Book Table of Contents

What the homeowner will learn

What the homeowner will not learn

Pat Fay’s class

The standard contractor method of home construction and why they are so expensive

The best scenario offered by the general contractor

The surprise change order

Unpaid suppliers

Not included in the contract

Change orders for minor errors and omissions in the plans

The building inspector caused additional work

The homeowner pays for excellent quality materials but the general contractor installs the cheapest materials possible

The homeowner expects high quality workmanship but only poor or average quality workmanship is delivered

General contractor says the work is completed but it is not

Excessive subcontractor markup by the general contractor

The worst scenario offered by the general contractor

The differences and advantages of the Pat Fay Method

No method can provide you with complete protection

Why manage your project yourself?

Reduced stress

Quality of workmanship

Quality of materials

Control

Lower overall construction cost

Arbitration, not lawsuits, to settle differences

Be wary of construction management books meant for industrial or commercial projects

Qualifications & time needed to manage according to the Pat Fay Method

Skills needed: communication, organization, records and knowledge

Know what you want

How the remodel or new construction process will affect your life and your relationship with your spouse or significant other

Work as a team to build respect in your family relationship

Select one person to be the final decision maker (preferably not the man)

New construction is a hard project; a remodel is even harder

Where to live while construction is underway

You will feel one of two ways at the end of this book – empowered or overwhelmed

This is a new method; we can expect push back from those vested in the status quo

Your house theme or project mission statement

For the homeowner the planning & preliminary design is one process

What is the planning process?

Planning is fun

What kind of project is it?
- Minor projects
- Major projects

Defining the work you want to accomplish

Examples of the planning process
- Kitchen, bathroom, family room

What is the preliminary design process?

Preliminary design is not as much fun
- Cost considerations

Doing your preliminary design
- Sketching
- Floor layouts
- Let the ideas grow in your mind
- Plan and elevation views
- The use of pictures to define the design

The 3-ring binder is the backbone of your planning & preliminary design process

What should go into your design binder?

How to organize your 3-ring binder
- The section tabs you may want to use to organize your design binder
- Write you ideas down on a piece of paper, date and file

Your first call and visit to the city about your building permit

The city’s permitting requirements

Review the requirements only; do not try to understand them

You want a building permit
- The best reason to have a permit
- Having a permit affects your house resale value
- Small projects may not need a permit

Make your major changes in the planning/preliminary design phase

Purchasing pre-designed plans

Finalizing your planning and preliminary design

Copy for your architect or building designer

How long should your planning and preliminary design take?

List of section tabs for 3-ring binder organization

Why to have meetings

The five types of meetings under the Pat Fay Method

Where to have the meetings

When to have the meetings

Who should be at the meetings?

How often should you have the meetings?

The meeting agenda with a time limit

How to conduct the meetings

Take meeting minutes

How to behave in the meetings

You and your spouse are a team of professionals

There is no room for pointing fingers of blame

How to respond to controversial ideas or proposals

Closing the meeting

Brainstorming

Problems that happen in meetings

Guidelines

Sample of agenda

Sample of meeting minutes

Does the homeowner need an architect or building designer?

Why you need an architect or building designer
- The architect is the expert in the building code

What is an architect?

What is a building designer?

Do you need a structural engineer?

Why you need a structural engineer

Do you need a civil, electrical, or mechanical engineer?

Do you need an interior designer?

The design build contractor

Finding an architect/designer

Interviewing the architect/designer

The second interview

Final selection of the architect/designer

Negotiating with the architect/designer

The most important thing to negotiate with your architect/designer

Other terms to negotiate with your architect/designer

The design schedule

What you can expect to pay for design services

Lump sum fee vs. an hourly rate for design services

Signing a contract for design services

The drawings you should receive from the architect/designer

Have specifications and material requirements on the drawings

Purchasing pre-designed plans

Working with your architect/designer

How to interact with the architect/designer

The preliminary design phase

Increase to the design fee as a result of late owner changes

The final design phase

You are the final decision maker

Other services provided by your architect/designer for an additional fee

What is a schedule?

Two types of schedules

High level schedule

Low level detailed schedule

The two kinds of schedules

Straight line activity schedule

Modified straight line activity schedule

The Gantt chart

Common tracking elements   

What goes into your schedule?

The elements of a schedule

Where does the homeowner find out how long a construction activity should take to accomplish?

Is scheduling difficult?

Build in buffer times

How to make your project schedule

Draw your own schedules

The use of the schedule during your project for time and cost

The biggest scheduling issue Pat Fay encountered
- One contractor on site at a time

What to do when a schedule is not being met by the contractor

What to do when a contractor is way behind schedule

Contractor is about a week behind schedule but on site daily

Contractor is several weeks behind schedule and on site only infrequently

Contractor started the project but only worked a few days and then disappeared

Schedule disadvantage of the Pat Fay Method          

The realities of scheduling in the homeowner construction world

How long will your project take?

