Why 3 different contractors will quote 3 different prices

Why 3 different contractors will quote 3 different prices

Our next topic is why 3 different contractors will quote 3 different prices on the same set of plans that a homeowner provides for a bid.

We are sometimes approached by a homeowner or realtor who asks us to bid a set of drawings that a homeowner has had prepared by an architect or residential designer. Before we will entertain such a request we always ask which other builders are bidding the work and what specifications exist from which to bid from. Many homeowners incorrectly believe that a six to ten page set of construction drawings provides all the information needed to properly bid a home. They also seem to believe that most builders are very similar if not equal. We usually spend some time to help them understand the issues involved in bidding a home.

Many homeowners believe the set of drawings contains all the information needed to bid a house, and don’t spend adequate time developing a set of specifications to bid from. In a competitive bidding situation the low bid usually has the inside track at being awarded the job. Therefore, it is in the
builder’s best interest to use minimal specifications and/or allowances. In these cases it is often later in construction when the homeowner recognizes the low bid probably wasn’t the best price for the level of finish they envisioned, while the builder is rewarded with the contract for providing a minimal package.

Also, all contractors and their sub-contractors are not equal. Contractors used to building in a less expensive environment will select finish levels and use subcontractors that are also less expensive and less experienced to maintain their pricing competitiveness. Contractors used to building upper end custom homes use higher quality materials, standards and subcontractors since their customers demand this level of finish. Expecting these two contractor types to have the same price for the plans is not realistic as they have 2 different levels of product and finishing.

In our initial meeting with a homeowner reviewing a set of drawings we will discuss these concerns. It is important for the homeowner to have all contractors bidding from a uniform set of specifications that establishes the standards for plumbing, heating and A/C, appliances, flooring, cabinets, and numerous other items for a more accurate comparison. It is also important for the homeowner to only select contractors who have demonstrated an ability to build the level of home the homeowner expects. As a prior web article noted, there can be significant price differences just based on the builders insurances or lack thereof let alone the differences in quality and finishes. In the end, a homeowner will have to make a decision based on their comfort level with builder, their staff, experience, reputation, financial stability, warranty, and expected quality in addition to the price they have provide for the home.