The Sprucehill 5% Guarantee | Sprucehill Contracting Inc.
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The Sprucehill 5% Guarantee

GET THE TIMING AND BUDGET YOU AGREED TO. GUARANTEED.

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What is the Five Percent Guarantee?

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It’s our way of standing behind our promise to be accountable to you as our client; to reasonably anticipate and document all materials, labour and project management costs related to your project.

Simply put, our Five Percent (5%) Guarantee states two things:

 

Your project will be completed within 5% of the contracted budget.

 

You will not be billed more than 105% of the entire contracted price for materials, labour or project management costs.

 

For example, if we provide you with a project estimate for (say) $100,000 for materials, labour or management costs, the most you’ll be billed for those items is $105,000 — even if our actual costs are higher.

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Your project will complete within 5% of the scheduled completion date

 

You will not be charged for any materials, labour or project management costs incurred beyond that date.

 

For example, if we estimate your project will take 100 business days to complete, we will not bill you for any materials, labour or project management costs incurred after 105 business days— i.e. 5% of the project schedule.

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Frequently Asked Questions

What costs does the 5% Guarantee cover?

The 5% Guarantee covers the cost of all materials, labour and project management costs.

What costs are NOT covered by the 5% Guarantee?

Our 5% Guarantee does not cover costs for the following, as they are outside of our control:

 

  • Permits and other administrative costs, including delays due to permitting and inspections
  • Any changes the client makes to the project after the contract is signed, including materials, design, and/or project scope
  • Significant market changes (see below)
  • Acts of God. Or forces of nature, if you prefer. We’re not here to preach anything other than responsible construction practices.

How do you define ‘significant market changes’?

We define significant market changes as events or circumstances that are beyond our control that may prevent us from completing your project within the budget and/or schedule provided in our estimate. Here are a few examples:

 

  • Changes in raw material prices such as lumber or steel beyond what we forecast (if we could predict commodity prices, we wouldn’t be building houses).
  • A sudden ‘run’ on a raw material, where all available supply seems to completely vanish for a period of time. And once it happens, all you can really do is wait for more to become available — however long that may take.
  • Strikes, lockouts or other labour unrest at the ports, in the trucking/shipping industries, or any other industry that has a direct impact on our ability to buy materials or equipment.

 

There are other situations equally beyond our control, but these tend to be the most common.

What kind of events do you consider Acts of God?

We define an Act of God pretty much the same as dictionary.com:

 

“A direct, sudden, and irresistible action of natural forces such as could not reasonably have been foreseen or prevented; such as a flood, hurricane, earthquake, or other natural catastrophe.”

 

Yup, that pretty much covers it.

Why doesn’t the 5% Guarantee cover delays or cost overruns caused by building officials?

Occasionally a new inspector will visit a project site and insist we follow different procedures than those we had followed on previous projects (even if the required work is identical to work we have completed on recent projects that were approved – and even if there have been absolutely no changes to the BC Building Code). Like it or not, inspectors have the legal authority to require changes at their discretion.

 

It doesn’t happen often —  but when it does, it can wreak havoc on a project, causing significant delays and added expenses. And there’s absolutely no way to predict it beforehand.

Why isn’t the 5% Guarantee the 100% guarantee?

We don’t offer a 100% completion guarantee (also known as a fixed-price contract) because in our experience, no matter how thoroughly you plan, costs and schedules almost never stay fixed for the duration of a project; there are always at least one or two variables that create delays or cost increases — and you simply can’t predict them.

 

It could be that a subcontractor’s tradesperson is sidelined for days with the stomach flu, or breaks their leg playing beer league hockey. Or the flatbed truck carrying a necessary piece of equipment breaks down on the highway. Or perhaps a difficult installation requires some additional labour or materials that you just couldn’t foresee until you actually started the job. It’s often a bunch of small delays or cost increases that add up to more than a 100% guarantee can cover.

 

However, when an estimate has been thoroughly and expertly prepared based on the right information, we can keep these unexpected costs to a minimum. That’s why we can stand confidently behind our 5% Guarantee.

What about other builders I’ve seen offering fixed-costs contracts?

In our opinion, they’re one of the biggest problems facing the construction industry. Some of the common issues of fixed price contracts include:

 

  • To maintain their profit margin under a fixed price, many builders cut corners or sacrifice workmanship.
  • Fixed price contracts can result in builders padding their costs with higher than normal markups.   
  • Some builders also ‘accidentally’ (on purpose) leave essential items out of the budget, knowing they can charge more for them once the project is underway.

 

In all of these cases, fixed price contracts ultimately place the builder’s interests in conflict with the best interests of their customers.

So how is the 5% Guarantee different from a fixed price contract?

We believe we’ve developed a much better model – one that allows us to be fairly compensated, while remaining accountable. It blends the certainty of a fixed price contract with the flexibility of a standard time & materials contract. And it ensures we’ll never have to sacrifice quality in order to complete your project.

Why is Sprucehill Contracting Inc. offering a 5% Guarantee?

Frankly, a lot of our competitors over promise and under deliver. We decided that offering a 5% Guarantee was the best way to show our clients that we stand behind our promises. We believe when you ask the right questions, do your due diligence up front, and are honest about your capabilities, it’s possible to commit to a schedule and budget that benefits everyone — where both our interests and our clients’ interests are aligned.

 

We are hoping the increased transparency and integrity our 5% Guarantee offers will encourage other contractors to follow suit. One of our goals is to help the construction industry transform itself, and for contractors to become far more highly regarded than we are currently.

 

That’s why we will also be petitioning the BC government to introduce legislation to make it illegal for contractors to go more than 10% over budget without providing advance notice.

How do you manage to keep your subcontractors on time and budget?

The project management software we use allows us to automate parts of the process. For example, it lets our trades know when they need to be on-site and when their work needs to be completed by. It helps everyone stay on the same page and remain accountable for their own work and schedule.

 

Because we have been using this tool for so long, our trades have bought in. They see the benefit of it. They appreciate knowing how far along the project is, and being able to see which trades will be working before and after them.

 

In fact, they sometimes call each other and coordinate small modifications to their schedules to suit their needs. (Admittedly, being control freaks, this makes us a tad uncomfortable — but we think it’s pretty awesome that this software allows our teams to coordinate and communicate with each other.)

Why do you use fixed price quotes from your subcontractors if fixed pricing is such a bad thing?

Fixed pricing is only a bad thing if you don’t have the time or expertise to provide the right kind of oversight. Our job is to make sure that the trades we hire for your project are performing their work to the exact standards we’ve promised you.

If it were truly possible to predict costs accurately enough to keep them within 5%, wouldn’t someone else have done it by now? How are you able to do it?

For starters, we put the work in up front. We ask the right questions, and we listen carefully to the answers. We don’t like to guess; we make sure we do our research before promising costs or timing. These are things any contractor can and should do, but they don’t always..

 

We have also developed a proprietary planning and estimating process of our own. It allows us to anticipate possible issues and plan solutions for them — before we start work on your project.

 

Take moving a wall, for example. It’s a pretty straightforward job for any skilled carpenter — unless the wall contains hidden pipes and wiring, in which case the cost could easily balloon to triple the original estimate and blow the project schedule to smithereens.

 

To prevent this scenario, we will open up the drywall (after verifying that the wall is asbestos-free) to ensure it’s not hiding anything — before we estimate the cost of moving it. Our approach takes more time and effort than many contractors are willing to invest before the contract is signed. But it’s the only way to prevent delays and added costs down the road so, in our view, it’s a must do and not a should do.