When preparing for a home remodeling project, nearly every article ever written on the subject advises the homeowner to get multiple bids.  This advice is prevalent, it’s sensible, and nobody wants to pay too much.  So, if it’s really that simple, why are there still so many horror stories about remodeling projects going over budget?  After all, you had multiple bids before you started, right?  So what’s going on?

In remodeling, the biggest problem we see with homeowners getting multiple bids is that they are aren’t getting bids for the same thing from one contractor to another.  There are typically a few reasons why this happens; here are the three most common ones.

Project Definition

There is a lot of work that goes into planning a remodel project.  Determining the layout, selecting the materials, and assessment of the existing structure to understand what is being torn out and how the new work will tie-in with the old.  Naturally, most people want to have a general idea of how much the whole project could cost, so they can determine how to proceed with the planning. This step is commonly referred to as the “ballpark estimate”.  Nothing wrong with that, but it’s only one step in the planning.  As details are worked through, materials selected and unknowns uncovered, a much more thorough assessment of the project can be made….basically, the project becomes more defined, and the opportunity for someone to price the project accurately becomes much greater with this definition.

In contrast, we routinely encounter homeowners with nothing more than a napkin sketch and a short list of ‘must-haves’….usually described with adjectives like “nice”, “high-quality” or “mid-level”.  Well, what does that mean?  After 20+ years in this business, I have yet to find a single product labeled as “mid-level”.  So, while I know enough to talk with the homeowner and gather more information to help establish what they really mean, it certainly does not guarantee that my competitors will arrive at the same conclusion and price out comparable items.  This is especially true in kitchens, baths and other finish-intensive remodeling projects.  For additions and structural projects (where the price of the materials can have less variance), the problem with ballparking from that napkin sketch is that the structural engineering has not been done, and the full scope of work is often not adequately considered.

Either way, a loosely defined project is tough to estimate, and estimate is really all that any contractor can do until the planning work is done.

Comparing Apples to Apples

While this problem could happen even after the plans and specs are complete, it is most prevalent under the same conditions described above, under Project Definition.  Here’s the premise: let’s say you want new kitchen cabinets, so you request bids from three different cabinet vendors.  You tell them all that you want a shaker door, in Alder, with a nice crown molding at the top.  That’s a good start, but are all three vendors providing the same services?  What type of construction are the cabinet boxes? How many drawers and pull-outs are included?  Are the cabinets pre-finished?  Are they installed?  Are they set up to support that new granite countertop you just picked out?  Are knobs included?  If you accounted for and addressed all of these details, then you would be on your way to a fair comparison, but if you didn’t think about (or know) these details, you could have very different results, and what at first appeared to be the lowest bid might not be so in the end.  The cabinets, of course, are just one phase of your whole kitchen remodel.  It’s the same exercise for the electrical, plumbing, flooring, windows, appliances, etc.

Understanding the Terms of the Bid

So, let’s say that you have defined your project, and you are confident that you are comparing apples to apples.  There’s still another thing that must be considered; the terms.  Basically, this means understanding what is included, what is not, and how things can change.  One of the common mistakes I see is when a homeowner does not differentiate between an estimate, a bid, an allowance and a budget.  These are different things, and may mean that the price paid after the work is done is quite different than what was anticipated at the start.

To clarify, here is what these terms actually mean:

• Estimate: literally, an estimation or guess at what the item might cost.  Good estimates can be very close, sometimes spot-on.  Other times, estimates are just wild guesses, and essentially useless.
• Bid: a firm amount for a specific item.  Sometimes bids have disclaimers, so watch for those.
• Allowance and Budget: interchangeable terms that effectively mean the same thing, which is a set amount of money to cover a specific item.  Just like estimates, though, there is not always a correlation between the allowance/budget amount and what the final cost will actually be.

Overall, these three key points cover most of the pitfalls homeowners face when setting out to get multiple bids on a remodeling project.  Since the premise of multiple bids remains a valid one, the three things a homeowner can do to improve the experience are;

• Define the project.  As much detail as possible.  If the details simply are not known, then understand that all you have are estimates….and these can change.
• Compare apples to apples.  Detail is critical here, too.
• Understand the terms of the proposal.  Is it an estimate, a bid, or just a budget?  Knowing the difference will prove critical later on.

Overall, these three key points cover most of the pitfalls homeowners face when setting out to get multiple bids on a remodeling project.  Since the premise of multiple bids remains a valid one, the three things a homeowner can do to improve the experience are;

• Define the project.  As much detail as possible.  If the details simply are not known, then understand that all you have are estimates….and these can change.
• Compare apples to apples.  Detail is critical here, too.
• Understand the terms of the proposal.  Is it an estimate, a bid, or just a budget?  Knowing the difference will prove critical later on.