What is the standard for billing for pre construction costs?
1 reply
Oct 7, 2019
What's considered "standard" can vary quite a bit from project to project. What's industry-standard on one job may be aggressive or too lax on another. Though, asking a customer to cover the cost of mobilization as well as the cost of obtaining permitting, etc. seems like a fair place to start.
Generally, whatever's in the contract goes. So, if the contract allows pre-construction costs to be billed, then they can be billed. And, when those costs can be billed will also be dictated by the contract. It's common for a project's down payment to cover pre-construction costs. But, unless that's specified in the agreement, pre-construction costs are typically worked into the early stages of the payment schedule.
Finally, keep in mind that contractors are limited on the ability to charge down payments for California home improvement contracts. So, on those projects, pre-construction costs would need to be worked into the payment schedule during the project if they exceed the allowable down payment - which is $1,000 or 10% of the contract amount (whichever is less).