Without multiple estimates you will not be able to compare costs or understand what is going into your quote. You will want a detailed estimate listing all that will be done. Ask questions and understand what you are paying for. Learn what is really going into your project and remember with knowledge comes understand and thus the ability to understand your price and pick the right contractor. A simple way to get one or more of those estimates is to contact us HERE for a free price quote on your project. You may also want to check into a home equity line of credit which you can do here.



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