Markup at first glance is incredibly simple; it’s what gets added to the costs to make profit. However, there can be misunderstandings about it. First, markup does not equal profit. It is the initial cushion added to costs to cover business overhead, risk of overruns, and hoped-for profit. When applied to construction company contracts, each… Read more »
Who Is Really the Low Bidder?
When looking for a custom homebuilder or commercial construction company in Sonoma or Napa County, most owners think they need to look for a low bidder. Unfortunately, the true low bidder is hard to find and even harder to recognize. First, we need to agree on the definition of “low bidder.” I would explain it… Read more »
To VE or not to VE: That is the Question for Top Custom Home Builders in Sonoma
VE is the popular acronym for a complicated and controversial process called “Value Engineering”. At its best, it is a systematic review of the plans and specifications by the building team to look for ways to reduce the project cost, typically by substituting one product or system for another. In a perfect world, one with… Read more »
Allowances aren’t Just for Kids, but also Luxury Custom Homes and Commercial Projects
The allowances I’m referring to are placeholders in estimates for items that have not yet been selected. They can appear in budgets or in contracts until the exact scope can be agreed upon. In some ways, they are a blessing to getting a project going, but they can also put a curse on a relationship…. Read more »
Custom Home Design in Sonoma and Napa – Sources of Savings in GMP Projects
When building a custom home in Napa or Sonoma County, a Guaranteed Maximum Price (GMP) contract is frequently chosen as the best option for an owner. The opportunity for the owner to share in cost savings is a significant advantage of a GMP. The GMP will include many different estimates and bids for the elements… Read more »
Change Orders, The Scourge of Luxury Home Builders in Napa and Sonoma
Most project owners think change orders are a pot of gold for contractors. In situations like hard-bid public projects, they are the way contractors make profit on jobs that would otherwise be losers. But, that is a subject for another time and place. When a custom home builder negotiates a win-win contract with their customer,… Read more »
Budgets by Luxury Custom Home Builders in Sonoma and Napa
Construction budgets can mean many things to many people. They can be anything from a WAG (wild ass guess) to pages of detailed items and pricing. Probably the best way to approach this subject is chronologically. Sometimes the first budget for a custom home design comes from the worst possible source; a real estate person… Read more »
What is Contingency, and How Does it Affect Custom Design in Sonoma and Napa?
At the risk of sounding like a politician, “it depends”. At early stages of project development, most budget contingencies are considered design contingencies. At 15% or more, they are intended to allow a cushion for construction costs that are not evident in preliminary drawings and may not have even been articulated by the owner. At… Read more »
Project Delivery Systems and the Worldview of the Players
This somewhat pompous sounding title actually hints at a fundamental issue in construction as well as other commercial enterprises and relationships. In its simplest terms, you usually find what you expect to find. Another way of putting it is that disagreements frequently arise not from the facts but from different perceptions of those facts. A… Read more »
What Can a GC Do for the Owner Before Construction?
The best luxury home builders and top construction companies in Napa and Sonoma have developed the expertise to help guide owners to the point where construction can begin. With all the overlapping regulations and environmental considerations in our beautiful area, it can easily take 2-3 years to go from finding property to digging the first… Read more »