Tyler Grace: Based on where I stand the total job cost to
date, and what I have left and what extras we have, then I'm
actually going to get this job done for less than the original
budgeted cost of the project. Welcome back to another midweek
modern craftsman. I'm looking at myself right now, and I have on
a winter hat and my harness sweatshirt, and I feel like I'm
fully bundled up, but maybe my office is just cold, and it's a
little cold here in New Jersey, but today I have a really
exciting podcast for all of you, really, really exciting. It's on
budgeting. Let's talk about budgeting, because that's the
most exciting topic that I can think of. No All kidding aside,
I was sitting in my office. It's my paperwork day. It's Tuesday,
catching up on things, and I'm getting to the final invoicing
for my porch project that I'm ratching wrapping up. And I
figured it'd be a good opportunity to dig into what
that looks like for all of you. So that's what we're gonna dive
into today, budgeting, what my budget looks like, how I balance
things out, how I maintain that budget, how I stay on track. I
believe I did this for this job early on, as far as what my
budget looks like, I figured, as I'm wrapping things up, how I
structured this. So I think we all talk about budget and Nick
and I talk about maintaining a budget and how a budget is a
living, breathing part of our construction process. But what
does it look like in real life? So first off, I am TNM, so what
I'm doing is I'm establishing a budget. I'm doing pre
construction. That's a separate cost that's not included in the
construction budget. So for this job, I charged $5,000 for pre
construction, and that was to bring in the architect. It did
not pay for the architect service. That was separate. It
dealt with the township getting a variance, none of the costs of
engineering. We had to get a survey. All of that separate.
The $5,000 was my consulting fee for getting this job through
permitting. So it included bringing getting the survey
done, but not the cost of the survey. So being the liaison for
that process, hiring the surveyor, getting that done,
dealing with the township, some going to the zoning, meeting
with my client, and then working with the architect to ensure
that what we were designing made sense for the client, and then
working with the client to develop scope, budget and make
sure that everything aligned. So that was a separate cost here.
So my preliminary budget, what I go through, basically, I took
what this job looked like on paper, and what we had designed
and what the existing conditions were, and I started allocating
costs to this whole job. So everything from I included a
permit fee in there the engineering and the design was
part of the cost. Cleanup, temporary bathrooms, concrete
dumpster, general waste, dumpster protection for the job
site, work, landscaping, crush concrete for underneath the
porch, excavation, placing the footings, materials I needed for
the specified spread footings. We had some drainage, any
equipment rental that I had, my machine rental, right? So I
charge out to rent, essentially from my own business, my Kubota
excavator, concrete demolition. We had flat work concrete. So
that was a subcontractor removing and reinstalling a
fence in the yard. We have rough carpentry, rough carpentry
materials, exterior trim, all of my post wraps, all of my my
specific quantities of PVC, right? So I listed out one by
four, one by six, one by eight, one by 12. I have cortex in
there, red hot adhesive for the PVC, the screen system. Interior
work. Once I installed the new door, obviously the new door
roofing. We had a roofing sub do the roof. He did the gutters,
and he did siding on the existing gables and
Unknown: dormers on the house. He did the tie in to the
existing roof. We have storm doors we did on this job. Let's
see labor to install them. We have all the decking material,
all of the fasteners, the handrail that we need, the code
required handrail, and then a budget for electrical so those
are all the things that I budgeted for on this project,
that I tried to capture some sort of realistic cost. So those
are all of the costs that we had going into. Project that we
tried to capture and tried to basically account for within
this project.
Tyler Grace: So what I did first is I got the design paid for. I
got the survey paid for everything up front to get this
job going, just to make sure that I wasn't bearing the cost
of this project if something were to happen this for return
client. But still, I do. I do. I don't alter my process for
different clients. So then, when I went to start this job, I took
a substantial deposit that if all things go according to plan
and we remain on budget, I'll back out my final invoices out
of that, that deposit that was taken. But the goal with the
deposit is to cover me for my most exposed period of this job.
So I took a $25,000 deposit to start the job and for any of my
pay periods. The goal was to to never be in the red, so to be
able to maintain that money once I'm two weeks into an invoice.
