Bonds and Cost control

key man insurance

company insures its core employees

worker’s compensation

if there’s 3 or more people working at a company you have to have worker’s comp. Subcontractors must provide compliance documentation, if not the subletting party is responsible for workers comp

unemployment insurance

eligible people who can’t work by no fault of their own

social security insurance

retirement, disability to workers and families

parts of a bond

dollar amount required for bond, length of bond, requirements if defect is noticed (period of corrections), bond enforcement (what happens if he doesn’t follow through)

bid bond

ensures contractor is serious about the bid, protects against unqualified bidders, if contractor bails, bid bond makes up the cost difference between winning bid & original contractor bid

performance bond

contractor will complete work in timely manner

payment bond

guarantees subs and suppliers will be paid

maintenance bond

for one year no defects in the product

fidelity bond

covers business owners for losses by their own employees

lien bond

liens can’t be placed on owner’s home by contractor; way to bond around a lien

miller act

all performance & payment bonds must be at least $100,000

what makes a good logo

simple/ easy to remember, attractive color; only a couple colors, representative of company

what to consider before sending a bid

company resources (can we do this kind of work), site considerations (special conditions), location & cost effectiveness (how can we do this cost effectively), risk assessment (what are the risks? How will we manage them), profitability

bid shopping

contractor approaches people outside of a bid to get a cheaper rate

bid peddling

sub contractors approach contractor who has already awarded a bid to someone else to change their minds/ go with them instead

bid rigging

contractors coordinate their bids to fix the award outcome

what is included in labor cost

hours spent doing the construction AND hours spent planning and scheduling

direct costs

costs involved for the project itself; equipment, materials, etc

indirect costs

costs to keep the business running; overhead, advertising, marketing, management

contingency

a % of total costs for unanticipated problems; changes with project risk level

what should you always add a contingency to

material cost

allowances

items not stated in project plans, lighting, carpet, fixtures, if owners demands are less/over the allowance fee, they will pay the difference

variable cost

increases/ decreases with volume

fixed cost

doesn’t change w/ work or materials; stays the same

job cost recording system

cost overruns are identified and prevented later

what is the most accurate cost estimator

quantity take off method- takes into account contingencies and details of a project rather than just square footage