Are You Getting An Estimate, A Quote, Or A Bid?
One of the big challenges for remodeling contractors working with homeowners is that they almost never have the project completely detailed out in terms of fixtures and finishes. These can make a great deal of difference in the actual cost of the project.
If you are a typical homeowner you have solicited “bids” from contractors. Unfortunately, a bid is an imprecise word that seems to generate confusion. Is a bid an “estimate”? Is it a “final quote”? There can be a huge difference between what homeowners think they are getting when they receive bids for their projects and what they are actually getting.
Remodelers are contacted regularly to look at projects that have not been pulled together yet. For example, let’s say the homeowner wants to do a kitchen remodel, during my first visit it is rare that people have their granite countertop, tile for backsplash, plumbing fixtures, flooring selections or cabinetry all picked out at once. Yet, they expect to get an estimate from the contractor. The estimates typically come back with all sorts of different prices, because the contractors have to make assumptions to fill in all the blanks.
A reputable company will use allowances and disclaimers to deal with the lack of definition and clarity. Most reputable companies, however, will capitalize on the lack of clarity by submitting a bid and surprising the homeowner later with change orders to add all the things that weren’t in the bid initially. The homeowner often gets stuck paying more than they would have if they had taken a more complete bid with the higher price from the reputable company. This is a big problem in the remodeling transaction. Homeowners think they are getting solid, empirical quotes, while the remodelers think that they are providing estimates that are not firm, yet. The difference between these two often leads to frustration, loss of projects at the last minute and a lot of wasted time for both the homeowner and the contractor.
Here are some ways to avoid this problem:
- Your contractor should call his initial attempt at giving you a price an “estimate”, that is all that it is until the job is defined enough to be quoted with firm prices.
- You should expect to get an initial budget range or “ballpark” estimate at the first meeting or shortly after the first visit.
- During the design development as more selections are made, you can ask for updated estimates. If drawings are needed, then the final quote should not be expected until the drawings are completed and all of the selections have been picked out specifically or assigned allowances have been agreed on by both the contractor and the homeowner. At this point a construction contract can be made and is a true “quote”.
Homeowners need to know that an accurate quote is impossible before a project is completely designed and specified. The challenging part for the homeowner is that the early estimate that they receive are often called “bids” but they are not a reliable indicator of which remodeler will provide them the best final value. That can’t be known until the selections are all pinned down. The initial prices are only useful for establishing a price range for getting the job done and perhaps setting realistic budgets.
The best procedure is to get an idea of the price range for the project will be, is to do thorough interviews of contractors and pick one or two to drill down into the detail more with. Let them know that the budget range is acceptable. This will help the final bidder or bidders to finalize the design and specifications and make the most of your investment without exceeding that budget.
Homeowners are notoriously reticent to talk about budget, but it is much more efficient to work with a design/build contractor and share ideas about budget from the very beginning. In order to do this you need to find a contractor that you trust and are comfortable with. “How to Find a Good Contractor” is the subject of another article, but I have a shortcut that homeowners are welcome to use. It is a 12 question contractor interview sheet found on my website.
The goal is to get all the design details and selections pinned down as specifically as possible so your contractor can give you the price for the job that you really want to get done – one that won’t change unless the homeowner asks for changes.
Developing the price for a remodeling project is a fluid process for remodelers. As more and more specific decisions are made during the development of the project, the cost tends to go up from the initial “ballpark” cost given by the contractors. Why is this? Because the contractors are making assumptions about your taste in finishesand quality and it isn’t until later that the specifics can be known and priced out with certainty. This is something know in the industry as “scope creep” – the tendency for projects to increase in size and scope as they go along. If you build this expectation into your cost from the very beginning, you will have it covered and won’t experience the frustration that is usually part of the process of getting remodeling bids.