How to Choose the Right Bid For Your Project
November 14, 2008
ENTRY BY A BLOG READER:
How should I choose from among multiple bids for the same job? Is price the best criteria?
REPLY BY MODERATOR:
An unusually low estimate for your home project should serve as a warning sign. When the price seems too good to be true, it usually is. Here is a true story, a case of a mismanaged home renovation project, which should serve as a reminder to think twice when offered a surprisingly low estimate.
An interior decorator received an unusually low estimate for painting and a few other small renovations in a client’s large house, a price that was several thousand dollars below other quotes she had received. By way of explanation, the contractor said that he had a well supervised but low-paid crew of 3 workers and he was simply passing on his savings to her to build goodwill for future jobs. She accepted the quote.
Shortly after the work started, the contractor’s crew received a better offer from another employer and quit. The contractor admitted to the decorator that he was unable to finish the job by the deadline for the quoted price, and he asked for more money in order to complete it on time. However, the decorator had already received her budget and time schedule from the homeowner on the basis of the original estimate. She decided to shop around for price that would be closer to the contractor’s original low quote. Three new estimates just for paining, not including the other renovations, each came in at over one and a half times the entire original estimate. She was now in a very awkward position; she was forced to ask the owner for a significant increase in the budget and forgo her profit on this decorating project.
What is the lesson for the decorator and homeowner here? The decorator (or the homeowner) should not have accepted the low estimate, however tempting it was; she should have hired a contractor whose quote was closer to the usual rate for the project. Then the budget established for the project would have been set at the higher price, or the job would have been scaled down to be within the available budget. There would have been no unpleasant surprises, and the aggravation, ill will and damaged decorator’s reputation could have been avoided.
In fact, a quote that seems lower than expected demands as much scrutiny as a quote that seems unreasonably high. A homeowner often loses more money by accepting a quote that is too low than by accepting a quote that is too high. Generally, with an unreasonably low quote, the contractor will be unable to finish a project as initially planned and will asks for more money or will finish late, or both. In the worst case scenario, the contractor may just walk away from the job to cut his losses, often after receiving a deposit for the job, and the homeowner will be forced to look for another contractor who can finish the job, always at much higher cost.
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