The industry standard for hiring a contractor is to get at least three bids before making a decision. No one wants to be overcharged for the same results, so you’d naturally eliminate outliers that are excessively high. On the other hand, an estimate that’s much lower than the other two should raise some red flags about the quality of the contractor.
But is getting three quotes really enough to make sure you’re making the most informed choice? We’ve collected some tips from the pros on how to solicit the best project proposals and how to tell if you’re getting a great deal.
Manage Your Expectations
You’ve been dreaming about a new slate roof for your 2,000 square-foot house, and since your neighbor only paid $6,000 to fix his up, you figure the $8,000 you’ve saved should be enough. When the highest bid comes in at $30,000 and the lowest bid at $10,000, chances are you’ll go with the latter since it’s closest to what you were expecting to pay.
The reality is that depending on the material, size, or location of your project, your guess may be way off. A slate roof, for example, averages between $25,000 and $35,000 for a 2,000 square-foot home. With this in mind, the $30,000 price tag actually seems reasonable, whereas the lower bid should raise some eyebrows.
Before you solicit bids, do some research on costs to see whether your budget is aligned with the scale of your project. Without a good benchmark, it’s hard to determine which bid is a bargain and which isn’t.
Vet Your Contractor
What’s the point in getting three bids that match your budget if all three contractors don’t meet your expectations on quality or if they don’t specialize in the work you need done?
Checking reviews from previous clients is a good start, but not enough to see if they’re a good fit for your project. Your neighbors might rave about the plumber they hired to fix the leaky pipes in their bathroom, but he’s probably not the best person to design and build your custom kitchen.
Before asking for a bid, see if you can answer the following questions or find a resource that does the research and vetting for you.
- Does the contractor provide proof of licensure for the work they are performing, worker’s compensation, and liability insurance?
- What do online reviews say about them?
- What are some of their latest projects and are they in line with what I need?
Compare Apples to Apples
If you ask three contractors for a quotation on a 200 square-foot kitchen remodel, you’re probably going to get three different prices with varying levels of detail, which makes comparing the bids difficult. In order to accurately evaluate the best bid, you need a breakdown of materials, labor, and unit costs so you’re not comparing apples to oranges.
Every contracting business operates their project accounting differently, and you will inevitably see some variance in individual bids. But if you’re getting widely different estimates, then you’re probably not effectively communicating what you need. Decide on as many selections before and be as explicit as possible when you solicit a bid, so the contractor can provide you with a more accurate estimate.
A detailed bid also helps you identify areas you may want to adjust to meet your budget, and will be useful if you eliminate or add an item later on in the project. Moreover, asking for the details encourages the contractor to think deeper about planning for the project, and will result in fewer unwelcome surprises or add-on costs.
Depending on the size of the project, it may be to your advantage to hire an architect or interior designer to make a set of plans that is distributed to each contractor. This way they the contractors all have the same materials to work from, making it easier to compare individual proposals.
– Simmons General Contractor, Arizona
Negotiating Prices
First and foremost, treat your contractor as your ally, not an adversary. Approaching a negotiation with the sole intent to save money can lead to an unhealthy relationship. The reality is that the contractor can calculate the cost of your project much better than you can based on their labor team, supply chain, overhead costs, and profit margins. The goal should be to strengthen your mutual understanding through clear communication to arrive at a fair price.
A single bottomline fixed price without detail is very difficult to assess for value, risk, or individual costs. A detailed itemization of each section of work and unit costs ($X for 1 square foot of Y) will make it easier to compare across bids and raise points of discussion. By having the individual costs broken out, you can identify which specific items or areas are increasing costs and how best to tailor your project to meet your budget. The key here is to ask questions whenever you’re unclear about the content of a bid.
People often feel uncomfortable negotiating pricing, but if you can articulate why you think lowering the price is fair, you can approach the discussion with more confidence. A broad base of knowledge on how much things generally cost (through multiple bids or doing research on materials yourself) will give you some leverage to negotiate. The more insight you have on the fair market price for a good or service, the easier it will be to negotiate.
Meet with the contractors and negotiate in person, not over the phone. You can explain that you would like to move forward with them, but the quote is a little beyond what you expected and can afford to pay. Another approach is to let the contractor know you have another bid that is X dollars lower than theirs, and ask if there’s a way to get closer to that number. Usually contractors are open to negotiating, but even if they are not willing to compromise, they should be able to explain why their estimate is fair.
Being flexible about the timing of your project can help you save money. Home renovation is a seasonal industry; the winter months tend to be slower, and you’ll probably pay extra for the contractor’s time and materials between April and June when construction demand is highest. If you’re willing to be flexible with your schedule, the contractor may be able to lower your estimate.
Finally, don’t be afraid to walk away from a negotiation you’re not happy with. It’s your home and your money, and you shouldn’t feel compelled to sign a contract just because you’ve spent time talking it over with a particular contractor. You’ll have more leverage in the negotiation as well if the contractor can sense you’re not desperate to sign with them. Have patience and take your time to find someone you feel comfortable working with.
Spell Out the Terms
Your bids may reflect item and labor costs, but may leave out some of the crucial details on how the project will be executed. In order to get a clearer picture, the bid should spell out the scope of the work, preferably in writing.
- The foreman or project manager who will manage the team and be your go-to person
- A general schedule including start and end dates
- Payment terms and any upfront costs
- General Conditions on an estimate, including permit costs
- Conflict resolution processes and arbitration clauses
- Change orders if there are major changes to the Statement of Work
- Allowances for undecided selections
- Who the subcontractors will be
The most important thing to ensuring a successful project with minimal headaches is a detailed contract.
– EZ Builders Inc, California
You Get What You Pay For
Be wary of defaulting to the cheapest estimate. Often if something is too good to be true, it generally is. Compare inclusions and exclusions, and if you’re unsure about any fees or item markups, ask for a clarification. We all want to find a great deal, but the cheaper bids could use lower quality materials or the project could end up taking much longer to be completed.
Ask Questions and Build Trust
Building or renovating a home is not a one-time transaction like buying a car- it is a partnership that is most successful when it is built on clear communication and trust. If you want to feel confident in your hiring decision, it’s important to ask lots of questions and to have a discussion surrounding how you will address curveballs like issues with permitting or unforeseen conditions that could delay the project and increase costs. While it’s impossible to plan for every contingency, having this conversation beforehand will help you be prepared, and will give you insight into how you and the contractor will work together to overcome obstacles.
There could always be issues that won’t show up until a job has started. I would advise having an unforeseen clause in your contract, including unexpected incidents and weather delays.
– WR Roofing, Texas
Doing the legwork to get the best bids might seem like a hassle when you’re just trying to get a project done, but getting the bid process right can save you lots of headaches, time, and money down the line. Finding a contractor who will give you high-quality results for a fair price is definitely worth your time!
My husband and I are looking to remodel our upstairs bathroom to accommodate my husband’s new wheelchair, and we appreciate your tips on comparing contractors. It’s true that every contracting business would operate their project accounting differently, resulting in variance on bills. We’ll be sure to communicate as effectively as possible about our needs, particularly in the way of how wide we need the open space to be so that my husband can maneuver properly unassisted.