Picking a Contractor Part II Evaluating Bids

By Jerome Graber,
April 7, 2019
Home | Picking a Contractor Part II Evaluating Bids

Welcome back! Today we are going to continue our series on selecting the right contractor for your home improvement project. Our first article in this series was on what to look for in selecting who to solicit bids from.

How to choose from the bids you’ve received


Now that you have your two to four bids in hand though, how do you go about choosing between them and making a final selection?

Your first instinct might be just to go with the lowest bid. After all, who wants to spend more money than you have to, right? And while the lowest bid is often the right choice, there are definitely some other considerations you take into account first.

Let’s take a look at the criteria you should use to make as good a decision as possible and maximize the chances that you will have a successful project instead of a nightmare.

Are bids within 5-10% of each other?

The first thing you should keep in mind is that construction is not a super high margin industry. All of the bids you receive should be within 5-10% of each other. If you got three bids, and two were really close to each other and the third was 15% or more lower, that should be a huge red flag for you. That virtually guarantees that either the low bid contractor does not fully understand the scope of the work you want performed, or missed something on his bid.

Either way, be very cautious about selecting the low bid if it is dramatically lower than the others. The chances of you getting burned in that scenario are very high.

But assuming all your bids are within a few percentage points of each other, what other criteria should you look at in determining which is best for you? Here are the questions you should ask each of your potential contractors:

Evaluate the products & manufacturer warranty of each bid

Which products have you specified for this bid, and what is the manufacturer’s warranty on it? Depending on the type of project you are taking on, the quality of the products being used can make a big difference in the total cost. There are more than one good manufacturer for virtually every product you may buy. But make sure that your contractors are all pricing similar quality products when comparing bids.

What is your labor warranty from the contractors?

What is your personal warranty on your workmanship? Above and beyond the manufacturer’s warranty, you should also receive a labor warranty from your contractor on any project you undertake. And this can vary greatly from one business to another. State law here in Indiana requires a minimum of 1 year of coverage directly from your contractor. But your most reputable contractors frequently offer more coverage than this. If the price between two bidders is only a few percentage points apart but the higher priced one offers a longer warranty, consider whether the reduced protection is worth the savings.

How long do the bids say the job will take?

One thing that homeowners often seem to fail to take into consideration when choosing a contractor is just how long their property will be disrupted with construction going on. Especially if you are remodeling the interior of your home, this can be a huge deal. For many people, paying a few hundred dollars extra for a promise of quicker completion and a shorter disruption to the normal flow of your life is well worth it.

Cross examine the details of each bid

Are you sure you covered all the details? One big advantage of getting more than one bid is that different contractors tend to emphasize different details when spelling out what they plan to do for you. When comparing your bids, take advantage of this by asking each contractor about any detail that may have been included in another bid but was not specifically mentioned in theirs. (this will also help you in making sure 100% of everything is actually spelled out in your final contract. More about that next time)

The right contractor for the job is likely apparent now

Once you have asked all these questions, usually the correct contractor to select for your project will be apparent. However, if two or more all seem equally qualified and right for you, of course then select from the lowest of the bids.

Don’t be afraid to negotiate bids

If one contractor is your preferred, but his price seems a few percentage points high compared to another, you can always ask him to price match. The worst he can say is no, and you just might get the best contractor for your project and the lower price at the same time!

On our next blog post, we will be discussing how to negotiate a fair contract that adequately protects your interests to make sure your home and wallet are properly protected during the project.

Hope you’ll enjoy the next piece!

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