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.