How long did Pat Fay’s new house project take?

Schedule of project activities in building Pat Fay’s house

Example schedules

High level straight line schedule, SCH-1

High level modified straight line schedule, SCH-2

Low level detailed straight line schedule, SCH-3

Schedule of activities from Pat Fay’s house, SCH-4

What is a building permit?

Why you want a building permit?

Why your city wants you to have a permit

The homeowner’s responsibility in regards to the permit

The homeowner’s responsibility in regards to the building code

What is the building code?

Why there is a code

The building code is a minimum requirement only

The code is a science and an art

Your state has a building code

Your city's amendments to the code

Working with your city to get your permit

The building official’s role in applying the code to your project

The personality and attitude of your city

The Pat Fay Method is allowed by the building code
- A word about the State of Louisiana

Pat Fay’s permitting experience

Keeping notes and your cool when dealing with the city

Questions you do not ask your city

Questions you do ask your city

Legal complaints against your city regarding your permit

There are different departments in the city

What to do when your permit seems to be lost in the city

When you do not to use your architect/designer in the permit process

When you do use your architect/designer in the permit process

Be wary of beginning your project with only a demolition permit

What to do while your project is in permitting

What to do when you receive your construction permit from the city

The Building Inspector 

The inspection department is not the building department

The role of the city in the enforcement of the code

The building inspector’s right to inspect

The work must remain accessible

What work needs to be inspected by the city inspector?

The homeowner’s inspection duties

Speak to your personal homeowner insurance agent

Your homeowner's insurance & the extended umbrella policy

Homeowner’s construction insurance

Coverage for liability, material theft and vandalism

Discount available before construction starts

The contractor’s insurance coverage

Have your name listed on the contractor's insurance

State industrial insurance and workers compensation

On site construction safety and the construction safety plan

A fence helps

Why is safety important?

Who is responsible for safety?

The homeowner’s role in safety
- Safety for the homeowner’s family and friends

The contractor’s role in safety

What is safety?

Safe work environment

Unsafe behavior

Personal protective equipment (PPE)

Safety for the homeowner on their own construction site

Contractor safety

The contractor’s safety meeting and safety plan

Providing hardhats and safety glasses

General safety rules for the homeowner

General safety rules for the contractor

What are contract documents?

Contract law and the home construction project

What is a contract?

What is a contract versus what is a proposal?

The contract is a document for both the homeowner and the contractor

The intent of the contract agreement

Honoring the intent of the contract by the homeowner

Honoring the intent of the contract by the contractor

What should not be in the contract: paying 50% of the money at the time he contract is signed

Why the homeowner should not pay 50% of the money

The contractor states they need the money to buy materials.

Material can be sent to the homeowner's project on credit.

The contractor can go to their banker.

The contractor can pay for the materials themselves as their bond

Exceptions to the rule of not paying 50%

What should be in the contract?

How long and complicated should the contract be?

When to sign the contract

Do not follow mainstream construction management books

How to modify the contractor’s contract

What is an addendum to the contract?

The addendum is a simple way to modify the contractor's contract

How to attach the addendum to the contractor's contract

Mark up the contractor’s contract proposal

What is a scope of work?

What are specifications?

How to use specifications to define materials and quality

Types of contracts to use in home construction

Fixed price contract

Time and material contract

Offered price contract

Material and labor costs can be broken out

Equipment costs

Why the homeowner wants to see costs broken out

How to control change order costs

Use of the No Verbal Changes form

Understanding liens

What is a notice to lien?

What is a lien?

What is a lien release?

The importance of receiving the lien release

How to resolve an impasse between the homeowner and the contractor

When the homeowner and the contractor agree to disagree

What is a change order?

How the change order can ruin the homeowner’s project

Legitimate change orders

Example of a legitimate change order

What are not legitimate change orders

Minor errors and omissions on the plans

Answering questions or clarifying something in the plans

The surprise change order at the end of the project

The building or site conditions are different

The building inspector's requirements have caused additional costs

Any change that does not increase labor or material costs.

Expensive materials that are shown on the drawings or were agreed to in writing.

The increase in cost change order for no legitimate reason

How to respond to a change order request from the contractor

How to control change orders on your project

Use the No Verbal Orders (NVC) change order form

The use of the NVC form must be negotiated into the contract

Define the hourly rate to be charged for change order work

When to use the NVC form
- Increases to the cost change order
- Decreases to the cost change order
- No cost change order

How to use the NVC form

Example of how to fill out a NVC form for a new door
- If you cannot come to an agreement on the price

Sample NVC form

Why is a contractor called a contractor?