If I'm if it's three weeks into an invoice, right, I'm covered
in whole until I get paid again, and then that $25,000 is
fulfilled again, just to make sure that I'm protected. So as
this job progressed, what I do is every day I keep account of
what materials I'm using, of my own supplies, what materials I'm
buying, and what labor I have on this job, whether it's my labor,
it's subcontracted labor, whatever that looks like. And I
account for this, and I maintain this every single day. So I go
through starting at the end of September, 22 and I bought a
screen door, I bought post bases, I bought structural
hardware, and I charge for that, and I charge a markup on that,
and then right I paid the balance of the patio door that
same day. So that goes on to my budget. I purchased structural
lumber that goes on to my budget, hangers, LP, sheathing
and tape. I had an hour of my own labor loading my truck up. I
had two hours dropping off permits, removing the fence,
setting the job up. I had a permit. Cost. Everything goes
into this. So the day I started, the actual job was the 24th so I
have anything that went into that, right? There were six
hours with me on the excavator. I spent two hours running to the
dump. I had a concrete dump fee, I had a fuel fee. I had to rent
a breaker. So all of this goes into my budget, and I'm
accounting for this. So then when I go to invoice, my first
work invoice was 922 through 10 eight. It was for $26,986.57 and
that was for all of the work that went in that I put in place
from 922 till 1028 so I I have $25,000 that I accounted for. I
exhausted all of that, and now I submit an invoice for basically
$27,000 so now I'm back in the green, right, and I'm paid, and
I'm not behind on this job. So I did this throughout the job. And
the way that I maintain budget while I'm doing this is I'll go
and I'll look at, hey, what did I account for demolition? And I
noticed on this job that I did not anticipate there being as
much concrete as we removed, because there was a lot of
concrete that was buried. So that affected my excavation
costs, that affected my time with my excavator. That also
affected how much fill material we had to bring in, right?
Because we brought an extra six tons of material out of there,
as far as concrete and brick and rubble. So I need then to bring
grade up so it affected three or four different aspects of the
project. So maybe that might affect the budget for the job.
Maybe it might not, but I make a note on my budget that these are
all extras, that if the job goes over, I can capture that cost at
the end of the job, but I don't necessarily want to invoice that
client for that money at this point. If it's I don't want to
say that that's a change order right now, because I may be good
on budget. So I'm going to make a note on my invoice. I'm going
to tell the client I think that we're good on all all aspects of
the job, except for we ran into more concrete than anticipated.
So we have a higher disposal fee, we have a higher excavation
fee, we have the higher equipment rental fee for the
time that it took, and then also we need to bring in more fill so
I just let them know, maybe we have that accounted for in other
areas of the budget, but right now, that's the scope that does
not align with the original scope that we accounted for in
our pre construction budget. So then. And the next invoice.
Period is from 10 eight till 1024 I have dump fees in there.
I have my labor. I have all of my material, pressure treated
material. I have my concrete sub payment, one payment, two in
there. I have an extra where we had to bring in eight additional
tons of crushed concrete to bring grade up, because the way
that it where we had to excavate and where we had to maintain
grade for the new patio, we needed to bring up grade on one
area of the property that we didn't realize initially. So
that was an additional $1,800 and that's to a subcontractor,
so I make a note of that. It's in bold and it's in red, that I
paid an additional $1,800 on top of our budgeted subcontractor
expense, and why that was so my client knows. So just right off
the bat, that's an extra because it's not my labor. It may not be
something I have accounted for in the budget, and that's just
an extra cost on this job. We may still remain on budget for
this project when I look at what the overall cost is, but this is
not something that I can reduce my scope, or I can create
efficiencies with my business to account for that. That's money
that's going out of my pocket to a subcontractor. So right off
the bat, I just want that to be an extra for my client to know.
And yeah, maybe we can get back on budget. But just right from
the outset, you have an extra $1,800 that I'm paying this
subcontractor. Right there's nothing that I can do about
that. We'll see what happens on the on the back end of the job.
