The pricing model is what saved us on a 312 unit turn contract
We're a six person crew doing interior renovations. Until last year the biggest thing we'd touched was an 18 unit where we did all of them over eight months. This one was different in kind and I underpriced the first version of the bid badly enough that I want to write down how it got fixed.
312 units, 1990s vintage, sponsor bought it last year at around $109k a unit and the plan was 140 interiors in 18 months. Scope per unit was cabinets refaced, quartz tops, LVP throughout, lighting, plumbing fixtures, paint, and appliance swap. My first number was $5,900 a unit all in, priced off what the 18 unit job cost me.
What was wrong with it. On the small job I had one building, one dumpster, and my materials in a garage. On 312 units I had five buildings spread over 14 acres, no staging space until we negotiated a down unit, occupied neighbors on both sides of every unit we opened, and a leasing office that needed 48 hours notice before we could make noise. My real per-unit labor hours came in 31% over the small-job baseline and almost all of it was walking, staging, and waiting.
What we changed before signing. Priced at $6,400 a unit with a separate mobilization line, one permanent down unit for staging written into the contract at no rent to us, and a variation clause that if we open a wall and find galvanized supply, that unit converts to time and materials at agreed rates. That clause has triggered on 11 of 118 units so far and it would have eaten the margin on all 11.
The part that nearly broke us was pay timing, not price. Sponsor's draw came from the lender monthly with a 15 day lag and their AP terms were net 45 on top of that. So 60 days from finishing a unit to money. At 11 units a month at $6,400 that's about $140k of my cash standing out at any time and I had $60k. We negotiated draws twice monthly on completed units with a third party inspection sign-off, and I put a line of credit in place that I've drawn on twice.
What I'd keep is the down unit and the galvanized clause. What I'd do differently is I promised 15 units a month in the first conversation and we deliver 11. I've been apologizing for the same four units every month for eleven months.