10 Years Later and I Understand THIS About Contractors

TLDR
Price, speed, and quality are not a pick-two problem. You can get all three when you understand the work, keep bottlenecks out of the crew’s way, and define quality in the scope.

Table of Contents

Price Has Three Parts Plus Three Taxes

Everything a contractor charges you should trace back to one formula: man days plus material plus a reasonable markup. That’s the honest version of the price. A guy costs $200 a day. He’ll burn $100 in material today. I want to make 20% on top of that, so the day costs $360 when I bid it out. If a job takes two guys five days, that’s ten man days, which is $3,600 to a customer.

The $3,600 result is the anchor in this example, not a price rule for all work. The man day formula is the habit of asking “how many people and how many days?” each time you review a bid.

Man days, materials, and a reasonable markup give you an anchor. The skill is learning enough to test a bid against it.

The Fear Tax

The fear tax is what happens when the contractor is scared of the work, or senses you are scared of it, and prices in the uncertainty. Sewer lines. EPA work like asbestos. Roof structures nobody wants to crawl. When the job has a scary reputation, the whole industry prices it high because they know the customer won’t push back.

There’s a second shape of fear tax that has nothing to do with you. It comes from the scene. If I walk a contractor through a house right after a tenant move-out and there’s rotten food in the fridge and fleas in the carpet, their brain stops seeing the $5,000 job and starts seeing the gross job. The number may reflect both. My move is to clean the property before the bid so the crew can see the real scope.

I reduce the fear tax by explaining the work. Know your scope of work, walk the property with the bid in your head, and show the contractor the path you expect. If the price still includes uncertainty you cannot reconcile, get another qualified bid. You can’t test a bid against the man-day math while the scope is still unclear.

The Slop Tax

The slop tax is the tax you pay for somebody else’s bad business. Most contractors are great at the trade and terrible at running a business, and it’s a real thing. The solo operator who is smart and sharp and keeps track of his hours is the cheapest crew you’ll ever hire. The moment he brings on three guys, he’s a crew leader, and his efficiency drops. The moment he puts one of them in charge of another three guys, the numbers get ugly.

Nobody great at construction management comes out of college to do cheap flips in crappy neighborhoods. They’re building hotels or spec neighborhoods. So the shop ends up with a middle-manager who is worse at the job than the owner was, managing guys who don’t understand the vision either. You fund that inefficiency line-by-line through the bid.

The way out is the same way in. Anchor on the man-day math, ask how many people and days the work takes, and decide whether the operation’s inefficiency is being passed to you.

Pro Tip
The sharp solo operator who knows the work and tracks time can be the most efficient crew you hire. Each added layer of weak management can add slop to the price.

The FU Tax

The third one most people don’t know exists. A fu tax is the markup a contractor tacks on when they don’t want your business. The job is a real $3,600 job. They bid $7,200. If you accept, they’ll do it for the premium that buys off the annoyance. If you walk away, fine. They didn’t want the work to begin with.

I came up with this after talking to somebody in my community who kept getting weird bids. Too high across the board, from every crew he called. I told him the truth. They think you suck. Either you’re confusing them, or you’re trying to chisel them, or you’re making their lives harder than the job is worth. They’d rather not work for you, so they FU-tax you out of the deal.

This one is brutal because it’s about you, not the work. The fix is a mirror. Are you clear? Are you prompt? Are you reasonable? Do you pay on time without arguing? Those are the parts you can fix. A better customer may get a more workable bid, but the source does not promise that every high price will disappear.

Speed Is About Bottlenecks, Not Hours

Speed is not whether a floor crew finishes in three days instead of five. Those two days don’t matter. What kills you is the three-week gap between the floors finishing and the next trade showing up, because the next trade got pulled onto somebody else’s job while yours was waiting.

contractors are not your employees. Your job is one of several. They may be on your site one day, away the next, and back later. Gaps are not the main problem. A blocker that sends the crew away and makes it hard to restart is the real delay.

The biggest bottleneck on your job may be you. On my own house, the plan changed to a countertop that had to be ordered. My contractor had to find the stone and work outside his normal vendor network. The crew moved to other work while that admin task sat. I said the change delayed the job by two months.

Dumb Mistake
Assuming the contractor will restart at the same speed they stopped. A blocker can send the crew to other work, and clearing it does not guarantee that they can return immediately.

The fix is to look ahead. Anticipate every admin-flavored decision, order, or call. Make them in the first week, not the week they’re due. The lazy pm posture is about eliminating the bottlenecks you cause, not supervising the work you hired out.

Crews also try to keep their most skilled people on tasks that require skill. They need simpler work ready for the less-skilled crew members. Clear blockers so both kinds of work can keep moving.

Then be the customer they choose. My rule is to be likable and somewhat forceful. Do not push so hard that the crew hates the job, but do make it harder to skip your project without a conversation.

Quality Is Adherence to Scope, Not Craftsmanship

Quality is not high craftsmanship. I’m not building a jewelry box. I’m putting LVP floors in a rental-grade flip at the baseline of the neighborhood. Quality on that job means the floors run front to back, there are no transition strips in the doorways, the doors get undercut, and the scope of work is followed.

If you want actual craftsmanship, you’re hiring a specialty trade at a specialty price. That’s fine if the exit justifies it. For most of what I do, it doesn’t. Specifying craftsmanship on a baseline flip is asking for the whole bid to go up for no return in arv.

Basic trade details matter. In the source, I use paper tape at a ceiling-wall corner and corner bead at an outside corner as drywall examples. They are examples of the defined installation I expected, not a substitute for the product instructions, adopted code, or the actual assembly. State the method in the scope and hold the crew to what everyone agreed.

Set the scope, set the expectation, hold accountability. If you said it and they agreed to it, they get paid when they do it. I’ll give a little on the margins. I don’t give on the spec. That’s the game.

Quality is adherence to the clear scope of work and trade rules the crew agreed to follow.

Why You Can Control All Three

I reject the idea that you must pick only two of price, speed, and quality.

  • Price comes back to man days, material, and a reasonable markup.
  • Speed comes from removing blockers and keeping work ready.
  • Quality comes from a clear scope and clear expectations.

That control is built, not wished into place. Gain knowledge. Put it into practice. Knowledge times experience equals skill. The point is not to hire a “great team” and hope it figures out the job. You build enough skill to set the plan and keep control.

FAQ

How do I know which tax I am seeing?

Do the man-day math before you read the bid. Then ask what is driving the difference: uncertainty about the job, an inefficient operation, or a contractor who does not really want the work. There is no percentage chart that diagnoses it for you.

What is a reasonable markup?

There is no universal number in the source. I used 20% in one example and said someone else might use 30%. The point is to separate a normal business markup from labor, material, and the extra costs you are trying to understand.

Should I hire the cheapest bid?

The source does not say the cheapest bid always wins or fails. Use the man-day math to understand what the bid assumes. Then compare the scope, crew, days, material, and markup rather than relying on price alone.

How do I reduce the FU tax?

Ask whether you are confusing the crew, grinding the price, or making the job harder than it needs to be. Be clear and likable. Be forceful enough that the job is not easy to skip. The video does not promise that every high bid will then fall.

This is my first contractor. Where do I start?

Write the scope, ask how many people and days the work should take, and make key choices before the crew needs them. As the work moves, look ahead for the next thing that could stop it. That is the beginner version of controlling price, speed, and quality.