Congratulations! You’ve done your homework. You’ve done your planning. And you’ve met with contractors. Now you’re ready to save money by comparing bids the right way. This is one of the most important steps in the whole remodeling process. And when you do compare bids the right way you can save hundreds or thousands of dollars and stay in better control of your project.
This is your first big chance to save money on your home renovation whatever it might be. And this is a crucial step whether you plan to hire a general contractor or a series of subcontractors. Knowing how to compare bids properly will save you time, stress and money!
You’ve done all the planning. You’ve met with contractors. You may have a favorite contractor already and you’re hoping that price is right. But how to compare bids for your renovation so that you come out on top?
Compare Bids – The Right Way
Comparing bids isn’t easy. Even General Contractors (who are the pros at this) spend a lot of time comparing bids between competing subcontractors. But, it’s a great way to get to know your project and save money.
Compare bids by not looking at the pricing
The first step is this: don’t look at the total price of any construction bids. Really. Don’t look.
It’s tempting to flip to the last page and just look at the grand total. Don’t make that mistake. Of course, the price is crucially important and you don’t want to overpay. But it’s even more important to make sure that you’re comparing apples to apples. And if you already know the price from each contractor it’s going to influence how you read everything else.
When a price is right on budget you’ll look at that proposal to see if it left anything out. If another price is above budget but you like the contractor, you’ll look at that proposal to see if maybe it includes things you don’t want so you can knock the price down right away. It’s human nature.
Compare bids to find out exactly what’s included
The second step is to go through every proposal and make a list of what’s included in each one. Contractors don’t use the same software or templates for estimating home improvement projects. Each proposal will be worded different. Remember that general contractors that do this for a living know they can save money by comparing bids the right way. You can too.
Start by listing the things that every contractor includes.
Then list anything that you want but that no contractor included.
And finally, make a list of questions. You’ll get to really know about your job by comparing bids, asking questions and getting answers.
Sometimes you’ll see something in one statement of work that’s not in anyone else’s. Does this mean that everyone else missed this item of work? Or did everyone include it but only one contractor mentioned it? Send an email with follow-on questions.
Don’t be shy about asking questions when you don’t understand. Go down through your list with each of them to confirm they have included what you outlined.
The good contractors won’t mind answering your questions. But don’t expect a free education. The best contractor will have included everything that needs to be done. That contractor doesn’t want to reveal everything to you if you’re just going to go to the next bidder and pass along that information.
How to negotiate the best deal
At the end of comparing bids you’ll know exactly what each contractor included. But don’t start negotiating price just yet.
I’ve got a better idea for you. Negotiate the scope of work to be performed instead.
The contractor might be willing to do some additional work at no additional cost. Contractors are often willing to be a little flexible like this because the crew is already on site. You can benefit from that.
Maybe he can get the electrician to add the outlet in your bedroom or install that outside light or add another outlet in your kitchen. Maybe he can get the plumber to change out the toilet in the other bathroom at no additional cost.
Finally, you can negotiate the pricing one last time. And by the time you’re done you can be confident that you saved money by comparing bids the right way. As a result, you’re going to get exactly what you want at the best price for you.
You’ve compared proposals. Now compare contractors to protect yourself.
You already know you should vet each contractor by getting references and calling those references. Try to get references that are a few years old as well as references that are new. It can be very useful to know how a client feels months or years after the project has been completed.
It can also be very useful to get a reference from an Architect or Designer who has worked with the contractor.
Also, find out about the history of each company. How long have they been in business? Construction is a business where longevity counts.
A contractor that’s been around for ten, fifteen or twenty years has done a lot of things right to survive and thrive. That company has learned valuable lessons along the way. And you can be the beneficiary of those hard-learned lessons!
I’m not saying that a new company can’t be a great company to work with. But, if everything else is equal and I have a choice between a new company and an established one, I’ll choose the established company.
One of the lessons the established company has learned is
Once you do choose someone to work with, contact the other bidders and thank them for their time and energy. They will appreciate it and who knows, you might want to hire one of them another time so leave things on a good note.
By following these steps, you can take control of your project costs and that’s one of the best ways of ensuring your project will be a total success!