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Three Bid Myth

Why Bids Aren't the Best Measuring Stick

Bid shopping works well for automobiles, but it’s a high risk way to shop for building projects. This presents a dilemma for some clients who feel that competitive bidding is the way to ensure a fair price. For remodeling projects it’s not and here's why:

Remodeling is not remotely like car buying; you may be comparing apples and oranges.

Weighing apples and oranges on a scale - they are not the same as one another.

When you are shopping for a car, you can ask three different dealers to price a specific make and model automobile, and you can be fairly certain that you are comparing the same product.


But when you have an addition or a remodeling project in mind, there are no clear specifications. There may be several design solutions of different complexity, including different features, levels of finishes, and levels of detailing. Due to the incomplete or vague scope of work, unbeknownst to you, one company may bid the Chevette level project and another the Lexus level project. All you get is an overall price, and maybe a big surprise later when you discover what it did or did not include.


Low bids may also result from gross estimating errors. You want someone who knows what they are doing. If it seems too good to be true, it probably is! You don’t want someone who disappears under cover of night in the middle of the project when they come to the realization that they grossly underbid your project and don’t have the money to finish it.


Other reasons for inappropriately low bids may be differing levels of service, miscommunications about your expectations of quality, shoddy materials, poor workmanship, slow production, inadequate safety precautions, lack of insurance and licensing, and no warranty service from here-today gone-tomorrow operators.

Should price be the basis for choosing a remodeling company?

Once you have some design objectives, you can meet with several companies to get a sense for a budget range for your desired project.


Sometimes, at this point, the homeowner will discard the high and low contractors; feeling that picking the “middle” one minimizes the risk. Is a price-based selection the best way to hire a remodeling company? Is the “middle price” company really the company who will build the best quality project for the “best” price?


Not necessarily. Bids aren’t the best measuring stick. With a building project, the ability to stay on budget, the quality of craftsmanship, timeliness, quality of materials, level of service, attention to detail, and warranty can differ significantly.


With a car, you're purchasing a product. You can see what it looks like and take a test-drive to see how it performs on the road. With a building project, you're purchasing a "design concept" and you don't see the finished project until well after the contract is signed.

What should the main criteria for selection be?

Remodeling quality never runs dirt cheap nor should it. It makes sense to base your selection on OVERALL VALUE rather than just on cost alone. Spending a little less and getting to an end product that you are less than thrilled with is no bargain, particularly if that route  is stressful, random, and out of control. It’s said that “the bitterness of poor quality remains long after the sweetness of a low price is forgotten.“ You don’t want to set yourself up for that.

What's the best way to make your decision? 

Interview the companies.

Ask around. Do a thorough interview. As no job interview begins by negotiating salary, hiring a remodeling company should not be any different. Before you get to compensation, you want to be sure you have a qualified applicant.


Choose someone with a track record of successful projects.

You are looking for a remodeling company:

  • who accepts responsibility for the actions of their company
  • who presents solutions, not excuses, when a problem arises
  • who understands every aspect of your project; from meeting your budget and design objectives to problem solving during construction
  • who has the expertise in bringing a job to a speedy close
  • who has the know-how to coordinate and orchestrate the utmost of results from numerous trade contractors and countless suppliers

Invite each company you are seriously considering out to your home and interview them.

Here are some questions you might want to ask.


Go to the place where they conduct their business

After they come out to see you, invite yourself in to see the place they work out of: their offices and showroom. You can learn so much about them during this visit. Your home, the job site is an extension of the company’s work environment. You can be pretty sure that your home, when being worked on, will be reflective of the work environment that they have established for their day to day operations.


By seeing who is there and what they are doing, you can find out more about how they operate and how they will run your job. Are they organized? How do they track things? What is their system for ensuring jobs stay on track and for following up on loose ends?


If the remodeling company passes your initial interview and you are happy with what you learned about them by visiting their base of operations, ask for a list of references.


Interview their clients

Ask past clients key questions! Here are some examples of good questions you might want to ask.

If the client has a current remodeling job in progress, ask to see it.


After you talk to some past clients, you may also wish to talk to the clients who are in the midst of a remodeling project and ask them the same above questions.

Your final decision!

Weigh your feedback. Positive and enthusiastic responses from past clients and a positive personal assessment based on a thorough interview and visit to their place of business provide a good basis for making a decision about a builder.


If you have done your homework well, you will be choosing an excellent remodeling company, one who will build a top notch project for you in a timely manner, within your budget and with a minimum of headaches. This is probably exactly what you are looking for and everything that you would want.


There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man's lawful prey. It is unwise to pay too little.


When you pay too much, you lose a little money - that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot - it can't be done.


If you deal with the lowest bidder, it is wise to add something for the risk you run. And if you do that, you will have enough to pay for something better.


- John Raskin