Type of T&M Projects
- Thread starter EEC
- Start date
- Status
- Location
- Illinois
- Occupation
- retired electrician
Re: Type of T&M Projects
With a fair contractor, the T&M cost should be cheaper than the contract cost for the same project. This is because when the contractor does a job on contact, he assumes some risk and gets paid for taking that risk. In the T&M project the customer assumes that risk. One of the problems with T&M is that the project often "grows".
Don
With a fair contractor, the T&M cost should be cheaper than the contract cost for the same project. This is because when the contractor does a job on contact, he assumes some risk and gets paid for taking that risk. In the T&M project the customer assumes that risk. One of the problems with T&M is that the project often "grows".
Don
jeff43222
Senior Member
- Location
- Minneapolis, Minnesota
Re: Type of T&M Projects
The main reason to do T&M is when there are a lot of variables that you don't know at the beginning of the job. Remodel jobs are a good example. I never know what I'm going to find when I open up a wall, and sometimes what I find winds up being time-consuming. If someone wants me to give them a fixed bid on a remodel job, I tell them they have to open up all the walls/ceilings first, or I bid high. I've been burned too many times by surprises after submitting a fixed bid.
The problem with T&M is that most customers are leery of this arrangement because the final number will be a surprise, and it will almost certainly be higher than they were expecting. Also, they are afraid that someone working T&M won't have any incentive to work efficiently and will be more than happy to take his time while the clock keeps ticking.
Probably the best way to hedge your bets would be to do T&M where it's called for, but also give the customer a "not to exceed" bid (that will be high) so that the final bill isn't any more than they were expecting. Chances are, you will end up under that "not to exceed" price, so the customer won't be upset. Well, not too upset.
The main reason to do T&M is when there are a lot of variables that you don't know at the beginning of the job. Remodel jobs are a good example. I never know what I'm going to find when I open up a wall, and sometimes what I find winds up being time-consuming. If someone wants me to give them a fixed bid on a remodel job, I tell them they have to open up all the walls/ceilings first, or I bid high. I've been burned too many times by surprises after submitting a fixed bid.
The problem with T&M is that most customers are leery of this arrangement because the final number will be a surprise, and it will almost certainly be higher than they were expecting. Also, they are afraid that someone working T&M won't have any incentive to work efficiently and will be more than happy to take his time while the clock keeps ticking.
Probably the best way to hedge your bets would be to do T&M where it's called for, but also give the customer a "not to exceed" bid (that will be high) so that the final bill isn't any more than they were expecting. Chances are, you will end up under that "not to exceed" price, so the customer won't be upset. Well, not too upset.
Re: Type of T&M Projects
EEC
Exactly, I never give a not to exceed unless it is understood and in writing that this means the work continues until this number is reached and then we talk about the remaining work and how to deal with it.
I alsways keep the customer up to date on costs and work progress, even daily reports and cost updates so they are aware of what is taking place
and they can somewhat controll there purse strings
EEC
Exactly, I never give a not to exceed unless it is understood and in writing that this means the work continues until this number is reached and then we talk about the remaining work and how to deal with it.
I alsways keep the customer up to date on costs and work progress, even daily reports and cost updates so they are aware of what is taking place
and they can somewhat controll there purse strings
Minuteman
Senior Member
- Location
- The Sooner Nation
We don't do a NTE very often. Most of are T&M jobs are with the same remodel GC's, Small industrial shops, or Property Management Companies.
sparky_magoo
Senior Member
- Location
- Reno
I do service & small jobs. Troubleshooting is always T&M. Our general rule of thumb is, if the job will be over $500 Iam expected to write a proposal. This is new to me. I have found it is much better. On remodel jobs, I figure worst case scenario and still usually get the job. Customers appreciate a fixed price. I know we're high, but we get the work because other local contractors are reluctant to write proposals on small jobs. I advise avoiding T&M unless it is for troubleshooting. I am paid a commision from the proposals I write & almost always come out ahead.
hardworkingstiff
Senior Member
- Location
- Wilmington, NC
T&M, NTE is a losing position for the contractor doing the work (IMO). You either pay a lump sum or a T&M, you don't get the benifit of T&M and the protection of lump sum with me. It's either/or.
- Location
- Massachusetts
Another question with no right answer, it depends on the EC, the customer and the job itself.
