Contractor estimate and accounting for cost overruns?

November 9, 2009 12:43 PM

My friend is buying an old brownstone in Brooklyn that needs to be gut renovated. The question is how accurate the contractor estimate is and should he account for cost overruns, if so, by how much?

My friend is about to purchase an old brownstone in Brooklyn that needs a lot of work. It's a 5 story building, with approximately 16,000 square feet of space. The buildings needs its pipes replaced, a new heating system, electrical work, and the foundations (or more specifically the supporting columns in the cellar needs to be replaced, along with some wood replacements due to termite infestation.

Two contractors gave him an estimate in the 120-150k range for all the above. Is this reasonable? Should he expect cost overruns and if so, by how much?

posted by pakoothefakoo to home & garden (15 comments total)

I am not a contractor, but I do live in Brooklyn and I have looked into renovations.

This doesn't sound like a gut renovation to me. A gut renovation would involve stripping all the walls down to the studs, ripping out all fixtures (kitchen, baths, etc), shoring things up, replacing everything that needed replacing, etc.

That said, this still sounds like a serious amount of work - replacing all the plumbing is seriously traumatic - patching up walls, ceilings, tile, etc. New heating system? is it just the furnace, or everything else? What's the nature of the electrical work? Support columns? What else might be damaged due to sag?

Did these contractors give him a breakdown of how they came to those figures? Because honestly, $150k sounds incredibly low. It sounds like the kind of bid that wins the job, but then results in significantly more work than that. Has he vetted these contractors?

Other note - what timelines did they promise? My neighbors did a gut renovation in Brooklyn on a 3-story building (previous owner had lived there for 90 years) - they were hoping for an 8 month schedule, it took 14 before they moved in with the work incomplete.

I will say, however, that I haven't gotten any serious contractor estimates for anything since the construction bubble burst, so you can likely get a lot more these days than you used to be. But $150k still sounds low.
posted by swngnmonk at 1:11 PM on November 9

I have recently been peripherally involved in a new construction project (I'm the treasurer for an organization that is building a building) and our contractor gave us a very detailed breakdown of costs, and included a contingency of about 10%, which we are going to end up using. The level of detail really helped us feel clear about the costs, made it possible to find places to cut costs, and so on. Can his contractor provide him with that level of detail?

Even having done only household renovations like putting in a new bathroom, I would say always expect cost overruns, and expect it to take longer than expected.
posted by not that girl at 1:14 PM on November 9

Regardless of the job, location, or contractors, the high-end estimate plus 50% is the absolute bare minimum he should expect to pay.

Spoken from painful experience.
posted by Joe Beese at 1:16 PM on November 9 [1 favorite has favorites]

My rule of thumb has been to budget 30% over a reasonable estimate.
posted by JohnnyGunn at 1:20 PM on November 9

In Brooklyn, with such an old and large building, I would expect 50-100% on cost overruns (seriously!). And I agree that sounds like a low figure for so much work. If walls are being opened for plumbing and electrical work, are they being closed up again? Because plumbers and electricians won't do that. Make sure you have in writing everything they will do for that price or you may end up with surprises (you will end up with surprises anyway, you just want to make them as inexpensive as you can). Good luck.
posted by rikschell at 1:29 PM on November 9 [1 favorite has favorites]

Other ugly gotchas when dealing with old brownstones in NYC:

* structural reinforcement - this enters the realm of potentially needing a structural engineer to examine & sign off on.
* Permits? Plenty of contractors will try and do the work w/o permits, but major work like this, w/o permits, can be a disaster if the DOB shuts you down (fines now start at $5k). But permits require plans, and approval, and time, and money.
* Unknowns. Asbestos. Lead Paint. Further structural damage. Code issues. All unknowns, all potentially very expensive.
posted by swngnmonk at 1:31 PM on November 9

Last note on the subject:

If your friend doesn't know about it already, they should check out the Brownstoner blog & forums. Best set of resources relating to brownstone ownership/renovations issues around.
posted by swngnmonk at 1:43 PM on November 9

I think your friend needs to hire a competent architect and/or structural engineer and get them involved before going any farther. Based on what you said, I can not imagine that the work you said was needed could be done for anything close to what is budgeted.

A major renovation on a 16,000 square foot brownstone isn't something to even think about without a detailed plan and budget. Unless your friend is a lot more plugged in than it sounds, they do NOT want to be the only person dealing with a massive project like this. I have decades of construction and remodeling experience and I would beat my shins bloody with a baseball bat before I undertook that project without a team in place on MY side.