What is a contractor?

Definition of the terms: general contractor, builder, contractor, and subcontractor

Pat Fay’s opinion of contractors

How to find contractors

It is a myth that contractors are hard to find

Look in the yellow pages

Talk to your friends and associates

Look on the Internet

Contact local material supply houses

Do not pass up building sites

Look in the smaller outlying town newspapers

Place your own advertisement in the newspaper

Go to a freeway overpass

Home Depot and Lowe’s

- Advantages and disadvantages of Lowe’s and Home Depot

- Pat Fay used Home Depot to install a roof

Costco and other companies

If you do have difficulty finding contractors in your area
- Move down the contractor food chain
- Pay a premium or bonus

How to screen contractors during the selection process

Remember you are forming a business partnership

Discuss your project and what you are planning to do

Two questions the homeowner must ask the contractor
- Are you an expert in your field of construction?
- Why should the homeowner use your company?

Review the contractor’s project 3-ring binder

Look at the contractor’s current project

Look at the contractor’s previous work

Contact your State Department of Labor and Industries

Getting pricing from the contractor

Ask the contractor if they charge for an estimate

The detailed price breakdown will cost money

Final selection of your contractors

Negotiating construction start date

Negotiating price
- Comparison to the homeowner’s cost estimate
- Comparison to other prices or bids

Negotiating contract terms with the contractor

When to sign the contract

Problems contractors have in conducting business

Knowledge and experience

Education

Business issues

Construction labor issues

Material issues

Quality and workmanship issues

Mistakes

Guidelines for contractors who want to work according to the Pat Fay Method

Conversation between Pat Fay and a successful general contractor

Homeowners need to come on site daily

There should only be one decision maker in the construction process

The issue of change orders and charging the homeowner additional money

Contractors are builders first and businessmen second

The con man contractor

There is no room for trust in home construction

The key to the con man contractor

The con man contractor and the law

About the con man contractor

What motivates the con man contractor?

How to identify the con man contractor

Legitimate contractors act insulted

The Pat Fay Method is a new idea

Pat Fay’s two experiences with the con man contractor

The pure Pat Fay Method for managing the home construction project

Hire a different contractor for each phase of the project

Who are the different contractors the homeowner needs to hire?

Acceptable modification from the pure Pat Fay Method

Two methods of driving down the project cost

Competition drives down the project cost

Bidding out project work packages
- The pre-bid walk through
- Contractors see the actual work site
- Contractors see each other. Therefore, they compete
- An interesting thing happens at the pre-bid walk through
- How to conduct the pre-bid walk through
> A simple example: replace kitchen cabinets
> A more complex example: concrete foundation
- Other details for the pre-bid walk through

Request for proposal (RFP)

How to issue the request for proposal

A sample RFP letter

Material quality is important

Strength and grade type materials

Finish materials

Methods of acquiring the materials needed to build your project

The homeowner buys the materials
- Getting good pricing for materials

Having the contractor supply the materials
- The contractor discount
- Does the homeowner share in the contractor discount?

Where to buy the materials
- The advantage of Lowe's and Home Depot warehouses
- Home Depot and Lowe's install the materials they sell
- Disadvantage of Lowe's and Home Depot
- Pat Fay used Home Depot to install a roof

Paying for materials

When the homeowner buys the material

When the contractor buys the material
- The two party check
- What if you never received a notice to lien from a supplier?
- Get your material lien release
- Review of notice to lien, liens and lien release

Inspection and counting of delivered material

            Incorrect or damaged material

What is the construction phase?

Being prepared for the construction phase

A few steps to get started

Step 1: Build the construction phase 3-ring binder

Step 2: Take pictures before, during and after

Step 3: Have an arbitrator lined up

Step 4: Have insurance coverage updated

Step 5: Call before digging underground

Step 6: The homeowner hires their first contractor and turns them loose

A review of construction safety

What to do if the contractor is not following their safety plan

Managing relationship with the contractor during the construction process

The homeowner visits the site daily.

Working and negotiating with the contractor on site

Have a single point of contact

This is a business relationship           

Short construction coordination meetings when the homeowner comes on site
- Leaving notes for the contractor

Maintain communication
- Allow the contractor to vent
- Do not embarrass the contractor in front of their workers
- The homeowner’s behavior
- When to call the police

Managing the quality of the work by monitoring and inspecting the work

Why should the homeowner inspect daily?

An example of what can happen if the homeowner does not inspect

Carry the construction 3-ring binder

Use the daily construction log

Use of the request for information form (RFI)

What to do if the contractor will not sign the RFI form?