So invoice two, I am through rough framing. We're getting
ready for finishes. I have deposits for all of my decking
material, so now I can start to verify. What did I budget for
finishes? What did I budget for concrete? What did I budget for
my rough framing? What did I budget for? All of my rough
grade? Are we on track? So I'm looking at my budget, I'm
looking at my labor, I'm looking at what our materials are, and
I'm understanding where we where we land. So on this project, I
wound up overestimating in my budget some of the material
costs that went into this job, some of the finishes, and it
costs less money. So right now I know, well, maybe we can squeak
that $1,800 subcontractor extra into the budget. Maybe we can
squeak the extra concrete that we disposed of and
Unknown: excavated and removed and dumped into the budget. So I
just have a general idea of that. Again, I have a
conversation with the client.
Tyler Grace: Here's what's owed, $31,000 here's where we stand.
I'm still confident on our budget, we're right in the
ballpark of where we should be, some things or more, some things
or less, but I'm feeling as though we're good at this point.
You know, more than halfway through the project, as far as
what our budget looks like, right? Are we on track at this
point? What I did when I invoiced for invoice two, which
was at the end of October, I looked at what I was paid to
date, I looked at the work that was put in place, and I looked
at what remained of my budget, and then I listed the extras
that I thought were affecting our budget, or could potentially
affect our budget in the long run again, allowing my client to
understand this so we had more concrete than anticipated, we
had more fill, we had more excavation demo and regrading. I
there was a hose bib that was leaking on the side of the
house, a minor but I did go and buy the parts for that. We fixed
that
Unknown: when we demoed part of the existing property, there's a
really not very well built brick retaining wall that kind of
crumbled. So that's an extra that we're going to have to fix
come the springtime. So I made note of that. There was more
trim work for the PVC that I anticipated. Maybe I can tweak
that in the budget. Maybe I can't, but I know that that's
somewhere that I feel I shorted myself on labor in our cost
estimate, there was an additional $1,800 for the Mason
and I also had more electrical scope than we anticipated. We
added some floodlights. We added more receptacles than
anticipated. So these are just all things that I'm noting. Hey,
these were more if our budget ends up running over, I need to
quantify these things and let the client know this is where we
stand. These few things were more than anticipated. It may
affect the budget. So as I'm going through my second invoice
for this project. I'm making sure that the work that's put in
place, regardless of where all of those numbers are, that the
overall budget is still relatively on track. If it's
not, I want to have a conversation with my client as
to why it isn't, and if it is, I want to have the. Conversation
as to why it may not on the back end, or if we've run into
something, how some of those extras may have to be accounted
for towards the end of the job. But right now, I'm feeling as
though we're still on track. I haven't started finishes, and
sometimes things can get funky with finishes and take a little
bit more time than anticipated, but I still feel as though the
budget is is relatively accurate in that the job is trending in
the right direction. So at this point, I probably have two more
invoices to go on this project, whether they're two weeks apart,
three weeks apart. I usually invoice every two weeks. This
one has been spread out because I had some traveling to do for
work. I wasn't there five days a week, four days a week, so not
as much work was getting put in place as anticipated. So I
spread out my budgeting a little bit more, but again, I make a
note on this as far as what has been paid to date, how much work
has been put in place, and how much budget is left after this
invoice. So moving into invoice three, and what I'm billing for,
which at this point would be, actually most of November, I
have communicated to my client everything they paid for, to
date, how much they've paid to date, what work has been put in
place, and what work may wind up being an extra cost, what was
trending higher than anticipated in our budget. So if so, if we
run into something in the last invoice or pay period, or work
period, or the second to last pay period, or work period that,
hey, these things had ran higher. We're going to need to
capture this cost on the back end. But right now I'm feeling
pretty good. I think that this customer understands how I work.
They understand that it's TNM, they understand the quality of
this project and what's getting done. And we've had the
conversation that, hey, there's details that me, we may want to
integrate into this project. Are you good if this is an
additional cost or this is more than we anticipated? And they
are, so we're going to keep moving forward with where we
are. I'm on to invoice three, which will be my second to last
invoice. I know what my last invoice will be, and that's
going to be in spring, because I have some stuff like topsoil and
seed, some final grading that I'm going to wait until it warms
up where we can actually plant seed, and I just don't want soil
in there and it washes out all winter. So we are into invoice
three. I have all the labor spelled out what everything's
allocated to, right? I have Tyler three hours framing. I
have a porta potty, cost deck, fasteners, concrete anchors,
flashing tape. I rented a break for this project. Every single
cost is accounted for. And then I moved down towards the end of
November, and I started running into some things that were not I
was not able to anticipate. So we went to wrap these columns.
