Can Jeff Bezos help you answer the biggest question in Home Makeovers ?

Learn my Secret Three-Step Strategy to pay the lowest price possible on any Home Makeover project.

A couple of months ago, Jeff Bezos stepped down as CEO of Amazon. What an extraordinary journey he's had over the past 27 something years. Under his incredible leadership, he has launched and grown Amazon from literally nothing to the exceptional organisation it is today.

You may not know this, but every year since 1997 until his final edition, issued earlier this year, Mr Bezos has written an annual letter to his shareholders. They make for fascinating reading and give unique insights into both the founder and his company.

In this latest release, he named two simple yet profound ingredients that he and his teams have baked into every single part of Amazon's growth. Since they are both readily available to all of us, I thought I would share them with you. In my opinion, you would do well to bake them both into your Home Makeover Projects. Just as they have been critical to Amazon's success, so they can contribute to the successful outcome of your projects.

One of the ingredients is particularly significant, because it will help you to understand and then implement the answer to one of the most universal questions Homeowners ask on their Home Makeover Projects. And that's the focus of today's Blogpost.

That dominant question, the question everyone asks sooner or later, is "How do I pay as little as possible for my Home Makeover project ?" And when any Homeowners ask that question, they're also really asking "How do I avoid being ripped off ?" Understandably, no Homeowner wants to lose money, to waste money or to pay too much. So, without doubt, it's the hottest topic on the Home Makeover block.

This is where we need those two secret ingredients Mr Bezos used at Amazon ... cue drumroll ... here they are ... sweat and ingenuity.

Sweat - that's fairly obvious. A heads-up that it takes a little effort. Although the effort pays off, big time.

The other ingredient is ingenuity. Construction projects present a series of challenges to overcome and ingenuity is the secret super-power that helps you do that. Today we'll apply ingenuity to getting to the right price, the correct cost.

The strategy I'm about to share is born out of ingenuity - which is defined as inventive skill or imagination used to solve difficult problems in original, clever and inventive ways.

The ingenious solution I'm going to outline for you is a hybrid blend of all of the techniques I mentioned a few moments ago. By selectively applying those techniques, we can find a method that will best suit your project and at the right cost - which is, the lowest correct cost.

A quick reminder, any cost from any supplier, sub-contractor is a combination of materials or components + labour to build or fabricate, assemble and install + plant or machinery or tools and on top of those base costs are typically added General costs or Preliminaries Costs - those costs which are not directly related to any specific piece of work but rather to the whole project, like the site supervisor or foreman + overheads + profit.

Our goal is to get each of the base components at the lowest possible cost and avoid, where possible, the add-ons or at least work hard to keep them as low as possible.

There are three essential steps to executing this strategy.

Step One.

Split the works into the four categories I'll share is a moment.

Category 1 : Identify any work you are going to do yourself. This can include relatively simple tasks like ordering the furniture and coordinating delivery and installation. Or it might even include some more hands-on activities like doing the decorating and even, if you have the appropriate skills, works like plastering or plumbing or electrics.

Work you do yourself will be the cheapest - you'll buy any components, materials or physical products directly from suppliers at the lowest prices you can find and then there are no labour costs or overhead and profit markups to add.

Category 2 : Identify any works you feel capable of procuring, ordering and coordinating yourself. These will typically be works that will be carried out by specialist manufacturers, suppliers or sub-contractors.

My insider secret is to target works where items are standalone - they have minimal or ideally no interface with other work elements, they don't need expertise from anyone else on the construction team and they can often even happen without anyone else on site. Examples of this could be painting and decorating, wallpaper hanging, curtains and blinds, furniture and even some floor finishes like carpets, even wood flooring.

Another way to identify works you might add to this category is to assess what added value the General Contractor will bring to the work scope. If there isn't any or not very much then you may be paying a lot of mark-up for nothing.

Category 3 : Identify any works that could be split between the Contractor and Owner, you.

Two common examples of this are for example lighting and kitchen installations.

Then the electrician orders the light fittings you have selected and installs them. The only significant added value they bring to the light fittings themselves is the ordering and coordination. But, if the cost of the fittings is anywhere from 40% to 60% of the total cost of the lighting installation, you'll be paying huge markups for not much service.