When the homeowner does not feel qualified to inspect a phase of construction

Monitoring and inspecting the materials used on site

Managing the inspections by the city building inspector

Post the building permit on site

Call for inspection per the city’s requirements

Working with the building inspector                         

The building inspector only inspects per the requirements of the code

Exceptions to the completed work by the inspector              

Contractor’s responsibility to fix or repair

Inspector signs off on a phase of construction

Monitoring and tracking the construction schedule

Measuring or determining the amount of completed work               

Controlling change orders in the construction phase

The homeowner has a right to make changes

With this right comes the responsibility to pay

Use the no verbal changes form (NVC)

What to do when the contractor suggests a change

Changes the homeowner wants

Changes the homeowner does not want                    

What to do when the contractor asks for more money for no reason

Are there changes driven by the building inspector? This is a trick question

Paying the contractor

Project money management

How to use the cost control form      

Project money management must be kept up daily

Pat Fay’s goal in the home construction pricing and estimating chapter

What is home construction pricing?

Three methods of arriving at construction pricing

Gathering home construction pricing from contractors
- Contact 6 to 10 contractors
> An example in pricing a new 200 amp electrical panel

Use Home Depot, Lowe’s and Costco for comparative pricing
- Contractors must beat Costco, Lowe’s and Home Depot pricing by 20%

What is cost estimating?

Cost estimating for the homeowner
- Budgetary estimating
> Residential SF costs from RS Means Company
- Detailed takeoff from drawings
- What does square foot costs mean?
- Determining square footage
- Square foot cost by activity
- Square foot costs go down for larger jobs, up for smaller jobs
- Cost by lineal foot

The Pat Fay Method of how to think about estimating

Think in terms of labor, material, equipment, contractor profit
- Estimating labor according to crew size
> What hourly rate to pay for labor
- Estimating material cost for an activity
- Estimating equipment cost for an activity

Adding contingency or risk to the estimate

Overtime will destroy a homeowner’s budget

Contractor profit

What is a reasonable profit for the contractor?

Detailed cost estimating sections

1. Design, structural engineering, civil engineering, surveying, permit fees, scaffolding, portable toilets

2. Utility trench by trencher, utility trench by backhoe, excavation for a basement, exterior grading.

3. Underground Utilities; water, sewer, electrical power, natural gas, telephone

4. Concrete foundations; spread footings & concrete walls

5. Framing & insulation.

6. Drywall/sheetrock; tape & mud, PVA coating, texture

7. Roofing & flashing, gutters & downspouts.

8. Exterior siding.

9. Finishes; doors & hardware, windows, flooring, kitchen cabinets, counters

10. Appliances

11. Plumbing; underground plumbing, above ground rough-in plumbing, finish plumbing: kitchen sink with garbage disposal, all other sinks, kitchen appliances, toilets, showers, bathtubs, laundry room, hot water tank, and hot water recirculation system.

12. Heating Ventilating and Air Conditioning (HVAC)

13. Electrical and Communications. Detailed costs; electrical panel, dedicated 120V outlet for a microwave or furnace, 6 outlets on one circuit, light switch, light, stove, electric clothes dryer, air conditioning compressor, hot water heater, telephone/data outlet.

14. Concrete flatwork; sidewalks, driveways, patios.

15. Decks

Situation 1: Planning for a kitchen remodel

Lesson learned #1 - Do not hire a designer before deciding what you want

Lesson learned #2 - Do not remove scope of work to reduce cost of project

Lesson learned #3 - Get pricing from 6 to 10 contractors  

Lesson learned #4 - Homeowner’s mistaken feelings of trust

Lesson learned #5 - Homeowner’s mistaken feelings of obligation

Lesson learned #6 - Homeowner not wanting to hurt the contractor’s feelings

Lesson learned #7 - Homeowner is afraid to say “No, I will not use you on this project!”

Situation 2: Work on a backyard garden structure

Lesson learned #8 - Do not pay the contractor until project is complete

Lesson learned #9 - Do not give contractor any money to buy materials

Lesson learned #10 - Homeowner mistakenly concerned about being fair to the contractor

Lesson learned #11 - Trust in the Pat Fay Method

Advantages

Cost savings

Reduced stress

Better quality material and workmanship

Disadvantages

Planning and scheduling

Coordination

Time

Length of construction

To use the Pat Fay Method or not?

Project Log-Planning

Project Log-Construction

No Verbal Changes (NVC)

Cost Control

Contract for Construction Services

Addendum to the Contract for Construction Services

Daily Construction Record

Request for Information (RFI)

Telephone Conversation Record

Transmittal Form

Meeting Minutes

Contractor Information Sheet

Lien Release and Claim Waiver Form

Contractor Bid or Price Review Form

Schedule Form-High Level

Schedule Form-Low Level Detailed