We had purchased prefabricated columns from ASIC. They were
supposed to go around our six by sixes. So I measured the inside
of these columns. They are five and 1116 inside, they were
supposed to be five and three quarters, which I still feel is
tight for a six by six post, which can range from five and a
quarter to five and three quarters. And then, if it's not
perfectly straight, you're wrapping it with half inch ASIC
might be tight. So we ran into some issues, and I destroyed
three ASIC post wraps, which my client shouldn't bear that cost
that's on me. I kept trying to wrap them, but I realized, hey,
we're not going to be able to use these prefab post wraps. I'm
going to need to buy additional half inch material. I'm going to
have to miter, fold these and wrap them by hand. This is a
completely unanticipated cost, unfortunately, the client will
have to bear. But I still want to try and maintain budget here.
So I start, I have the conversation. Hey, the post
wraps that we got aren't going to work. We're going to have to
build them by hand. I'm going to have to get more material here.
We're going to have the labor of fabricating them and installing
them. It'll be an additional cost. So I in my budget, I have
bold and red materials extra, the half inch PVC, the
additional glue, the fasteners I need. I have the labor in there,
and I have this broken out as far as all the labor that was
put into making these posts. So that's an additional cost, and I
have all of the cost associated with them. $920.20 for
materials. $1,000 for labor. It's all spelled out there, and
it's in my budget. We go down a little bit further. We ended up
changing the screen system. So there was the architect had
speced a structural screen on the bottom, and then a different
screen on top, and we would have had to put. A lot of framing in
it would have reduced the size of the openings, and it would
have just really changed the feel of the porch. And once we
got it all framed and we got a trend in PVC, we wanted to
preserve as much of that look and that scale as possible. And
I felt that building all this out to put screens on the inside
was really going to change the look of the job. So I got a hold
of client and said, Hey, are you good if we change the screen
system. Once we change the screen system, we're going to
need rails in there. We're going to need guard rails for the
ports. We're going to have to make guardrails. So I have an
additional cost for the materials to make the
guardrails. I decided and elected to make them myself,
purchase the material, fabricate them, because they're going to
look better. We'll integrate it into our screen system, and also
it's going to cost less. So I have the cost of the extra
material and the labor separated within my budget in bold, in
red, for her to see what that cost was, something small, but
we went to go touch up all the interior paint, and ended up
patching some other areas of the house while we were there, and
the paint that the house had been painted with. It dried up,
so we had to buy additional paint. So that's in the extras.
So I get this invoice done, I have the total job cost to date,
everything up to this point. The total job cost I can reflect
what that looks like compared to what our initial budget is.
We're under budget, and I can look at what's left on my scope
of work to date. So I have extras that are left to date,
which is bringing in a little bit more fail. It's actually the
grade of the fence in the backyard. We want to raise up,
because our patio came up higher in one area, so we want to
elevate that fence. So we're gonna have to pull that fence
and lift that up. So that's an extra and then we also have
things that are just left on the budget, installing the screen
system. What else is left on this general cleanup punch list
items? So I look at what all of my budget is left, and I compare
that to what the job has costed to date. What's left on the
outstanding deliverables on the contract. And I can look at
where we are and what we're trending as far as budget. I
also, at this point, have added up all my extras to date, and I
look at what the extras look like. And I can say, here are
extras to date. They're $11,597.97
I can look at what I think we have left in extras, what's the
fence going to cost? What's the extra grade and we're going to
cost so I can say, hey, we're at $15,000 in extras for this job.