The company I work for does a lot of T&M NTE.
We rarely if ever hit the the NTE price, it seems to work good for us and the customers that have to answer to someone above about projected project costs.
What Don says is (should be) true, if your honest the customer makes out better at T&M.
Bob
The company I work for does a lot of T&M NTE.
We rarely if ever hit the the NTE price, it seems to work good for us and the customers that have to answer to someone above about projected project costs.
What Don says is (should be) true, if your honest the customer makes out better at T&M.
Bob
JohnE
Senior Member
- Location
- Milford, MA
I'll sometimes invoice 2 ways on a project. for example, on a remodel or addition I price all the known items per unit. Then I'll put in a factor for "repair/ replace existing wiring accordingly". This might be anywhere from $300.00 - $3000.00. My GC's know that this actual number will be based on T&M. It gets their number very close, and they know I could exceed it if unexpected situations arise.
sparky_magoo
Senior Member
- Location
- Reno
If I'm doing an install over $500, I am expected to write a proposal for a fixed price. We won't do T&M over $500 for additions. On jobs involving troubleshooting, we never give proposals. It is always T&M w/o a NTE.
We do lots of work for homebuyer warranty companies. They usually require auhtorization if the repair goes over $200 or so. It's a PITA, but I get the authorizations.
On these small bid jobs, I am expected to pad in time for the unexpected. In the beginning, I would get chewed out when my labor was equal to the hours I spent on the job. I need to make the work worth the companies and my time. Our customers don't have the option of NTE T&M. If they're aren't willing to pay for the work, we don't need them.
Our proposals have a clause for the unexpected. On one job where I added a light ckt., I found structural iron preventing me from fishing a MC cable switch leg up a wall. I told the customer I required more money. They reluctantly coughed it up. We are not in business to lose money. Ever.
If your customer wants a T&M NTE, perhaps he should call a handyman out of the want adds. Licensed EC's don't need to deal with that. Your expertise is worth some money.
We do lots of work for homebuyer warranty companies. They usually require auhtorization if the repair goes over $200 or so. It's a PITA, but I get the authorizations.
On these small bid jobs, I am expected to pad in time for the unexpected. In the beginning, I would get chewed out when my labor was equal to the hours I spent on the job. I need to make the work worth the companies and my time. Our customers don't have the option of NTE T&M. If they're aren't willing to pay for the work, we don't need them.
Our proposals have a clause for the unexpected. On one job where I added a light ckt., I found structural iron preventing me from fishing a MC cable switch leg up a wall. I told the customer I required more money. They reluctantly coughed it up. We are not in business to lose money. Ever.
If your customer wants a T&M NTE, perhaps he should call a handyman out of the want adds. Licensed EC's don't need to deal with that. Your expertise is worth some money.
- Location
- Massachusetts
Sparky Magoo many of our T&M NTEs are in the tens of thousands of dollars.
These will be for large customers that need to plan the budgets but do not want to be locked into a contract as the scope of the jobs are always changing.
We are not 'Handymen' or a charity either 8)
These will be for large customers that need to plan the budgets but do not want to be locked into a contract as the scope of the jobs are always changing.
We are not 'Handymen' or a charity either 8)
- Location
- Illinois
- Occupation
- retired electrician
T&M not to exceed is to be avoided. The contractor can't win. If it takes more than the not to exceed price, he still has to complete the work and take the loss. If it takes less, he doesn't get paid for taking the risk. He only gets paid for the labor and material used. The only way we do T&M not to exceed is if the customer understands that the work stops when we hit the not to exceed number no matter if the job is complete or not.
Don
Don
Don,
I agree NTE can cause conflict, here in Jersey, the consumer laws require, all residential work, to be contract, a known price, before work starts, they don't differ, between, remod, or new work, as for commercial, and industrial, the laws do not apply, they can be either T&M or contract, if you do a T&M job, and the customer is not happy, they have the option of filing, a consumer complaint.
I agree NTE can cause conflict, here in Jersey, the consumer laws require, all residential work, to be contract, a known price, before work starts, they don't differ, between, remod, or new work, as for commercial, and industrial, the laws do not apply, they can be either T&M or contract, if you do a T&M job, and the customer is not happy, they have the option of filing, a consumer complaint.
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