Browse all questions

The amount above direct cost is $90,000 - $54,000 = $36,000. As a percentage of the bid: $36,000 / $90,000 = 40%, which covers both overhead and profit.

Estimated labor cost equals hours times the burdened hourly rate: 320 x $55 = $17,600. The burdened rate already includes payroll taxes, insurance, and benefits.

Competitive bidding awards the contract to the lowest responsible and responsive bidder. Among $182,000, $176,500, and $189,300, the lowest is $176,500.

The critical path is the longest chain of dependent activities in the schedule, so its length is the shortest time the project can take and it fixes the completion date; finding that chain is what a CPM schedule is built for. Spreading overhead across cost codes and comparing actual hours to the bid are job-costing exercises done from the accounting records, not from the schedule network. The retention percentage comes from the contract, not from any schedule calculation.

In a fixed-price contract the price is locked. With costs of $112,000 and revenue of $100,000, the contractor absorbs a $12,000 loss; cost-risk falls entirely on the contractor.

A home improvement contract that is missing or noncompliant is grounds for CSLB discipline under B&P §7159, and it leaves the contractor arguing an unenforceable or unprovable bargain when it tries to collect. Nothing converts a private remodel into a public works contract - that turns on public funds and the prevailing wage statutes, not on paperwork. No statute doubles the price for the owner; the doubling idea comes from §7031(a), which runs the other way by barring an unlicensed contractor from collecting at all. And the CSLB issues classifications on examination and experience, never as a consequence of a defective contract.

On a home improvement contract, B&P §7159(c)(5) makes a change order part of the contract only if it is in writing and signed by the parties before any work covered by it begins, and §7159(d) says the same of any change to the contract. Doing the work first and adding it to the final invoice leaves the contractor arguing over an unauthorized extra. A verbal go-ahead with a log entry is not a signed writing, however contemporaneous the note. Calling the extra an allowance at closeout relabels the billing without supplying the signature the statute requires.

Prompt payment statutes do one thing: they put deadlines on money moving down the contracting chain, with penalties for missing them. Civil Code §8800 gives a private owner 30 days after a demand for payment under the contract to pay the direct contractor, at a 2% per month penalty on anything wrongfully withheld; B&P §7108.5 gives a direct contractor 7 days from a progress payment to pay each subcontractor; Civil Code §8814 gives 10 days for passing retention through. Prevailing wage rates are set by the DIR, the award of a bid turns on the bidding statutes, and the 5% retention cap is Civil Code §8811 - none of those are prompt-payment rules.

B&P §7159.5(a)(3) caps the downpayment at $1,000 or 10 percent of the contract amount, whichever is less, and §7159.5(a)(8) exempts from that cap a contractor who provides a performance and payment bond or joint control approved by the registrar - that, not a bigger deposit, is how a special-order purchase gets funded, with any finance charge set out separately from the contract amount. The cap is a consumer protection the homeowner cannot waive. Relabelling an oversized deposit does not make it lawful. And §7159.5(a)(5) bars requesting or accepting payment beyond the value of work performed or material delivered.

Overhead is the indirect cost of running the business - office rent, insurance, licenses, administrative salaries - that no single job carries and that has to be recovered through markup on direct costs. Labor and material charged to one job are direct job costs. The markup is how overhead is recovered, not the overhead itself. And retention is money the owner holds back from a payment, not a cost of doing business.

B&P §7159(d)(10) requires an 'Approximate Start Date' heading with a statement of what counts as substantial commencement of work, and §7159(d)(11) requires an 'Approximate Completion Date'. Together they give the homeowner a timeline she can hold the contractor to, and they are how a delay becomes measurable as abandonment. The price is set by the contract's price and payment-schedule terms, not by the dates. The buyer's three business days to cancel run from receipt of a signed and dated copy of the contract, not from the start date. And retention is a payment term; the date provisions do not control when it comes due.

A direct (job) cost is traceable to one job — the lumber that goes into that framing job, the labour on that site, the equipment rented for it. The office telephone, the annual liability premium and the bookkeeper's salary are all incurred to run the company rather than to build any one job, so they are indirect overhead recovered through a markup spread across all jobs. The test is not whether the cost is large or recurring; it is whether you can point to the job that consumed it.

Markup amount equals direct cost times the markup rate: $14,000 = cost x 0.35, so cost = $14,000 / 0.35 = $40,000. The selling price would be $54,000.

A unit-price contract pays the unit price times the measured quantity: $3.20 x 9,500 sq ft = $30,400. $28,500 is the same quantity at $3.00, a rounded-down unit price. $304,000 comes from reading the rate as $32.00 per square foot, and $3,040 from $0.32 — both are decimal-point slips of one place in opposite directions.