I can look at what the job cost to date, and then I can say,
hey, we're still on budget. We're $5,000 over budget. Worst
case, I'm $15,000 over the anticipated budget because of
these extras. But the rest of the job and the rest of the
scope is still on track, I think, based on where I stand,
the total job cost to date, and what I have left, and what
extras we have that I'm actually going to get this da job done
for less than the original budgeted cost of the project,
which is great. We did extra work that wasn't anticipated,
but we must have recouped enough cost within there that this job
wound up being right around what she thought it was going to be
in the first place. Maybe it's $5,000 more than she
anticipated, but according to our budget, I did roughly 12 to
$15,000 worth of work that I didn't anticipate. But there
must have been numbers within that budget that I had
overestimated initially, that are coming down under. So the
client pays what the client pays. She understands at this
point, with one more invoice cycle left, that will get done
in spring, that the job is on track, that our budget is on
track, and she understands what the extras are. She understands
what she's paid to date, right? So she's paid that extra $25,000
so what I'm invoicing her for now is actually less than what
she owes me, because I'm backing out that $25,000 she's already
paid me for that at the first billing cycle. I know that what
I have left on the job come springtime is going to be a
small number, so I'm going to back that out, and I'm going to
have an invoice for what's due to date, and that's going to be
everything from this past billing cycle, minus that
$25,000
Tyler Grace: so at that point, she's giving me a check. I'll
wrap this job up, I'll punch it out, and I'll come back at
Spring and we'll execute the rest of the contract, which are
essentially extras at the end of this job. But that's how I'm
maintaining the budget throughout this project. And all
of it's done through notes. It's done through an Excel
spreadsheet, and it's done just through tracking payments. It's
done through looking at my initial budget. So I have my
initial budget up top of my spreadsheet, and then I track my
job cost right under that. So I can say, Oh, hey, here's what it
took me to frame this job out, all the labor of everyone
included. I can go up and I can look at what I anticipated for
labor costs and say, Yeah, we're right on track, or we're within
a few hours, or maybe. Maybe we're slightly over. I can look
at all the PVC that I budgeted for up top right. I have ASIC
post wraps, $3,300.04 by four. Post wraps, $2,400 one by four
for the lattice, 1600 20. I even put 50 quantity PVC for the
lattice, made a vertical one by four. So I have all of these
notes. I have one by 12 PVC. All this spelled out. I can go down,
I can look at my invoice from the lumber company and say,
let's see, hey, my PVC costs x amount. And then I can go up and
say, hey, you know what? That was $2,000 less than we thought.
So I have $2,000 worth of wiggle room in this budget to get
things done the way that I need them done again, T and M. So my
client is paying what the cost of things are. I'm creating as
realistic of a budget as possible, from regards to
schedule, budget scope, but it may not be 100% accurate. It's
my job, throughout the course of that job, to communicate to the
client how that budget's trending, where we've gone over
what may cause an increase in price. But wait, what may not
right? If I go to the client say, Hey, we're over on this,
we're over on this, we're over on this, it's $10,000 more,
Unknown: and it winds up not being $10,000 more, it makes it
look bad on me. So I say, hey, look, we're trending at $10,000
more on this job, I felt that I may have over budgeted the
beginning or the end part the finishes of this job, right?
That I may have accounted for extra PVC. I may have accounted
for extra time. So I'm going to say, hey, we're trending that
we've spent there's some tasks that have been longer or more
than we anticipated. Maybe it's, it's to the tune of $10,000 but
I think that we have space in the budget. So I can look at my
budget, and I have a feeling of where we're trending. I have a
feeling on a project of this scale, where I have wiggle room,
where things can be made up, where I can spend a little bit
more time. And I understood right after my second invoice, I
understood what had been put in place, how much work was left
and how much budget was left. And I understood that I needed
to hustle some I knew that there was a lot of work that had left
to be done, and that I had to be very efficient, that I had to
watch how much I was I was how many hours I was accruing on
this project and what I was spending. I knew that as I as I
went into the second half of this job, that my budget was
close. I knew that there were some things that we ran into
that took a little longer and cost a little more than we
anticipated. So I knew on the back half of the job that I had
to I had to be more prudent. I had to be diligent in how I was
managing this job, on what we were paying for, on managing my
subs, on making sure that we weren't overpaying, that we were
getting the scope that we delivered, and that if we made
changes, how they were going to impact the budget, and properly
communicating that to my client, everything has gone pretty much
according to plan. I understood how it was going to I understood
how the job was trending. There's some things towards the
end of the job that wound up being extras that might cost a
little bit more, but they were communicated to the client. I'm
still aiming to execute this contract within budget, even
with the extras, because how's that not a win? I got paid for
all of my time. The client got everything that they wanted,
plus some possible upgrades and a better project than they
anticipated, and it's still for the initial budget that I put in
place. Like, if that's not a home run, I don't know what is.
