Comparing Price Estimates – Make Sure It’s Apples to Apples

Accurate Contract Scope Keep Change Orders To a Minimum
Accurate Contract Scope Keep Change Orders To a Minimum

This blog is half rant and half advice about how to evaluate bids from remodeling contractors.

About 9 months ago I lost a job for a basement remodel on “price”.  The winning contractor came in with a fixed price of $33,000 based on a brief discussion with the client.  My firm separates design and construction and the client liked what they heard from us and our references so they went ahead with us to do design (this is after they got the fixed price quote, mentioned above).  After a fairly detailed design, I gave the client an estimated price of $53,000.  Not surprisingly, the client thought the $33,000 was more attractive and went with the other firm.  When I heard that another contractor had bid $33,000, I was quite surprised and suspected that the difference reflected a different scope and not real construction price differences.  I tried to have a conversation with my client about whether the scope was the same but the client saw only the bottom line.
I thought I had developed a fairly good relationship with the client so decided to check in after the job was scheduled for completion.  I just called.  Here’s what I learned
1 The job took 2 months longer than expected.
2 The final job costs were $50,700 — a whopping 54% over-budget.  Note that we included $5,000 for contingency (not included by the other firm) so the total costs were almost exactly the same.  Plus we have a record of coming in on-budget based on detailed up-front budgeting.
3 Change-orders included the following items:

The bath location had to be moved to the location we suggested
Lighting was upgraded to recessed lighting (included in our initial quote)
The inspector required them to include an egress window (included in our initial quote)
HVAC was upgraded (included in our initial quote)
Finish allowances were exceeded by 500% (upgraded finishes were included in our initial quote)
Additional walls were constructed (included in our initial quote)
Additional labor for removing and reinstalling bookcases and other case goods (included in our initial quote)
4 The client was furious about the job.  They didn’t like working with the contractor who was messy and somewhat unreliable.  The client especially didn’t like all the “nickel and dime” change orders and hassles.
So while I feel somewhat redeemed, I’ve been thinking both about what the client should have done differently and what I could have done differently.
The main lessons learned for the client are to:

  1. Always make sure you’re comparing apples to apples when comparing 2 price quotes.  In this case, it would have been relatively easy since my price and design were quite detailed and the client could have spoken with the other contractor and confirmed that all the specifics were in his quote.
  2. Always make sure that price quotes include a detailed scope of work.  This will help limit change orders and price increases.
  3. Always get references and use a guide like the one here
I’m having a bit more problem with the lessons learned for me and would welcome suggestions about how I could have helped the client understand that the lower bid wasn’t realistic.
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