If one chooses to work with the team at Chill-Ax! Please read, be aware of and understand the following parameters by which Chill-Ax! operates. We are available for questions should you have any!
Chill-AX! provides construction services on a cost, plus a fee, basis. Chill-Ax! DOES NOT work with stipulated sum contracts and/or agreements.
We at Chill-Ax! believe a cost plus agreement is the most fair, win/win, agreement possible. See my reasons why at the bottom of this article.
What does “cost plus a fee” mean?
Cost plus = You will pay whatever Chill-Ax! pays, plus a fee for overhead and profit.
You will pay whatever it costs Chill-Ax! to perform the services and provide the final product contracted for. If Chill-Ax! receives a discount when purchasing materials, or other items, for your project, that discount is your discount on those specific items.
Chill-Ax! will provide a written estimate for the intended scope of work. However, the final cost of the project could be more, or, it could be less, than the estimate given. If Chill-Ax! gets the project done for less than the estimate, the savings is yours and stays in your pocket! Of course the opposite is true as well. If the cost to Chill-Ax! is more than the estimate to get the project complete, you will be expected to pay the overage expenses, with a fee, as well.
There are typically six categories that project expenses get divided into. They are;
Labor – including, but not limited to, on site field production, off-site shop production, tool and material acquisition and transportation, office project administration, tool equipment maintenance after use on your project, project superintendence, and……..more and other!
The cost of Labor will also include the labor burden, imposed upon us all by law. The labor burden is 50% of the specific wage and includes –
employer match of employee withholding of Medicare employer match of employee withholding of Social Security employer paid federal unemployment
employer paid state unemployment
employer paid workers compensation insurance
So, if an employee is paid $15 an hour, the billing rate will be $22.50 an hour for that employee. A $10 labor bills at $15, a $20 skilled man bills at $30. And so on. Also, if an employee works overtime on a project, the law requires that employee to be paid at the overtime rate of time and a half – at $15/hr regular employee rate, $22.50/hr regular billing = $33.75 overtime billing rate
Materials – any and all materials used to produce and complete your project. Including, but not limited to, newly purchased materials, new materials from Chill-Ax! inventory, used materials from any source including Chill-Ax!, fuel, power, water
Sub-contractors – From time to time, Chill-AX! Will require the help of specialists, like; plumbers, electricians, insulators, roofers, excavators, pool builders, and potentially others
Equipment – The labor force are required to provide their own hand tools. Chill-AX! will provide all the most commonly used power tools.
However, if the project requires other specialty equipment to get the job done, the project owner will be responsible for costs incurred in the rental or purchase of such equipment. This would include, but not be limited to, things like, scaffold, dumpsters, cranes, beam saws, demolition saws, jack hammers, compressors for jack hammers and the like, cement and mortar mixers, concrete pumps, other and more.
Fee – All of these expenses are logged and tracked on a spread sheet and totaled at the bottom. We add 20% of that total, to that total, for our “Fee”. This is our fee for being in business and having the ability to provide the services that gets you to your goals and dreams! This is for our overhead expenses, such as the office, computers, utilities, vehicles (does not include the cost of operation for use on your project, that is a direct project expense) and more. If we do our job well, and complete your project without causing ourselves expenses due to problems we caused, we hopefully have a little profit at the end! This usually goes back into the business to help us be more proficient at what we do!
Overhead and Profit Fee rate schedule = $0 to $150,000. = 20%
$150,001. + = 15%
NM GRT – New Mexico Gross Receipts Tax is added to the final sub-total. The amount of tax is based on the location of the project and is set by the state of NM.
Payment – All payments, except for final payment, are required in advance of any production. Chill-Ax! is NOT a financial institution. We DO NOT finance anyone’s construction project. Chill- Ax! will typically require a deposit of 50% of the estimated project budget, depending on the size of the project, to get started. At some point, based on production and the exhaustion of current owner funds on hand, we request another 30% deposit to continue to the end of the project, at which time we require the balance be paid in full – less any amounts in dispute for some reason.
For more terms and conditions, please see the “Contract for Services”.
I choose a cost plus contract because I believe it to be the most fair and appropriate agreement to use. Why? For several reasons.
- An estimate is exactly that. And nothing more. It is an estimate. I have been in the construction trades for over 35 years. In ALL that time and all that experience, I can tell you I have never done the same thing twice. Now, that does not mean I have plastered only once, or, that I have poured and finished concrete only once, or, that I have framed only one building. I assure you, I have plastered hundreds of buildings. I have poured and finished cement many, many times. I have framed many homes and other buildings, too, and much, much more. What I am saying is that every plaster job is different. Every cement placement and finish is different than any other placement and finish I have done. Nothing I do is done the same way twice. Why? Because it is all custom to the project and the clients wants and needs. It is impossible to know exactly what something is going to cost. Like I said, Estimate.
My estimates are made with significant focus and attention to detail and, are based on relevant experience and knowledge of the particular task or phase being estimated. I create a material list and get current quotes from suppliers and sub-contractors as needed. Then I use my experience and knowledge of the processes and products to ESTIMATE the amount of labor involved for the specific task or phase being estimated. Any special equipment required? How about sub-contractors? Sub-contractors must provide estimates, as well.
- As a contractor and, not an owner of a project, I am not a stakeholder. I do not own the property. I will not be paying for the production of the project, ultimately, and, I stand to gain no long term benefit from the production of the project. Actually, the owner is the stakeholder who will ultimately be paying for the project and stands to gain the most from the production of it. If not, why do it?
- I am charged with the duty and responsibility to do the absolute best I can to make sure the project comes in on or below the estimate.
- There are hundreds, if not thousands, of variables that effect the outcome of any project with a massive percentage of which are truly out of the control of the contractor. In fact, every person involved in the situation has an effect on the time frame and budget of any project, from job-site labor to supplier warehouse labor all the way through every participant up to the owner! Here again, the ultimate risk goes to the ultimate stakeholder/ employer, the owner.