So a clever tactic is to buy the light fittings yourself and employ the electrician - probably through the General contractor - to do just the wiring and controls (like light switches and dimmer switches) and install the light fittings.

The other example is kitchen installations. Typically new kitchens are either ordered from bulk manufacturers of kitchen components or bespoke manufacturers who create unique, one-off designs tailored to the specific layout and needs of the Homeowner. Very often, the kitchen is delivered to site by the manufacturer or supplier and a specialist kitchen installation team then install the kitchen millwork or joinery. The main contractor's role is minimal and mostly consists of coordinating the installation around other trades who need to provide an interface in the kitchen. The kitchen itself makes up the bulk of the cost of the new kitchen. By ordering and coordinating the kitchen installation yourself, you can avoid most of the main contractor mark-ups while still paying the main contractor to use his skills and expertise to coordinate the associated trades.

Category 4 : Bring together all of the remaining work scope into what is likely to become your General Works category. Works that naturally fall into this category are more complex in nature. They require input from multiple sub-contractors - for example, like a bathroom that might require the framers, the plumber, the electrician, the tiler and the decorator. This needs more complex coordination and a supply chain of reliable, competent sub-contractors but where individual scope may not be extensive.

Now we get to Step Two.

This is where you apply the most effective procurement method to get the best cost for the work scope in each of the categories in Stage One.

There are three main methods.

The first is competitive bidding or tendering.

The more complex the work scope, the more complex the tender exercise becomes. BUT ... a major warning ... for competitive tendering or bidding to be effective, the work scope must be very well defined.

You can use this for any element across any category from all of the work in General works Category four to individual items in any of the other categories. This method works best for higher value items where even a small percentage price difference can be an amount that is worth the effort.

The second method is negotiation.

This works best when there is a work package or element that you want to have carried out by a particular supplier or manufacturer. I favour an open approach. If you have a budget, tell them and then ask them to advise the best way to spend that budget. To keep the costs as low as possible, shave a bit off your actual budget - maybe say 10% to 15% - before you share your budget with them. Once they know the budget, they'll typically offer up to and often over that amount - but that's where the negotiation comes in.

For this process to work best, just be clear and open. If they are a reasonable company they will work with you to develop a solution you can afford. When negotiating, they have the opportunity to offer options. When any contractor or supplier knows they are in with a chance with a real customer who has real money to spend, they typically work much harder to win the work and keep you interested.

In a good negotiation, instead of being in a confrontational commercial arrangement, rather you are in a more aligned position and working together to find a mutually satisfying solution.

The third method is one you will already be very familiar with and that's buying off-the-shelf products and elements from regular suppliers. Here your goal is to narrow down your search and then focusing on specific items and simply buying them at the best possible price.

A few tips on this. Many products are sold by both catalogue companies and by smaller, more personal service companies. With catalogue companies there is usually minimal opportunity to get better than rack rates - the price you see is the price you pay. But, if you can find a smaller supplier of the same product, making direct contact may enable you to ask for better, discounted prices.

Another worth mentioning is that when you are buying lots of items from a supplier, they may have member deals or a tradesman's account that you can sign up to. This often gives discounts off rack rates and those savings can add up across a project so do look out for them before you just accept the quoted price and click to buy.

The third and final Step 3, is where you make sure you lock in the deals you have bid, tendered or negotiated with appropriate and adequate contract documents. Critical to this is tying the contractors down to terms and conditions that protect you from price changes once the works commence.

This is a step most Homeowners completely forget or ignore, at best perhaps accepting, without adequate consideration, the contractor or supplier's own terms and conditions. Those are always written to favour the contractor or supplier and never the client.

Getting the best possible price for your project is not the total amount you agree with the various contractors, suppliers and subcontractors before you actually start the works. No, it is the total amount you have paid once the project is fully completed and the contractors are done and gone and everyone you owe money to is paid up in full. For that amount to be the lowest possible amount, a critical requirement is limiting cost creep while the works are being carried out. This means both starting with the lowest contract sum AND making sure those costs cannot go up for reasons outside of your control.

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If you have a question about a project you're planning or already running, please reach out and email me on faq@thediypm.com. If you have a challenge to overcome then others are also facing the same or similar challenges. I'll be answering Subscriber questions in FAQ editions every few weeks. It’s always reassuring to know you’re not alone in your Project challenges.

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