To Bid or Not to Bid – Residential General Construction

Seattle General Contractor’s perspective on bidding.

So your wife is pregnant and the influx of baby gear has just begun.  This is about the time that the little Seattle home you’ve lived in comfortably starts to feel a little cramped rather than cozy.  You’ve thought of buying a new house but in these tough economic times that may not be an option.  Besides you probably love your neighborhood and are on a first name basis with the local barista.  At this point it makes sense to consider remodeling, renovating a room or constructing an addition.   So whether or not you use an architect to design your project or are handy with google sketch up you have some design drawings… What’s the next step?

Many people decide to solicit competitive bids from residential remodeling contractors.  The theory at work in soliciting competitive bids is to have general residential remodeling contractors compete against each other and in doing so get the lowest price for the remodel or addition project you wish to accomplish.  Sounds like a good plan…What could go wrong?

Remodeling older homes is similar to an archeological dig.  Every layer that’s removed reveals treasure and folly from past events.  The difficulty with bidding a remodeling project is there are usually many unknowns that can’t be quantified by a residential remodeling contractor until they are exposed after the project has begun.

Let’s say you’ve decided to go with Mad Mike’s Construction Co., a residential remodel general contractor, because they were the lowest bid.  They begin the process of remodeling your bathroom and adding on a nursery when the plumbing inspector shows up and notices that the existing plumbing is not to code and must be re piped to pass inspection.  If that wasn’t bad enough there’s a mess of electrical wiring running right through the location of the new closet area.  Mad Mike sees dollar signs.  Hopefully Mad Mike will be fair with the extra work he needs to perform but all too often we hear horror stories of extra charges that are exorbitant.  Over charging for extras is usually the result of the “low bidder” bidding the project below the true cost knowing that they will be able to recoup the money in change order work.  Or the “low bidding” residential remodel general contractor just didn’t have the experience to bid the project appropriately and is looking for a way to correct his mistakes.

At this point your house is a mess and you don’t have much of a choice so you authorize your residential remodel general contractor to perform the extra work and the project budget spirals out of control.  When the dust clears Mad Mike’s Construction Co. cost you 30% more than the high bidder wanted to charge when you began.  How can this situation be avoided?

Instead of bidding out a residential remodel/addition project interview reputable custom residential remodel general contractors and find someone you can work with and trust – a good fit for you.  Then negotiate the project and in doing so find out what the general contractors price includes and doesn’t include.  Identify the potential unknowns and build in a contingency for those items.  You should agree on labor rates and mark up and build them into your agreement with the building contractor.

You will never eliminate the potential costs of unknown conditions in a residential remodel project but negotiating rather than bidding fosters a dialogue between you and the residential remodel general contractor that will help the project run more smoothly and ultimately save you money.  This will make it a positive experience and get you the product that you hoped for.

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