Blog

Reviewing Bids: Do Your Due Diligence

Now that you’ve created a short-list of contractors after speed dating them and have collected the right kind of bids from the contenders, it’s tempting to look at the bids you’ve received and go for the one that costs the least. Easy, right? Everyone loves a bargain!  WRONG! I know it’s hard, but don’t give in to this temptation! Bids are so much more than a stack of papers with a bottom-line cost at the end.

Here’s how you should review your bids:

Look at the bottom line cost. Are some bids so far apart from the others that you can you eliminate them immediately? Did you receive any bids 10% (or more) below or above your conceptual budget? If so, beware.  Contractors with low-ball bids can hold your project for ‘ransom,’ and there’s a big risk they’ll end up walking out when you don’t want to cough up more cash. A Wall Street Journal noted that “Construction firms often make unrealistically low bids to get jobs…but they can count on finding plenty reasons later to jack the price up enough to allow for a profit. When the building is under way, it becomes prohibitively expensive to fire the contractor and start anew.  The owner has become a hostage.”  Also remember that extravagant bids don’t necessarily indicate better quality work.

Take another look at the level of specificity and detail in the bid. The devil is in the details.  So, you’ll want to see the bid demonstrating that the contractor sees both the big picture (new kitchen) and the details (what materials, the process, and timing that will complete the new kitchen).  Bids that don’t get specific about the details are a huge red flag. It may be a sign that the contractor hasn’t fully considered the costs they’re incurring, which means they may come back to you for more money later. Don’t put yourself in a position where your project could be held for ransom.

Confirm the appropriate quantities of materials are noted in the bid, and if any special-order materials come with an additional charge to get them quicker.  If you’re okay with paying a premium to get your remodel done more quickly, go for it. If not, consider adjusting your timeline.

Compare bids. If you see discrepancies between recommendations for electrical work in two bids, follow up with both contractors. Ask them to clarify their intent and explain the differences.  Do this in a neutral way that respects their expertise so it doesn’t seem as if you’re pointing fingers.  Let them know that you just want a little more information to fully understand their recommendation.  If you have that information, feel fully informed, and still don’t agree with what their explanation, simply choose not to work with them. It’s important for you to understand and trust the message and the messenger.

Discuss any “critical path” deadlines. The critical path from the start of construction to finish is based on a series of deadlines that MUST be met in order to finish your project on time. For example–you cannot tile the shower until all rough plumbing has been installed in the walls and signed off for inspection. You’ll want to ask pointed questions about what would happen if any critical path deadline is missed.

I break down each section of a final remodeling bid in my book, Remodel Success. This is a great guide to help you get comfortable with all of these parts before you actually read a bid!