The Contractor Bid Process

The Contractor Bid Process

One of the first tests of whether or not a contractor is working in your best interests comes when you are ready to review plans and get bids. Thorough plans minimize the possible backlash from assumptions and expectations. They ensure that everyone should be bidding apples-to-apples.

You may want to ask that each bid be broken down by the cost of materials, labor and O & P (Overhead and Profit). A breakdown of some items is usually necessary in case you make changes such as different materials and you need to know its affect on the bottom line (we’ll be exploring the dreaded “allowances” line item shortly). But contractors will be hesitant to break things down because they (rightfully) know that many consumers will use that information to try and negotiate price. So be prepared to be a bit flexible on this issue during the bid process. As long as you have a very detailed material specification prior to signing a contract, you’ll have the protection you need.

We’ll be going over the process of getting things in writing pretty thoroughly before you sign a contract. But for the bid process, insist that each bid include at a minimum the following information:

  1. a detailed Scope of Work;
  2. a timeline for completion;
  3. their proposed payment schedule; and
  4. the process for approving changes.

When you have a desired budget but the quotes are higher, be prepared to discuss it with your ‘preferred’ contractor. You’re essentially challenging the contractor to work with you and meet your goals so it becomes something of a test to see if their experience and innovation can help find solutions. Be cautious became some contractors will just agree to the budget and expect to make it up with change orders. As we discussed earlier, another area of caution concerns the role or roles the contracting firm handles. When one of the selected bidders proposes that it handle both design and construction, recognize the potential of a conflict that might impact getting apples-to-apples competitive bids. Again, there’s absolutely nothing wrong with this process and in fact, is many times in the consumer’s best interest. The only downside for the consumer is potentially additional work or another step to eventually make sure you’re comparing these apples to those applies. So be up front and ask for suggestions on how to make the bid truly fair and competitive. While the answers are important, it is just as important for you to see how everyone works and if they keep your best interests in mind.

At this point – you’re ready to get bids on your project. Each contractor you ask to bid will probably want to be the last one to present their bid as the truth is that the consumer’s excuse to procrastinate goes away once all the bids are in. You can eliminate or at least reduce that pressure by telling the bidding contractors beforehand that you will not be making a decision until after you’re had a couple of days to analyze and review each bid without any pressure (or you can always say that you want to get good ‘ol Uncle Ed’s opinion). In any case, once you’ve selected the front runner, you’ll need time to take the next all important step – Investigate and Verify.

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