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In my daily meetings with contractors, I encounter plenty of self-delusion. It comes in many forms, but I see these four types most often.
1. My labor costs are covered. This affects all jobs, whether they are T&M or contract price. With T&M, the labor component is sold at an hourly rate. Too often this is based not on actual labor costs, but on what the contractor thinks will match or undercut the competition and be acceptable to his customers.