Completeness of the Estimate: One of the Most Confusing Stages of Dealing With A Contractor Can Be “Getting Bids”
One of the most confusing stages of dealing with a contractor can be “getting bids.” Different people attach different meanings to words, and it can be very confusing to consumers and contractors alike. There are subtle differences between the words bid, estimate, proposal and contract. A bid is an offer to do something, with certain conditions, for a certain (usually) lump sum price. An estimate is a calculation or judgment – a written statement giving the likely price that will be charged for specified work. A proposal is an offer, a proposition (price) for something, i.e. “for X amount of money, we will do X work”. Some proposals include an allowance. An allowance can be a lump sum number, such as “$8,000.00 for appliances.” An allowance can also be for a unit cost of material, such as “$4.00 per square foot material cost for ceramic tile.” An allowance is usually given because an exact product, process, or type of material has not yet been determined. A bid or estimate is usually the first step in determining the conditions of a project, and all it tells you is the projected cost of the project. The bid or estimate is usually followed by a proposal. A proposal outlines all of the other terms and conditions that will be included in the final agreement between the parties. The contract is the final agreement between the parties. What should be in the contract…
Design/Build Remodelers start their process with the execution of a design contract that typically will include the costs of the design/build team – a designer, a draftsman, and an estimator. As concepts are developed, a preliminary budget is created and presented to the client for discussion and approval. During this stage changes can be made to help reach a desired budget before investing significant time in drawing plans and choosing materials. After establishing a preliminary budget the design team can refine the details of the project. This process is required to ensure a well-planned project.
Homeowners are always cautioned against accepting a verbal bid. Many contractors will verbally delineate a cost, pulling these numbers from experience or price books they have acquired over the years. The caution applies to accepting a verbal quote as “the contract.” Always do business with all elements in writing in a binding contract. At McCaleb Construction http://www.mccalebconstruction.com/ we believe that good, detailed contract agreements help maintain good relationships, since details are not left to recollection and potential misunderstandings. Beware of contractors who refuse to give a written estimate or contract.
A reputable contractor will not give you a sketchy proposal on the back of an envelope. He prepares a comprehensive set of material and labor specifications, carefully estimates costs and offers you a detailed proposal, at a package price, covering every aspect of the job from removal of existing materials to a thorough clean-up when the job is done. Some contractors choose to leave certain items out of their proposal because they are trying to make their proposal less costly. It isn’t until all of the details have been determined that a contractor can give a firm bid on the whole project. The smaller and less complicated the project, the easier it is for the contractor to put together an estimate. Nailing down all of the details, getting bids from trade partners, finding products that satisfy the customer and designing the details of the project take a long time and involve a lot of work.
Unacceptable: You are sure to have trouble if you accept verbal estimates because nothing is documented and everything is left to chance. Be wary if a contractor leaves whole areas of work out of the bid. Some contractors put in very small allowances for things like fixtures or appliances. Again, this could be an attempt to have the lowest bid. Some contractors minimize the job on the front end and then write a lot of Change Orders (we’ll discuss Change Orders later) for extras, making the project cost a lot more than initially expected.
Good: The contractor listens carefully to the customer’s wishes, offers good suggestions and produces a bid that includes all the elements of the project for which the homeowner asked.
Better: In addition to the above, the contractor has a system for checking off all the elements that are necessary to complete this type of project. The contractor produces a document that makes it clear what the estimate or bid is based on, shows you samples, has you pick out elements of the project at showrooms or on websites and helps you understand what you will get for the amount you want to spend.
Best: In addition to the above, the contractor offers a fixed price contract. He also specifies in detail the make, model, and color of the pieces of the project. He keeps the design and estimate reflective of each other. The contractor is willing to share constructive ideas with the customers about decisions that will help the project meet budget. The allowances in the proposal are adequate to purchase the products desired in the project.