When all the Bids Are In
by Richard Connolly
Have you ever wondered how contractors arrive at their bids and why their quotations for the same job can vary so widely?
Much of the problem stems from how much time the contractors spend studying your house first and the plans next. In this regard, the contractors face a dilemma: comprehensive bids take more time, increase the price, and may cost them the job.
Norman Pratt, a general contractor from Rockland, MA, says, “I spend approximately 25% – 30% of my time estimating jobs and don’t get a lot of them. If I spent more time, I wouldn’t have much left over to do the actual work.”
Pratt’s specialty is remodeling. He says that it is almost impossible to get everyone to bid on an “apples for apples basis,” a discouraging situation he thinks is unfair to homeowners and contractors.
Offering another view, general contractor Ted Mahoney of Sherborn, MA says, “If you do not take the time in the beginning to work with the customer, you will have problems later. I like to spend extra time in the beginning. Then the end product is what everyone expects.”
Mahoney spends 15% – 20% of his time estimating the new homes his company designs and builds on land he also develops. Mahoney has an advantage over Pratt because he has more control over the sale.
Some contractors reduce their estimating time by hastily preparing a low bid and then compensate by charging high for extras or providing understated allowances for kitchen appliances, plumbing and electrical fixtures, and flooring, etc. The estimates look complete but almost certainly will go over budget or result in misunderstandings.
Regarding this strategy Mahoney notes, “When the cabinets are included their quality may not be what the home owner wants. These contractors do not take the time to explain well enough what is included and what is not. There should be no surprises.”
The second major component of bidding is estimating the labor and materials, a skill that varies from one contractor to the next. To offset error, the less skilled estimator may inflate the material amounts or the labor, which results in a higher bid without adding value.
The contractor who knows where to buy materials or how to hire subs at the best price can offer a bid lower than his competition. Either may reduce the quality of the materials or workmanship to present to the homeowner a more attractive price.
Surprisingly, the consumer can solve these problems by providing contractors with construction specifications that include all the material estimates and their grades, model numbers for windows, appliances, and fixtures, etc., and a highly detailed description of every facet of the project.
The specifications should allow the homeowner to include or exclude certain portions of the work, such a skylight. In that case, the materials and labor to frame, install, plaster, and paint can each be identified as separate line items.
The contractor benefits because he saves estimating time and eliminates quality, comprehensiveness, and its higher pricing as competitive issues. Everyone plays on a level field.
Most important, the specifications provide both parties with a vehicle of communication that can certainly reduce, if not eliminate, future surprises or misunderstandings.