Once you’ve got a detailed plan for your project, described in accurate drawings and written specifications, it’s time to put your project out to bid. Whether you are hiring a general contractor to perform most the work, or you are an owner-builder soliciting bids from subcontractors, the same strategies apply. The goal is to get the best work at the lowest price.
MARKUP & PRICING
Once a contractor has come up with his estimate of hard costs to complete the job, he will mark up his costs to determine the bid price. The hard costs – the money paid out for labor and materials — is marked up to cover the contractor‘s overhead and profit. Every company calculates overhead and profit a little differently, affecting the price they will bid on your job. Read More
The most common approach to is to provide the same plans and specs to two or more contractors (typically three or four) and ask them to bid the project. Each then submits a price and proposal and you select the winner. In most cases, the owner selects the low bidder, but in some instances you would be wise to choose another bidder. Read More
Some contractors state flat out, especially when times are good, “I don’t do competitive bids.” Can you blame them? After all, spending 20 to 100 hours on a highly detailed bid that they have maybe a 20% chance of winning can seem like a big waste of time. But negotiated bids can work for homeowner as well under the right conditions. Read More
Design-Build offers an alternative model based on collaboration rather than an adversarial relationship. In this world-view, the owner trusts one company to come up with a design that works functionally, aesthetically, and financially. In design-build, you give up the checks and balances (sometimes illusory) of the adversarial process, but gain the benefits of everyone working together to a common goal. Is this approach right for your project? Read More
Cost-plus bids are often used on jobs with a lot of unknowns and hidden conditions, such as repair work. While generally used for smaller jobs, these contracts are sometimes used for large jobs as well. Whenever the plans and specs are fuzzy for whatever reason (never a good idea), cost-plus may be the only way to proceed. On jobs with many unknowns, the client can benefit from cost-plus pricing, in theory, because the contractor does not have to add big “fudge factors” into his fixed bid to cover the unknowns. Without adequate protections built into the bid, however, the owner is taking on an enormous risk that job costs will spiral out of control. Read More