Money Issues: Estimates, Contracts, Quotes, Bids and Purchasing
Pricing all the elements of a project like a kitchen can be complex. Each quote you receive should be on a standard printed form specifying price, terms of payment, what exactly is being done, who supplies what materials and when the work will be performed. The quote should also provide for a method of resolving conflicts.
At the beginning of the process much of the pricing will be estimates, made in good faith but not accurate to a final amount. Use these estimates for planning and when you have chosen the contractor(s) you want to work with have them prepare a specific quote. Most standard quotes are signed by the contractor and provide a place for your approval. Once you’ve worked out the details, write in any changes, have the contractor initial them with a date and sign the quote yourself. The quote now becomes a contract binding both parties. Usually you’ll make a deposit to get the job started and work will commence.
Payment Schedules
The terms of payment are usually based on meeting various goals or stages in the process. The contract may start with a good faith deposit of one quarter or one third of the total. A second payment may occur upon completion of the next stage, continuing until the project is complete. It is common to hold back 5-10% of the total until after the entire job is complete to ensure that any final repairs or punchlist items get completed.
Your GC may be required in your contract to hold funds in escrow to cover any subs taking off with your money or not completing a job properly. In lower budget jobs this is less of a risk but large and expensive kitchens can involve enough money to consider having your contract approved by an attorney familiar with construction. Most of the time you can and should work it out with the GC yourself. If you have a construction loan from a bank for the project they will only disperse funds upon completion of various stages after an inspection. You should be equally careful with your own money.
Who Buys The Materials?
Before you get any estimates or quotes you and your general contractor should sit down and develop a strategy for the purchase, delivery and storage of materials. Each contract must specify who supplies what and when in clearly understood terms. See our Section on Demolition and Purchasing for more on this critical issue
