Replies to This Discussion

Permalink Reply by Chris Heiler on September 17, 2008 at 4:10pm

Hi Brandon,

I work this way.

I handle all contracts and put a mark up on my subs. Usually between 15-20% depending on the trade. This has worked out well for me.

Regarding your second question, I've found that once you build repoire with your clients, and trust, throughout the design process that when it comes time for the construction it's pretty much a foregone conclusion that they will hire you as the general contractor.

I'll also explain that it is much easier for one person (me) to handle all contracts, scheduling, etc. instead of the homeowner trying to do it all. This way, the homeowner deals with only one person- me.

I also explain that each construction operation is put out to bid so they are getting good competitive pricing even with my markup.

Hope that helps.

Also, I'm hosting a free teleseminar next week (see the event page) and Tuesday night we will be talking about this very thing.

Chris Heiler
Editor- LandscapeLeadership.com

Permalink Reply by Jay Horton, RLA, ASLA on November 2, 2008 at 8:34pm

Are you wanting to become a GC or do you want to oversee the project for quality purposes regrding the implementation of your design? When we manage projects, the client pays an hourly fee for travel and time spent on the job site... In the state of North Carolina we cant engage in contracting unless our documents state "Limited Liability Landscape Architect", or something like that. In general, I think the LA receives more respect from the other trades if his role is to assist in the success of the project instead of profitting from the subs. I am not disagreeing with anything Chris said, but I personally prefer to stay away from the contracting side... I also agree with Chris on the fact that once the trust is there, the client will stick with you and the construction management of the project is just a natural course of progression. I also think that the term "Construction Manager at risk" applies more to an LA that is hiring and marking up the subs. I respect the design build guys, but it's not for me; I keep in close with the clients and cater to their needs by offering advice that is not based off of the profit I stand to gain from a sub that I hire. I manage a lot of large residential projects and I am more than willing to share any of my experiences with you. Let me know If I can help... By the way, great site, I just signed up tonight!

Good Luck,

Jay

Permalink Reply by Jim Del Carpio on August 12, 2009 at 10:23am

I agree with your reply. Its best to represent the owner and our design intent than to deal with contract negotiations and construction mark-ups.

Jim

Permalink Reply by Jonathan J. Bob on November 7, 2008 at 8:08pm

Brandon,

In NJ if you are directly involved in the contracts you need to be a licensed Home Improvement Contractor. With that you need a minimum of $500,000 in liability insurance and other stuff that may or may not be worth it. If contracted by my clients (at an hourly rate) I will review contracts, do site inspections and other aspects of project management without being a GC. If you get the client through the design phase and they see the value they've already gotten by hiring you, as a designer, chances are they will see the value in continuing with your expertise. Check out your state's requirements for acting as a Contractor. The NJ law is just within the past 2 or 3 years and can be limiting.

Jonathan

Permalink Reply by Dan Barnes on November 12, 2008 at 4:12am

Brandon,

Most of my jobs, I am the GC and like Chris I add at least 15-20% and sometimes more. It depends on the sub and the work to be completed. If I have to do all the leg work, and hold the clients hand constantly I will charge 30%.

I have been very fortunate to have clients that trust me and allow me to take care of their projects, allowing them more free time and taking care of the problems when they arise, which will happen every once in awhile.

I will say there are some people that will not pay this and want to bargain with you. It has happened and I have made it very clear that I was not the GC and they were to handle the scheduling, other subs, etc.

Dan

Permalink Reply by Rochelle Greayer on February 5, 2009 at 12:49pm

Hi-

I have managed some of my jobs and when I do, I charge 17% on top of my costs (all put out to bid and competitively chosen contractors). That said...I am moving away from doing this....I find it way to stressful as I inevitably end up in situations that I am not happy with. Usually the contractor is under performing (or at least not conducting business with the same set of standards that I do) and because I am financially responsible for the whole thing, it can potentially reflect badly on my business. I find it also puts me in a tough spot ...again as I am financially responsible and I also have a vested interest in getting paid I can sometimes find myself trying to navigate the best interest of everybody (including myself) which is not always easy. I plan to, at a minimum, take myself out of the financial part (and for some projects not manage at all). My fees will be paid separately from the contractor and I will not be responsible for holding project construction funds. This way I feel like I can better help the client and advise them as I would want to be advised and not have any conflicting interests.

Permalink Reply by Brandon Reed on February 5, 2009 at 12:53pm

Hi Rochelle!

Thanks for your input....That is exactly what we are doing right now....We act as the owners representative and charge them an upfront management fee instead of acting as the GC....It is the only way to truly represent the clients best interest and look out for them.....We are finding that most clients love this as we have a non-byass opinion when giving them recommendations and the clients feel comfortable knowing that our interest is in their best interest....

Permalink Reply by Rochelle Greayer on February 7, 2009 at 3:17am

What I am not sure about, is what is a reasonable fee when not managing the financial part. I have talked to people that are charging the same either way, but there is inherently less risk (and arguably less value) in not managing the funds -- the the work load is pretty much the same. I am thinking to reduce the rate a little bit to perhaps 12- 13%. But am concerned that my be selling myself short. How do you charge this? And also, when there are change orders and additional costs...it is easy to continue to tack on the 17% .... but when you are a little bit out of the $ money loop...I am not sure how this will go.
Thoughts?

Permalink Reply by James Dawson on June 1, 2009 at 10:22pm

I have the same question regarding the setting of a management fee, also I ask myself the following questions.

Should the % change depending on the cost of the job?, i.e lower % higher construction cost.
Maybe just simply charging at an hourly rate?

Permalink Reply by Brandon Reed on June 2, 2009 at 5:45am

We are still working on figuring out the best way to charge our clients.....We do charge a percentage based fee....if the construction cost is low then we place a higher percentage fee...it the cost is higher we place a lower percentage.....

We also include the cost of producing the construction documents into the fee to sell the management....seems to work very well....just make sure if you do this that you build the cost of doing the construction documents into the fee or you won't really make money....this way allows you to do an all inclusive type service where the fee covers everything.....

I would not go hourly unless you are strictly going to be doing a supervisory role...i.e. - going out to the job site at benchmarks....to ok materials....plant layout, etc....

Hope this helps you....

Permalink Reply by Mike Metevier on September 21, 2011 at 7:35pm

Yes, the % should change.  The higher the cost for the project, the lower the %.

Permalink Reply by Mike Metevier on September 21, 2011 at 7:37pm

You should never be financial responsible.  You are simply authorizing you client when and what to pay.  The money should NEVER come out of your pocket.

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