Getting bids for your home construction project

When you need a general contractor, how do you decide which one to use?  How do you figure out how much your project will cost? One way is to call in three or more general contractors.  Give them each a set of plans and specifications, and ask them to submit a bid on the project.  After you receive the bids, you look them over carefully, but you might be left scratching your head.  You might discover the lowest bidder left something out and substituted lower-grade materials.  One out.  The highest bid was loaded with stuff that wasn't on the plans or specs.  Two out.  But the bid in the middle doesn't seem right either.  The bid is vague, and you don't understand if you're going to get what you asked for.  How do you know they will get it right?

The biggest issue we face in the construction industry is communication.  We have to be able to take the idea you started with and understand how it was interpreted through the design process.  Then we determine the proper engineering, materials, construction techniques, and budget for your project.  A general contractor can be responsible for forty or more vendors, suppliers, and trade contractors during a new home construction or a remodel. That's a lot of moving parts. Communication is key to everything getting done right the first time, on time, and on budget.

When you're designing and bidding a project, scrupulous communication and perfect clarity are essential.  Here's an example -- a true story:

A home owner wanted a 1,000-square-foot addition -- a master suite with a new master bath, bedroom, and large walk-in closet.  The home owner hired an architect to design and complete a set of construction plans.  Then the home owner searched the Web, found three contractors, and asked them to bid on the job.  But here's what happened:   Contractor A visited the job site, looked at the plans, and began to ask lots of questions.  As the home owner answered the questions, he made some new decisions, and things changed.  By the time Contractor B came by the next day, the home owner has gone back online and made changes to the plans and specifications.  Contractor B gets the new information to add to his bid, and he has lots of questions, too.  When Contractor C showed up on the third day, he got a whole new set of specifications and plans that had a few more changes on them. Guess what happened when the bids came back?  Numbers were all over the place.  Examining the bids, the bewildered home owner felt she was comparing apples and oranges and bananas.  In this case, you have to wonder:  Did each contractor get the same information to work with?  If not, how can the home owner even compare numbers?

And is price the best way to judge value?  What do you know about the quality of each contractor's work?  Their reputations?  What about warranties and insurance?

For the contractor, arriving at an accurate price for a project is as much science as it is art.  A general contractor has to answer many questions when estimating a project.  How much will materials cost?  What will the trade contractors charge?  How much time will I have in the job?  What are my overhead costs of the job? What about company overhead?  What is the value of the job, and what do I bring to it?  What's the location?  Profit?  What's the current market situation?

So what should a home owner do?  Is there a better way to go about this?  Here's what I suggest:

First, start with a good idea of your budget.  I understand if you don't know what it will cost -- that's why you're getting bids, right?  But you should know what you're willing to spend.  Start there.

Next comes the hard part:  Be realistic about your budget compared to your plans and wish list.  You wouldn't walk into the Bentley dealership with only Yugo money in your pocket.

Getting bids on a project is one way to find out costs.  But it might not always be the best way.  Next month, I'll talk about other ways to get information about construction costs, and about how to build a relationship with a contractor to yield the best results for your project.