With no good faith dispute, the owner must release retention within 45 days after completion (Civil Code §8812) and owes 2 percent per month on what is wrongfully withheld, plus attorney's fees (§8818); a written demand documents that claim while the 90-day lien deadline of §8412 runs. Re-entering to strip out installed work is unlawful self-help. The CSLB disciplines licensees but does not collect money owed to a contractor. And a stop payment notice under §8520 belongs to claimants other than the direct contractor, so the prime cannot use one against the owner.

The G702 application and certificate for payment, with its G703 continuation sheet, itemizes the schedule of values and the percentage of each line item completed — that is how a progress payment is requested and certified. Substantial completion is certified on a separate form and does not by itself release retention. Subcontractor and supplier listings belong to the bid documents, not the payment application. And a mechanics' lien is a statutory claim recorded with the county, not an AIA payment form.

If progress and spending track together, spending at 60% complete should be about 60% of the $250,000 budget: 0.60 x $250,000 = $150,000. Spending much above this signals a possible overrun.

What B&P §7159 requires inside a home improvement contract does not depend on where it is signed: a job over $500 needs the same signed writing sold in a kitchen or in a showroom, and the §7159.5(a)(3) down payment cap of $1,000 or 10% of the price, whichever is less, applies the same way. What does depend on the setting is the cancellation notice - §7159 excuses the Three-Day Right to Cancel notice where the contract is negotiated at the contractor's place of business, because those three business days come from the home solicitation rules of Civil Code §1689.5 and §1689.6, which reach contracts made away from the seller's trade premises.

A no-damage-for-delay clause leaves added time as the contractor's only remedy for the delays it covers, so extended overhead and idle-equipment costs stay with the contractor. Owner payment of delay costs is what a compensable-delay or changes clause does — the opposite result. A daily amount owed for finishing late is liquidated damages, which runs against the contractor rather than limiting its remedy. And the clause does not excuse the completion date: the schedule stays, only the money claim goes. On public work, Public Contract Code §7102 stops an agency from enforcing such a clause for delay the agency itself caused.

An indemnity (hold harmless) clause allocates risk: one party agrees to protect, defend, or reimburse the other against specified claims arising from the work. Capping damages at the contract price is a limitation-of-liability clause. Being named an additional insured is an insurance endorsement, which moves the cost to a carrier rather than between the parties. Sending disputes to an arbitrator is a dispute-resolution clause. Civil Code §2782(a) sets the outer limit: a construction indemnity reaching the promisee's sole negligence or willful misconduct is void.

The license number is how the homeowner reaches the CSLB record: whether the license is active, what classification it covers, the bond and workers' compensation on file, and any disciplinary or complaint history — all checkable before work starts. It says nothing about the contractor's tax liability or profit margin, which live in the contractor's own books. And a permit is pulled by the licensed contractor or by the owner as owner-builder; a homeowner cannot apply in the contractor's name just because the number appears in the contract.

A precise scope prevents gaps and overlaps, making clear which work the subcontract price already covers and which is extra work that needs a change order. What a change order costs is set by the contract's pricing terms, not by the scope. Permit responsibility is its own provision. And license classification is a legal requirement that the parties cannot assign to each other in a scope clause.

A binding contract requires an offer and an acceptance of that offer's terms, supported by consideration. Accepting a written bid as offered creates the contract through offer and acceptance.

A pre-printed clause that strips the homeowner of what B&P §7159 grants is unenforceable: Civil Code §3513 says a law established for a public reason cannot be contravened by private agreement. The other three belong in the file. Progress payments tied to work already completed are how §7159.5(a)(5) expects payment to be staged, and a start date with an approximate completion date is required contract content. Civil Code §1689.13 does allow one narrow waiver of the cancellation right - but only by a separate dated, signed statement describing the situation that needs immediate remedy, never by a clause in the contract.

A bid bond guarantees only that a bidder who is awarded the contract will enter into that contract and furnish the required performance and payment bonds; if the bidder walks away, the bond answers for the cost of reletting the work. Completing the work for the contract price is what a performance bond guarantees. Paying subcontractors and suppliers is the payment bond. And a ten-year defect guarantee is a warranty or maintenance bond.

A timely cancellation must be honored. The Notice of Cancellation required by B&P §7159, and Civil Code §1689.10, give the contractor 10 days from receipt of the notice to return every payment; the buyer need only make delivered goods available at their own residence, and if the contractor does not pick them up within 20 days the buyer may keep them without further obligation. No cancellation fee is authorized - the $1,000 figure is the §7159.5 down-payment cap, not money the contractor may retain. Materials delivered before the notice cannot be billed, and the refund cannot be held hostage to their return: the 10-day refund duty does not wait on the 20-day pickup window.

