When Darius Baker, owner of D&J Kitchens & Baths, in Sacramento, Calif., created a system he calls “ reverse budgeting,” he also came up with a form that he could show to clients to help them better understand cost, budgeting, and value engineering.

Working in Reverse

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For one remodeler, "reverse budgeting" helps clients define and stay within their budget range.

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He took 50 kitchen-only projects over a six-year period and calculated an average job cost within particular price ranges between $40,000 and $100,000-plus. (Not every category is shown below.) Most of the company’s kitchen remodels were between $50,000 and $80,000. The more jobs compared, the more accurate the numbers.

During the six-year time frame, D&J Kitchens & Baths had six people in the field, one of whom was a manager, and their efficiency was consistent over all jobs, says Baker, who does job costing for each project.

Form boxes show each area of the job, its average cost, and the percentage of the total job cost. Baker is careful to show clients that labor costs include all carpentry, electrical, and plumbing, none of which is subcontracted.

Using this form, “You can have a better discussion with clients about the types of things they can find in a budget range,” Baker says. “This gives you a starting point with clients, and they can make knowledge-based decisions.”

—Stacey Freed, senior editor, REMODELING.