And forget trying to do it unpermitted. If the contractors giving the estimates were suggesting that, don't even consider using them.
posted by toucano at 1:53 PM on November 9 [1 favorite has favorites]

Nthing that $150K sounds way, way under what the final cost is going to be. That would be too cheap even in the Rochester area, where housing and labor costs are both extremely low--let alone in Brooklyn, where such things are not low.
posted by thomas j wise at 2:07 PM on November 9

That sounds very low. He needs to talk to several more contractors who have experience doing this sort of major renovation. He should get contractors who are recommended by people who have done this sort of thing. I like the idea of going to internet forums to learn more - but more importantly, try to make actual contact with people who have had work done like this and who can give personal recommendations. Try to get in touch with them in real life, so they can talk on the phone and give your friend the DL on what to expect. A gut job on a building that big is going to cost a lot more than $150k, I would think.
posted by Dasein at 2:47 PM on November 9

I made a huge typo. 1,600 square feet not 16,000.

Does that change the equation significantly?

Good advice all around, thanks!
posted by pakoothefakoo at 3:56 PM on November 9

Is this an estimate or a proposal? I've never gotten estimates, only proposals with every detail listed on them, and that was exactly what I paid.

I've never had that much work done at once, just a bathroom and a kitchen. I met with 4 contractors for the bathroom, got back 2 proposals, met with 5 for the kitchen and got back 4 proposals and in every case, the ones who listed the price for each small piece of the job were more expensive that the ones who just listed the work with a single price at the end, FWIW.

I hired the expensive company for the bathroom and the job ran like clockwork and finished sooner than they promised. I hired the cheapest company for the kitchen (I had other reasons than just price). Not only did the job take 50% longer than promised, but I ended up doing a lot of the GC's job for him. I was negotiating between the countertop company and cabinet maker. I would call him and tell him what needed to be done next and to send the electrician or whoever, which is the opposite of how it's supposed to work. The guys doing the work were skilled, it got done the way I wanted eventually, it was just hell getting them to finish things and to work together. If I weren't unemployed and at the house all day, it would have sucked. So tell your friend not to automatically hire the cheapest company if this is his first experience with remodeling.
posted by zinfandel at 10:31 PM on November 9

I made a huge typo. 1,600 square feet not 16,000.

Yeah, that makes much more sense. 100$/sq.ft. is still pretty cheap. $250/sq.ft. was more along the lines of what I would have expected (mind you this is for four years ago, when I stopped doing that kind of thing - building in NYC).

So no, it's not a reasonable price. Your friend should get as many bids as possible. More than five should give them a good sense of the range of prices. The best is to call people who come recommended (I think that's obvious), and then take the recommendation with a grain of salt.

If they're doing a gut, they need permits - the chance of the neighborhood busy-body shutting them down is too high to risk. So unless they have scads of time/patience, they need a 'real' contractor who will do it all for them.

Some friends of mine did their renovation all themselves, this is their blog of the job (their house is tiny).
posted by From Bklyn at 12:12 AM on November 10

I am working on a similarly sized project now. That number is way low. I would at least double it.

That said a project this large is really a job for an architect. There are plans that will have to be filed architecturally at least for any permeant for a job of this size. Which neighborhood are you in? If there is some kind of historic protection on the house, you are going to have to have drawings made by an architect and approved by the board. If you are doing structural work, the NYC Building department is going to require that you have engineered drawings. If you are replacing your water and sewer lines back to the main, you are going to have to get a mechanical engineer involved to deal with the DEP.

It is really much better to get a design team involved now. Experts will be able to evaluate the house, find out what needs to be done. Design it in the correct way. Detail it in plans that can be bid. Coordinate plans between trades. Develop a budge. Help you bid. And monitor construction. All the little details that you may not be familiar with in construction that really matter to the finial product, they are familiar with, they do it day in and day out.

If you need a recommendation, memail me and i can forward you contact information for a architect.
posted by ihadapony at 3:41 AM on November 10

I've passed along all the information. Unfortunately at the moment I don't have the details regarding exact structural work.

The building is in Williamsburg, just off Bedford Ave.

I've not marked any best answers as nearly all of the responses have been really helpful. Thanks y'all!
posted by pakoothefakoo at 8:17 AM on November 10