Net profit equals the profit rate times sales: 8% x $800,000 = $64,000. Overhead recovery ($96,000) is separate; profit is what remains after both direct costs and overhead are covered.

B&P §7107 makes abandonment - leaving a project without legal excuse - a cause for discipline, so a stoppage the owner's own failure to pay a clearly due, undisputed amount justifies is a suspension rather than abandonment. The reason for leaving is exactly what §7107 turns on, so 'whatever the reason' misreads it. Discipline is never automatic: the Registrar must proceed by accusation. And no statute conditions a justified suspension on 10 days' written notice.

A detailed estimate is built from a quantity takeoff: every material and labour item is measured off the plans and priced, item by item. A square-foot or conceptual estimate skips that and multiplies area by a historical rate, which is why it is used early and is far less accurate. An assembly or systems estimate sits between the two, pricing whole assemblies rather than individual quantities. A schedule of values is not an estimate at all — it is the breakdown of the agreed price used to support progress billings.

Civil Code §1689.5(a) defines a home solicitation contract as one for the sale, lease or rental of goods or services 'in an amount of twenty-five dollars ($25) or more' made at other than appropriate trade premises, and §1689.5(b) defines those premises as where the seller normally carries on business. The PLACE of the transaction plus a very low dollar floor is what triggers the three-business-day right under §1689.6 — not the size of the job. (a) states the exception rather than the rule: a contract negotiated and signed at the contractor's own office is made at appropriate trade premises and carries no §1689.6 cancellation right. (c) inflates the $25 floor to $500 and drops the place element, which is the operative one. (b) is not a consumer transaction at all; §1689.5(c) limits 'goods' to things bought primarily for personal, family or household purposes.

Change orders adjust the contract price up and down: $120,000 + $15,000 - $4,000 = $131,000. The adjusted price reflects all signed change orders.

Under cost-plus-percentage the fee itself grows with the cost, so the owner learns the final price only when the work is finished - the least certainty of the four, and the reason many owners refuse the form. Cost-plus-fixed-fee is the near miss: the costs are still open but the fee is capped, so escalation at least stops adding to the contractor's margin. A guaranteed maximum price puts a ceiling over the same open costs, and a fixed price fixes the whole number at signing.

The contract must be fully completed before the owner signs, so the homeowner sees and agrees to all material terms. Leaving blanks to be filled in later is improper and unfair to the consumer.

A flow-down (or conduit) clause incorporates the prime contract's relevant terms into the subcontract, so the sub owes the general the same obligations the general owes the owner for that scope. An indemnity clause allocates liability for claims; it does not import the prime contract's terms. A pay-when-paid clause governs only the timing of payment. And a no-damages-for-delay clause limits one remedy. None of those three keeps the two contracts consistent.

Job costing exists to surface a problem while there is still time to act: a 15 percent material overrun at the halfway point should be investigated at once, and purchasing or scope corrected before the second half doubles the loss. Waiting for closeout throws away the only chance to correct it. Halting the work over an internal cost variance risks abandonment under B&P §7107, because the owner has changed nothing. And an overrun the owner did not cause is not extra work, so it cannot be billed - with or without a change order.

A conditional waiver under Civil Code §8132 only becomes effective when there is evidence of actual payment, meaning the check clears the bank. If payment fails, the waiver has no legal force and the subcontractor retains full lien rights.

Civil Code §2782 voids any construction contract clause that purports to indemnify a party for liability caused by its sole negligence or willful misconduct. This anti-broad-form-indemnity rule cannot be waived.

B&P §7159(c)(5) makes a change-order form part of the contract only if it is in writing and signed by the parties before the work covered by it starts, and the opening words of §7159(d) say the same of the contract and any changes to it — so an unsigned verbal upgrade leaves the extra at risk. A daily log is the contractor's own record, not the owner's signature. No dollar figure turns a verbal change order into an enforceable one; there is no $5,000 line in §7159. And the risk is not the complaint: the money is at risk in a collection action whether or not the homeowner ever contacts the CSLB.

Civil Code §8182 lets an owner record a notice of completion on or within 15 days after completion, so a notice recorded on day 12 is valid - as the stem says it is. What it does is set by §8412: a direct contractor must record its lien before the EARLIER of 90 days after completion or 60 days after the owner records the notice, so once the notice is on record the 60-day clock governs, because it runs out first. The 90-day period is real but measured from completion, not from the recording. The 30-day window is real too, but §8414 gives it to claimants other than the direct contractor - subcontractors and suppliers. And a notice of completion shortens a deadline; it never extinguishes the lien right.

