How Homeowners Can Accurately Compare Bids on Custom Home Construction and Remodeling

Homeowners are used to hearing “get at least 3 bids” before proceeding on a construction project. This is sound advice as well as getting referrals from friends and family. Bids are only useful however, if they come from comparable companies, and if they are structured so that they can be accurately compared. Many owners, and even some architects, don’t do a good job at detailing the project.

The most important requirement is a complete set of plans and specs. If everything about the project isn’t clearly spelled out, each bidder will make different assumptions–about fixtures, appliances, finishes, and so on–leading to widely divergent bids. And because each bidder’s assumptions will likely differ from the buyer’s, the stage is set for conflict during the project. The way to make bidding more productive for everyone is to eliminate assumptions and to give each bidder a legitimate chance of succeeding.

1) Buyers should interview three to five builders to see whom they would like to work with. If a buyer is working with an architect, the architect will likely have a list of builders that seem a good fit for the project. The buyers may also want to call previous customers of each builder for references.

2) Buyers should invite two or three builders to submit budgets. Note that the bidders may want to know who they are bidding against. For example, an established professional company may choose not to compete against a small, less-professional outfit with a reputation of lowballing.

3) Provide as detailed plans and specs to each builder as possible-besides being necessary for an accurate bid, it also allows the builders to look for discrepancies, incomplete items, and other problems. Plans are rarely perfect, so a good architect should welcome such feedback and be willing to make any necessary revisions. This will lead to a more accurate budget for the project.

4) The buyers and architect should also work to eliminate as many assumptions as possible. Allowances are a good example: if the buyers have researched kitchen cabinets and decided their quality level will cost $40,000, they need to tell bidders to use that number.

5) Your new construction project or remodeling project is a huge investment, make sure that surface protection is specified to that your interior finish will remain looking new throughout construction.

6) Set a due date agreeable to all parties: three or four weeks is typical for a custom home project.

The bid should include the budget and an estimated completion date. It should also include each builder’s policies and costs, including any administrative charges, for making changes once the project is underway. Before making the final choice, the buyer and architect should meet with each builder to review the bid, ask clarifying questions, and confirm numbers. After all, it wouldn’t be good for anyone to rule out a qualified candidate, or to end up with problems later, because there was a math error on the bid.

Custom homebuilders say that at least 20 percent of the plans they see are over-designed for the customer’s budget. That’s another reason to work with a reputable builder that can be involved in the home’s design from the beginning, even though they may not have the lowest bid.