# How would you handle going over budget?



## Everend (Jun 11, 2010)

Last month we built a cedar picket fence (basic) for my neighbor across the street. Mid job he asked about staining it, I said sure probably about $100 - first mistake giving a price on the spot! A month later, after the wood dried, we came back to stain it. 10' into the job we realized that $100 was WAY off, the wood was drinking up the stain. I called him and apologized that I was way off on my price that it was going to cost me about $350 just for the stain. He said he could afford to pay the difference but it would be a few weeks. So we got more stain and finished the job. My actual cost for the job to pay for materials and my guys time was $424 (without any markup/profit/overhead). Just running to the store added two man hours to the job.
I'm not asking for help with dealing with this customer. I told him yesterday that I only wanted him to pay me the originally agreed $100. He sent me an email today that sounded like he wants to pay more but will talk to me about it on Thursday when the computer parts come in that he ordered for me. Since he's helping me rebuild a computer I'm not really worried about collecting the $324 difference, but like the previous "did I do the right thing" post, I'd like to learn from this experience and all y'all's advise.

How would you handle going over budget like this? Do you stick to your bid? Do you charge time/materials and just forget about the bid? 

Keep in mind most of our jobs are small and the difference between staying on budget and doubling the budget for a job like this is only a few hours. So we don't have time to do a proper change order or even put the job on hold while we figure something out. 

I realize for some this may be a black/white question since I called him, he agreed to pay the actual cost... done. But I feel bad about being wrong  I feel this is an integrity issue since I said I would do it for $100 and then, at the first sign of trouble, I go asking for more money. I don't want to be that contractor who bids low to get into the door then jacks the price after starting the project. I also can't afford to bid jobs and eat it because I bid to low or not have any work because I bid to high trying to cover all contingencies.


thanks


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## Mud Master (Feb 26, 2007)

Short answer...

If they change the scope they pay (with an authorized change order).

If I don't calculate enough for the original scope, I pay.

Your right about integrity. If you made a mistake during the bidding phase you just need to own up to it, complete it for the agreed and contracted amount and learn from it.

Nobody said business was easy, and we have ALL made mistakes. The trick is to learn from them and move on. Estimating is the hardest part of the business, because it's where all the nuts and bolts of the job come together and either make you money, or make you broke.

I never liked the word estimator either. I want a proposer, not an estimator. 

What I would do, besides the fact that you pinpointed where you went wrong on this job, is to start keeping track of your labor on each job and see where you come in. In turn you can look to that data on future jobs and see the average time it takes you so you can bid accordingly.

Nevermind that what you do are small jobs, because a job is a job. It's just as easy to lose a little money on 100 jobs as it is to lose a lot of money on one. In the end your still out. The key is reducing your exposure so you don't lose any money on any job. The only way to do that is to know your time and costs and relay that into your proposals.

Just be thankful it is only a couple hundred and not a couple thousand or hundred thousand. Learn from the mistake and use your new found knowledge in the future.


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## Seven-Delta-FortyOne (Mar 5, 2011)

Everend said:


> Keep in mind most of our jobs are small and the difference between staying on budget and doubling the budget for a job like this is only a few hours. So we don't have time to do a proper change order or even put the job on hold while we figure something out.


*******


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## AustinDB (Sep 11, 2006)

I personally do not like jobs where the materials are as much as the labor-I think this situation lends itself to being to close to the edge (if something goes wrong as in your case). 

Something can be said for how you communicate cost and possible issues to the customer. for instance, telling the customer the staining of the fence will likely cost $100 but some woods require a lot more stain to achieve proper coating based on wood porosity and other contributing factors, so the labor and materials may be higher.


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## tedanderson (May 19, 2010)

If I make a mistake on estimating the materials, I'll ask the HO for more money to ensure that job is done right and done to their satisfaction. But if the job ends up taking longer, if it requires more people, or for whatever reason I underestimated the difficulty, then I'll take the hit. 

In this situation, I don't know if you could have really estimated how much stain that the fence would soak up. And as much as we don't like to do it to other people, it happens to us all of the time.

