Thoughts on Time and Materials versus Lump Sum

Contractor Matt Smith posted underneath our last week’s article by JELD-WEN called ‘7 Questions homeowners are asking contractors.’

Looks fair enough and we should all be able to answers these questions.

On point #6, “What is the cost breakdown,” there can be a fine line between full broken-down Time & Materials plus Overhead and Profit versus Lump Sum.

We have the best luck using more of a lump sum to avoid giving clients bullets to shoot us. We have Infrastructure on one line and Allowances on another, with mark-up built into Total Project Value.

[Matt then lists the following Essential Elements of any job…]

Open communication, proper design, clear scope of work, estimated fair price for the scope outlined, [sufficient] mark-up to cover your overhead and profit to stay in business, listen more, play fair, make the sale, build, create a raving fan client!