Saturday, May 19, 2007

Remodeling Questions

I've made my living as a remodeling contractor for over 20 years now. And in those 20 years there have been two questions that come up again and again. The first is "Why is it so hard to find someone to work on my house?" The second is "Why does it cost so much?" I don't know who will see it, but I thought I'd lay out my take on the answers to these.

One answer that applies to both questions is that there aren't enough people doing the work to handle all that needs to be done. I've read the contractors' magazines for 20 years. And there have been items and articles about the labor shortage in the building trades for almost the whole time. There aren't enough young people coming into the building trades to replace the ones who are quitting or retiring. I saw an article last year saying the average age of a subcontractor in new residential construction is 45. And my own experience on jobs goes along with this. The last new house I worked on was in 1996; in the month or so our crew was on that jobsite, I saw maybe one man who looked to be under 30. Of the crew of 4 that I was with, I was the youngest at 46. Back when I started in this work, there were 4 of us who got together to take on big jobs, such as roofing a large house or siding or interior trim in new houses; I'm the last one of the four still in the construction field. Age and injuries have taken a heavy toll; not too many stay in construction until retirement age. A lot of things in construction used to be considered young men's work (framing and roofing, for example) but now older men are doing them because there are too few young men. The biggest relief so far has been immigrants (legal or illegal), but they work out best on large crew jobs, with one good English-speaker to interpret for the rest.

A second factor on both questions is that construction can be a hard way to earn a living, in other ways besides the physical issues. To begin with, the whole field is rather seasonal. The winter is slow. Around March or April it starts to pick up. By June I'd often be booked up for three months out--one year it was five. After Labor Day the backlog shrinks to about a month or so, then by November you're going week by week, then day by day. In January I'd usually have only a week or so of work for the whole month, two at most. We learned to cope by saving all year so we could take a two-week vacation in January (there's no such thing as PAID vacation when you're self-employed).

Along with the seasonal work, you don't always get paid for a whole day's work. I've always told folks I'd do jobs from one hour long up to a month long. The main value of the one-hour jobs is that they often lead to bigger jobs--many people will try you out on something small and call you again for something bigger. But it is almost impossible to schedule more than half a day's work on one-hour jobs. People's own schedules and the variables in length (half an hour here, one and a half there, then a trip to the hardware store for something unexpected) throw things off and you can't get everything in. My real bread-and-butter is the week to two-week jobs, and the month-long jobs are nice when I can get them. Any longer than that and I start to lose other work because I'm tied up too long. And sometimes, especially in the spring, I have to take a half-day or a whole day out and get estimates out to people so I can keep the work flowing.

That brings up what is probably the biggest single expense in contracting--estimating. Everybody expects free estimates. In fact, they are not really free--they are paid for by the people who actually have work done. How many estimates does it take to get a job? It can be as high as 10 per job, in the commodity fields like siding or windows. In most remodeling, the experts figure you're doing well if you get one job for three or four estimates. I love repeat customers, because with them I often get 3 jobs out of 4 estimates. On the other hand, I've had people call up wanting some estimate in the spring--and that's all I hear from them until they ask for another estimate. I reached the point a long time ago where I don't even do a third estimate if the person hasn't had any work done at all. "Tire kickers" like that just run up the costs for everybody else. How much does it take to do all these? Generally I can kill an hour going to look at the job, sometimes two. The estimate itself may take an hour or so for a simple job, 8-10 for a complex job like finishing a basement or designing and building a deck.

Over the years I've seen plenty of fellows try to move from working for a contractor to contracting on their own; most start out charging their new customers what they were getting paid per hour as employees. After about 6 months they figure out that with all the time they are really spending, they'd clear more per hour as a minimum wage employee. A few learn to charge more for their work; most go back to being employees.

The above isn't a complete answer to the two questions, but it's a start. This post is getting long enough, but maybe I'll come back to the subject someday.