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Getting bids: “The rules”

by Steve McKee on August 17, 2006

In a perfect world, sealed bids for your construction project would be delivered before noon on a designated Friday and then opened at three o’clock and read aloud to the small crowd of assembled builders hoping to get your job.

Actually, now that I think about it, that sounds a little too rigid and uptight for the world I want to live in. But the scenario I just depicted actually is the way it was done on huge school remodels that my old boss would do. After many days of effort assembling their bids, the builders really had a lot at stake and hearing all the bids read out loud one after the other (complete with gasps and groans from the group) made for good drama in the otherwise humdrum world of school remodeling.

In the universe of residential construction, things are more casual, with the homeowner in control of the process. Though they may be new to the procedure, they have all the power. Unlike government work, decisions about who to hire are made more “holistically,” in any way the homeowner wants. Going with the lowest bid may not seem as important as finding a responsive professional who seems totally on top of things.

Contractors who have been in business for years have been at the receiving end of clients both good and bad. Guess what. They don’t like the bad ones. In the early meetings with potential clients their radar is going full-tilt-boogie for cues as to how an owner will conduct themselves as a business partner. Owners (who are risking the integrity of their house and just about the most money they’ll ever spend at one time) especially don’t like bad builders. In addition to their own radar scanning for potential future problems, the owners have the advantage of being able to check builders’ references and reputation.

The good news is that the bad builders don’t get to fly under the radar too long, especially in a small town like Benicia.

It’s okay to get a few bids for your project.

Competitive bidding is what makes the construction world go round. All builders expect it. Many welcome it for some sound reasons. If their bid and their preparation has been cross checked with other builders and found to be superior, the homeowner will feel more certainty in the correctness of their decision to select that builder and a healthy confidence results.

The good builders I’ve talked to don’t mind losing out to a fellow builder who is offering the same level of professional services. But they sure don’t like it when they lose to someone who is using unlicensed or uninsured subcontractors, or is not allowing for a certain level of quality to the construction and instead “low balls” their bid to get the job and then finds numerous change orders to then bill the homeowner as extras.

Pay attention if a builder is thorough about noting all the aspects he will be taking care of for you.

Try for three or four bids. Be happy if you actually end up with two.

I usually advise my clients to try for about three or so bids from builders we know to be good and reliable. If you ask four general contractors you will probably get two (maybe three) really sincere bids, one guy who just doesn’t seem that interested or helpful, and another who ends up finally telling you that he’s too busy or perhaps even seems to be ducking your phone calls.

Don’t fall in love with the lowest number you hear.

Tell yourself you will resist the temptation to instantly develop a favorite builder just because the price flashed at you is the lowest. Instead remain emotionless, pause, take a deep cleansing breath, and wait to weigh all the evidence.

I say this not because you are supposed to throw out the low bid. Remember, we are only talking to builders we know are good, so we don’t need to nervously discard any bid. It’s because some bids with a lower number will also have statements written in toward the bottom that say little things like “owner shall provide cabinets” or some other fourteen thousand dollar item. Maybe this lower looking bid (that includes you buying the cabinets) is the better choice, maybe not, but if you have let yourself “bond” with any builder before considering all these factors you have done yourself a disservice.

Expect to be able to understand the bid and how and when payments are made. Be ready to struggle a bit comparing unlike bids with different allowances for different items.

Ask for bids only if the builder is seriously being considered by you.

It takes days of work to put together a well considered bid. Hours each day poring over the plans doing takeoffs, faxing lumber lists and making phone calls. Ask a builder to do a bid only if he really has a chance of being selected. It’s unfair if he’s not really in the running, but is being asked to do all the work to develop a bid just so you can feel better about giving the job to another builder you’ve already decided upon.

Of course, you’re allowed to solicit more bids, but only do it with builders that you are in fact willing to hire if his price and favorable impression wins out.

Expect the contractor to have certain people skills.

Does your general contractor “get” you? Expect to be able to express your concerns and know they’re heard and, more important, addressed in a meaningful way. Are you getting answers with nuance or are you being cut off or talked down to? Do you like the problem solving style of this soon-to-become “significant other”? You can ask a builder how they handle changes requested by owners and see if the answer sounds professional and fair to both sides.

Serious bidders need more than one set of plans to be effective.

General contractors assemble their bids by loaning a copy of the drawings to their subcontractors. These subs will need to see the drawings for a least a couple of days each. It’s actually sort of a good sign that a general contractor wants to speed up the process by having more than one set of drawings to shuttle around to his various subs.

A set of plans will cost the homeowner about $15 each depending on the size of the job and the number of pages. It’s sort of annoying when a builder takes three of your sets and then you never hear from the guy again. It’s best to figure such losses are a cost of doing business as a remodeling homeowner and get over it. Remind yourself that such a $40 or $50 investment in a bidder may just lead you to the quality individual who will then save you thousands. Therefore it’s not a bad gamble to take when you pass out plans.

Committing to a builder without cross checking his bid is not necessarily a bad idea.

The good builders I know aren’t shifty types who try and size up a client as to whether or not they can milk a few more thousand dollars out of them. It makes little difference to them if they are competing with others for a job. They simply take the drawings and figure their subcontractors prices and their own costs and then add their standard figure for profit and overhead. That’s the bid. It doesn’t matters whether they are one of three bidders, or the lone builder being considered.

Committing to a trustworthy builder can get you the advantage of having him hold a slot of time open for your job. You want to get a good builder but don’t want to wait five months to get on their schedule? If the contractor knows for sure he will be doing a job for you he’ll place your job on his schedule and commit to you. If he is just one of four bidders then he will of course need to continue to fill his work schedule with committed clients until he knows whether or not he got your job.

If you end up not using a builder, you are still allowed to look him in the eye when you see him at Farmer’s Market.

Maybe you went with someone else for scheduling reasons or money reasons. Maybe circumstances with a bank loan required you to cancel a project before it even started. Conduct yourself like a pro would, with good communication and real answers about what happened. That clears the air. You did it right.

If at any time you resist returning a phone call because you think the builder “won’t like you” then, by god, get a grip on yourself and step up and meet the challenge. (This also goes the other way when weak builders are bad at returning phone calls to owners.)

In the end, trust makes it work.

If you know you’re with a good contractor, then trust him as the professional he is. Of course you should have all the possible legal contingencies addressed in the contract, and all change orders and verbal agreements turned into written agreements, but like so much of human interaction, it comes down to faith in each other to do what’s right.

That’s a big part of success here. Honest people trying to do right by each other.

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