So that's how I manage my budgets. That's how I manage my
projects. And again, at the end of this, when I send this
invoice out, and I have one more billing cycle, I'll know, and
the client will know the total job cost as of today, right? I
have that number to the penny to the 17 cents on top of the
number. I have all the extras. I have the anticipated extras. I
have paid the date, and I have what's due to date so they are
fully aware of everything that's gone into this job. They
understand all the extras, they understand every cost that's
gone into it, and they understand how every decision
that we've made has impacted that cost. So I'm good to close
this job out till spring, and we have a general idea of what the
balance of this contract will be come springtime, but I made sure
that I've managed this project properly. I also this is a
client that I've worked for for so long as things have gotten a
little hectic, a little stressful, as as trimming out
this job had taken a little bit more than anticipated, I
understood it's a really great client, that I've really enjoyed
this aspect of the job, that it's a really amazing job, and
I'm getting a lot of good photos from it, and it's something that
I could get photographed if I wanted to, and I'll probably
land another job or two that's similar to this, from this, that
I am absolutely willing to concede some of my time to this
project if I'm going over budget, and I feel like, hey,
it's five grand over that. I. Don't feel like she should pay,
or that she really doesn't want to pay. I'm more than willing,
understanding all the costs of this job, to say, You know what,
I'm going to concede that money because I made the money that I
needed to elsewhere on the job. I know that there were markups
that made me money I got. I know that I captured all of my time.
I know that she was a fantastic customer. I know that that
$5,000 is not going to make or break me, and I feel like this
is the right thing to do if it were to come to it. I have the
ability to do that because I made my money throughout the
job. I didn't get burnt throughout this entire job. And
then say, Hey, I'm going to concede $5,000 I made the money
that I needed to
Tyler Grace: everything's all good on my end.
Unknown: So I manage the job with that in mind, right? I'm
not going to stress out, and this last week of time, or two
weeks just do a crappy job or put pressure on people to get
done. When we've we've spent this much time, it's not worth
rushing at the end of the job to say I need to maintain this
budget, and I'm going to throw everything else out the window
and just slap it up. No, I'd rather concede a little bit of
my time, if need be, and continue to knock this job out
of the park. Because I made money throughout the whole job.
I didn't work for free. I made all my markups, anything that
was extra, anything that we ran into, the client, was very
understanding. So life's a two way street, right? She's been
very fair. She's been very understanding. I've worked for
her for almost 15 I think it was before Selby was born, so 13
years, and I'm going to be appreciative of that. And if
that's a slight concession on my behalf, I'm more than okay with
that. So that is my project. That's my budget. That's how I
ran through this. I know last time I did this, Dave wanted to
show some of the spreadsheet. I'm not willing to show the
numbers of what this job totals, just because it's my clients
business and it's it to me, she didn't sign up for that. If you
have questions about it, yeah, I'll answer questions offline.
But I would, I could show a separate spreadsheet if it were
helpful for for you guys and girls, but for me, I'm not going
to share this spreadsheet with you, so you're just going to
have to listen to this podcast and maybe imagine what it looks
like and what the numbers look like. But that being said, it's
the same as every other one of my spreadsheets, right? I have I
have line item budget, I have scope, I have specifics
attributed to every single task, and I have payments. I have
credits. I have outstanding payments due, but I'm not going
to show the spreadsheet again. David asked me if I could share
that. I'm not going to share that, just for sake of
preserving my clients private matters. She didn't sign up for
me showing all of the financials of this project. So I hope that
this helps you guys and girls understand how I work, how I
manage jobs, how I how I manage add ons and extras on jobs at
the beginning versus the end of the job, how I invoice, what I
leave outstanding. All the information with budgeting. I
know that we talk a lot about budgeting, that we manage jobs a
certain way, but in real life, how am I putting that in place
to ensure that my job is is staying on budget and staying on
task? And if we've run over, what does that look like, and
how am I addressing that? So hopefully this helps all of you
have a better understanding of that. I appreciate it. I will
catch you all on the next one.