Your Time
I used to hire anybody I met at Home Depot and convince them to do a job for me and haggle the price. To get them to perform the job the way that I wanted it done I would basically stay there all day micromanaging. Sure, doing it this way I would get the job done for a lower price. This is a pretty common mistake for business owners. Your time is valuable and I suggest putting a dollar per hour number on that while considering if you are really getting a better than market price deal on construction labor.

Cost of “Go-Backs”
The evolution of hidden cost number 1 is when you actually find the higher grade contractor and get them to complete a job or groups of jobs. (Which we call Blocks - See “How to Systematically Manage your Remodel Contractors”). At this point I started to think I was really taking off in my skills as project manager because I was getting jobs done for less money with less of my time/management needed. However, I started to realize that when I would zoom out to look at the financials of the total project, my dollar spend was actually higher. What I discovered was these contractors were leaving just a few things left to be completed between jobs that were not really noticeable at the time of completion, but at the end of a project I would always need to have a punch list of all the little items left by all the different contractors on the project.

Your Reputation
If a contractor gives a price that is lower than the money it costs them to complete the job 1 of 4 things happens. 1) they abandon the project, 2) they realize it and eat it, 3) they ask for more money, or 4) they start cutting corners. When people get caught on the money they will start cutting corners that you can’t see. When those things finally come to light, it will be your reputation that pays the price, not theirs (if they are still around).

Your Trust
After you have been burnt by a bad contractor, a little piece of your ability to trust other vendors is gone. If it happens enough times, you lose the ability to trust any of them. Sometimes that can be a good thing. However, once you find a good contractor or vendor you will start to project that onto them and it will ultimately deteriorate even the good relationships.

Your Ass
When you try to save money by hiring people who don’t have insurance or who cut corners, either knowingly or unknowingly, eventually something bad happens. At that point, nobody (except maybe you) is looking for Joe-Schmo the contractor. They are looking for YOU and coming for your ass.

The Bottom Line
Most often, the hidden costs of remodels point back to lack of planning, skills, or ethics. Make sure you are constantly leveling up your skills to avoid both the hidden costs and the not so hidden. That’s what I’m here to help you do. Good luck out there, investors.
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