I mean have you ever put your car in the shop for a minor repair only for the mechanic to tell you that the work will be more extensive and cost you more money? 

So personally I would have asked the HO for more stain had the arrangement been a straight deal (excluding his computer services).


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## floorinstall (Sep 8, 2007)

I have been there as has most everyone in this business. I would simply explain that that the estimate was just that and estimate and would he mind covering my actual cost and show him the receipts.


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## jimmys (May 1, 2009)

Of course, NOW you have time for a Change Order!
This is so common, we've all done it, and I don't think anyone ever felt bad (just poor) for manning up and eating a low estimate. 
But, thinking of the HO, he sounds like he's ok paying for what you did. So how about charge him for the extra materials that you couldn't predict, and chew/swallow the labor. $.02
Jim


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## VinylHanger (Jul 14, 2011)

In that situation I would have him buy the stain and pay you hourly for your time. Besides that, I don't know how you could do any kind of decent job staining or painting for 100 bucks including materials. Unless it was a very short fence.

It does happen to all of us, and I do a lot of small jobs as well. I usually eat the time, but it ends up getting me more work that I make it up on. However, I try and always take the time to figure out what it should actually cost.


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## HomeSealed (Jan 26, 2008)

Be a man of your word, eat it, lesson learned. As said above, we've all been there. You know that your first mistake was quoting a price on the spot. The other mistake was not giving a cushion for the worst case scenario, or at least giving him a range, or just quoting him T&M.


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## Chris Johnson (Apr 19, 2007)

This almost looks like two neighbors/friends helping each other out, he's helping you with a computer, your helping him with the fence, I'd think you should be okay to ask to cover costs without any issues, if it is an issue I would say he's not doing you a favor on your computer


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## TheItalian204 (Jun 1, 2011)

Contract--->scope of work(signed same time as contract)----->change?show scope of work---->change of order----->no work until change of order paid---->receipt/workmanship/hugs and kisses.

Learnt that hard way.


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## genesiscont (Feb 8, 2012)

I would charge more for the stain and eat the labor, in this case you could not have figured on the wood soaking up so much stain. leason learned on makeing sure you estimate enough in the furture for the conditions. But if you were say building a deck and under estimated the lumber needed in that case i would eat materials and labor, because i should have estimated the structure correctly (I did that this summer). my clients got a 15k deck for 13k.


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## javatom (Sep 9, 2008)

I know this is going to stir the pot but here goes. This is the kind of activity that hurts our industry. You should have given him and estimate OR a bid. At the minimum, send him an email that outlines what you talked about and what the price would be for the described work. You may also want to brush up a bit on your pricing skills. Can you imagine if this happened in another industry like automotive. You order a new work van and the dealer tells you it cost 25k. It arrives and they tell you it cost more to make than they thought and it will now be 75k. You would think they didn't know what they where doing. Sorry for the rant but I've been on the other side of this story before by doing a proper bid on something only to be told that a neighbor is going to do it for $100.


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## 3Seasons (Feb 11, 2012)

A few years ago my "estimator" bid the wrong price on a large project. The builder outlined in the Blueprint both as a Note and in the Legend specific plumbing fixtures that were specified.

My estimator didn't see this, I ate the entire loss. Over *$32,000.*

It was sickening but it was my company's fault, we blew it. I approached the builder and said he too was losing his ass on the project and was ready to walk away. I asked if he could give me an idea of the other contractors bids and he said we were $30,000 cheaper than anyone else. 

That project ticked me off, the estimator is no longer with me, but my name is on the Letterhead so I ate the loss.


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## jhark123 (Aug 26, 2008)

^ to me hiring an estimator would have the biggest pucker factor of any employee. I don't know that I could ever do it. I just know how many FATAL mistakes I've ALMOST made.


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## KingOfTheCounty (Feb 14, 2012)

First thing you should do if you wanna be proficiant is learn your trade of choice *Better* and learn your real hourly cost. 

Clearly you don't know as much about staining a fence as you should or you would know the rate of absorbtion as well as the cost of the stain. The same applies to your hourly costs. I'm not giving you an hour of my time for a hundred bucks, let alone materials too.


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