Picking the Right Remodeling Bid
We just got some bids on a remodeling project and the bids are all over the map! And even the lowest bid is much more than we expected we’d have to pay for our project.
Why are the bids so high, and why is there so much difference between
them?
Well, there are two different things going on here.
First let’s address the scatter in the prices of the bids: The National Home Owners Association says you should expect a difference of about 20% in the bids you receive for a home improvement project. Under normal circumstances, I assume. But we haven’t had “normal” circumstances in the residential housing industry in years! During the boom builders could pretty much name their tab (within reason, anyway). And now, during the bust, they’re bidding jobs outside their regular field of work, and doing so in a highly competitive market. Both extremes lead to a wider variance in bid prices than you’d expect to see for any given job, but for very different reasons.
Now to the second question: Why are the prices so high?
Repair and remodeling is a very different animal than new construction. Repair and remodeling loses all the advantages of the economics of scale that new construction enjoys, both in the purchase of materials and in labor.
Consider: In a new construction project the doors are purchased as part of the bid package by the supplier for the entire project. So while a door might cost $200 each, by bundling that door into $150,000 worth of materials for the whole project, the contractor is able to buy them for only $135 each. When the laborers install them they have the advantage of brand new square framing and many doors to install. As a job is repeated time is saved. So installing 10 doors is cheaper (per door) than installing 1 door.
Now over to the your remodel: Your whole project probably doesn’t total just the materials in the new construction. And, you may have only one or two doors that need to be changed. So the economics of scale are lost both in purchasing power and in labor savings. Then, your doors are going to be installed in old frames that are probably no longer square. They might not even what we refer to today as a “standard” size. All these factors increase the cost of installing the door.
Multiply this example out to the size of your project and you can see why remodeling is a very different animal than new construction. According to Building News International the national average price for a remodeling project is $86 per square foot — almost the same as for new construction.
Finally, let me give you some suggestions about which bid to choose. Obviously I can’t be specific as I know neither the details of your project nor the contractors in your area, but in general:
- If you have a bid that’s disproportionately low, throw it out. “Low balling” is a bidding tactic that some contractors use to get jobs that is, in my opinion, dishonest. Basically the contractor deliberately under bids the real price of the job in the hope of being the lowest bidder. Then, after s/he’s gotten the job and the work has started, s/he finds reasons to get you to sign Change Orders that progressively raise the price up to what the bid should have been in the first place. In some states I understand a contractor can be disciplined for using this type of tactic
Another reason a contractor might submit a low ball bid is because they have no intention of doing the work! They take your money and disappear with it. Believe it or not, it happens a few times every year.
In either case, this isn’t the kind of person you want to hire.
- If you have a bid that’s disproportionately high, throw it out unless you can find a darned good reason for the high bid.
- That leaves you with a pile of middle bids that are all worth your consideration. All other factor’s being equal, I recommend picking the contractor you get along with best, not the lowest bidder — though the two may be the same. Because remember, this individual and his or her crew is going to be around five or six days a week for months on end! You don’t want the industrial version of your mother-in-law!
Good luck with your project!`
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