520: The Problem With High-Profit Jobs In The Construction Industry

<h1 style="text-align: center;"><span style= "color: #0000ff;"><strong>This Podcast Is Episode Number 520, And It's About The Problem With High-Profit Jobs In The Construction Industry</strong></span></h1> <p><span style="color: rgb(0, 0, 0);">Many problems can be traced back to the "Halo Effect," which happens when a contractor thinks, "We are so good at (fill in the blank) we should expand into (fill in the blank)."<br /> <br /> The most common situation is when a residential remodel contractor with a reputation and a substantial company generating 15% or more profits decides to start building custom homes. Or the opposite, a home builder who decides to branch out into residential remodeling.<br /> <br /> <span style="color: rgb(6, 0, 255);"><strong>Residential Remodel Contractor Building A Home</strong></span><br /> <br /> The processes, tools, equipment, materials, skills, and invoicing procedures required to build a house from the ground up differ entirely from modifying a home with people living there.</span></p> <p><span data-preserver-spaces="true">The remodeling contractor uses a form of "Cost Plus" or "Not To Exceed" to provide the homeowner with the scope of work and a contract price the bank needs to finance the construction. That process can work for a residential remodel because the house is already in place, which helps define the size and scope of the project.</span></p> <p><span data-preserver-spaces="true">The size and scope of the homeowner's dream house are limited only by what the building codes will allow. When the labor, material, other costs, and subcontractor bills pile up, the remodeling contractor asks for a construction draw and is told the bank needs a </span><a href= "https://www.fasteasyaccounting.com/payment-application-for-residential-remodelers/" target="_blank" rel="noopener"><span data-preserver-spaces= "true">Pay Application</span></a><span data-preserver-spaces= "true"> filled out and submitted. Then it will take a while for the bank inspector to review the project and approv