Under Civil Code §8412, a direct contractor has 60 days after recording of a Notice of Completion or Notice of Cessation to record a mechanics lien. Without such a notice, the period is 90 days after actual completion.

Civil Code §8414 gives a claimant other than the direct contractor until the earlier of 90 days after completion of the work of improvement or 30 days after the owner records a notice of completion or cessation. No notice was recorded here, so the 90-day limb controls and the lien must be recorded by about May 30. The 30-day figure is the shortened deadline that only a recorded notice triggers, and it runs from that recordation rather than from the subcontractor's last day. Sixty days is the direct contractor's post-notice window under §8412, not a subcontractor's. No deadline in the California lien statute runs 180 days.

A Notice of Cessation under Civil Code §8174 can be recorded after work has ceased for at least 30 continuous days. When validly recorded, it shortens the subcontractor and supplier lien deadline to 30 days from recording, the same effect as a Notice of Completion.

Civil Code §1670.5(a) lets a court that finds a clause unconscionable as a matter of law refuse to enforce the contract, enforce the rest of it without the clause, or so limit the clause's application as to avoid an unconscionable result. That both parties signed is not an answer: unconscionability is a doctrine about signed contracts. The statute lets the court decline or narrow the clause, not redraft it into a mutual fee provision the parties never agreed to. And §1670.5 is a question of law for the court, not something routed to a CSLB arbitration first.

The protection comes from agreeing the joint check terms before the check moves and exchanging conditional waivers and releases on the Civil Code §8132 form at release: the agreement says how the funds are allocated, and the waivers record that the money reached both payees, which is what keeps the supplier's lien off the job. Running the check through the GC's own account first turns both payees' money into the GC's and invites the very claim the joint check was meant to prevent. Paying the supplier and skipping the subcontractor leaves the sub's labor unpaid and its lien rights alive. And splitting a two-payee check at the GC's discretion is not a discretion the GC has — both payees must endorse.

B&P §7108.5(a) gives the direct contractor 7 days after receipt of each progress payment to pay each subcontractor its share, unless the parties agree otherwise in writing; wrongful withholding costs 2 percent of the amount due per month plus the prevailing party's attorney's fees (§7108.5(b)-(c)), and in a good faith dispute no more than 150 percent of the disputed amount may be held back. Each wrong number is a real California deadline for a DIFFERENT payment. (a) 10 days is Civil Code §8814, the direct contractor's deadline to pass RETENTION through to subs. (b) 30 days is Civil Code §8800, the owner's deadline to pay the direct contractor a progress payment after a demand. (c) 45 days is Civil Code §8812, the owner's deadline to release retention after completion of the work of improvement.

Civil Code §8814 requires a prime contractor to release retention withheld from a subcontractor within 10 days after receiving the retention from the owner (a). Wrongful withholding triggers a 2% per month penalty under Civil Code §8818, plus costs and attorney fees to the prevailing party. (b) 30 days and (c) 60 days are contract terms, not the statute's; 60 days is the Public Contract Code §7107 window for a public agency, a different project type. (d) invents a condition — no subcontractor's acceptance gates another's retention. The retention percentage itself is capped at 5% by Civil Code §8811 for contracts entered into on or after January 1, 2026.

B&P §7159(d) caps the down payment on a home improvement contract at the LESSER of $1,000 or 10% of the contract price, exclusive of finance charges. Here 10% would be $4,800 so the lesser amount of $1,000 controls.

The Home Solicitation Sales Act, Civil Code §1689.5 et seq., lets the buyer cancel until midnight of the third business day after the day the contract was signed (§1689.6). Signed Tuesday: Wednesday is one, Thursday is two, Friday is three. The next day and a flat 48 hours are both shorter than the statute allows, and seven calendar days is the federal-style cooling-off period some buyers expect, not California's home-solicitation rule.

B&P §7159.5(a)(5) bars front-loading: apart from the downpayment, a contractor may neither request nor accept a payment exceeding the value of the work performed or the material delivered. The exact-10-percent answer borrows the §7159.5(a)(3) downpayment cap — $1,000 or 10 percent of the contract, whichever is less — and misapplies it to every progress payment. Billing when materials are merely ordered fails because §7159.5(a)(5) counts material delivered, not material promised, and billing the next phase before that work starts is the front-loading the section exists to stop.

Civil Code §1671(b) makes a liquidated damages provision valid unless the party seeking to invalidate it establishes that it was unreasonable under the circumstances existing at the time the contract was made: the burden sits on the challenger and the measuring date is formation, not the day the delay happened. Requiring the sum to equal actual daily loss is the stricter treatment §1671(c)-(d) reserves for consumer contracts. Type-size requirements come from the home improvement statutes, not from §1671. And the CSLB does not approve or pre-clear contract terms.