Defining Remodel Cost: Soliciting Contractor Proposal

The first, and perhaps most common way to price your remodel project, is by getting bids from professional general and sub contractors.  Some people dread this process; for good reason.  It’s uncomfortable having strangers in your home, discussing subjects you may not be too knowledgeable about.  But the process doesn’t have to be painful.  This post analyzes the best method for soliciting multiple contractor bids.  Upon applying these principles, you’ll be on your way to selecting the right company for your remodel job.

When to Use this Method

Pricing a remodel via contractor bids is best done in the later stages of your project planning.

Sure, you can get contractors out to the site very early in the planning stage but often this leads to more questions than answers.  If the project scope is not yet defined, you’ll have a contractor staring at you blankly, or trying to convince you of what you want.  Neither is ideal.  Also, this method may be most applicable for projects involving complex scopes of work or unusual conditions.

For example, let’s say you are converting an attic into living space and the project requires structural modification.  Accurately pricing this scope of work certainly requires professional contractor input, and it may be wise to bring bidders in sooner rather than later.

When NOT to Use this Method

Refrain from using this method if you are looking for very general or preliminary budgets.  If this is the case, consult some of the other methods in this series.

Also, if you plan on doing most of the work yourself, I recommend not getting contractor bids just to use their estimate.  If you don’t intend to hire someone, do not waste your time or their time.

How to Use this Method

So you’ve decided this method of pricing your project is right for you.  What next?

Step 1:  Determine Your Scope of Work

Project scope can be as simple as “new carpet in bedrooms and living room.”  It can be as complex as a full set of remodel plans from an architect and structural engineer.

Either way, it behooves you to define you scope of work before calling a contractor.  This is not as complex as it sounds.  Use the following list of project elements to begin assembling your scope.  Next to each applicable item, simply list what you want the eventual result to be:

• Demolition
• Concrete
• Masonry (brick, stone veneer, block walls)
• Metals and Handrails
• Wall and Roof Framing
• Trim Work (Finish Carpentry)
• Insulation
• Roofing
• Doors
• Windows
• Drywall/Plaster
• Lath and Plaster/Stucco
• Flooring (Carpet, Tile, Wood, Baseboard)
• Paint (Color, Sheen)
• Appliances
• Plumbing (Water, Sewer, Gas, Fixtures)
• Heating and Air Conditioning (Furnace, Condenser, Thermostat)
• Electrical (Wiring, Phone, Cable, Light Fixtures)
• Sound and Alarm Systems

Your remodel may not require all of the above elements.  If that is the case, cross it off and move to the next item.

If your research produced samples of materials, or pictures of homes you like, attach them to the scope description you are developing above.

Extensive renovation or remodel projects will likely require an architect.  I will be writing a post on this topic in the coming weeks.  Meanwhile, my free e-book covers the design phase of a job.  Feel free to reference it should you need a design team!

Step 2: Determine Which Type of Contractor Does this Work

Once you have a general scope, determine what type of contractor you need.  Your three choices are a handyman, a subcontractor (aka specialty contractor) and a general contractor.

Usually a handyman is a one-man-show working out of a pick-up truck, often with decades of experience under his belt.  A handyman is great for small projects that require a jack of all trades, and no specialty work (masonry, plumbing, electrical, etc.).  Make sure they are licensed!

Subcontractors, or specialty contractors, work on specific elements of a project.  Heating and air conditioning contractors, electricians, masons and flooring contractors are all examples of subcontractors.  They are used when you only need one type of work completed.

General contractors often complete a project using a combination of subcontractors and their own workers.  For example:  If you’re adding a master bedroom to your house, and hire a general contractor, he or she will likely subcontract out the larger items like concrete, framing, roofing, etc. and then self-perform items like finish carpentry and window installation.  General contractors are a good fit for larger, more complex project involving three or more trades, or types of work.

Step 3: Find Contractors

Once your scope is defined and you determine the type of contractor you need, the next step is finding them, right?

Here are my preferred methods, in order of preference:

1. Contractors you have effectively used in the past.
2. Referenced contractors from friends or family.
3. Contractors referenced by material suppliers.  For example, if you are looking for a roofer, call a local roofing supply company.  They will know who buys a lot of material (i.e. they do a lot of work) and who pays their bills (i.e. they are financially solvent).
4. Online resources like www.servicemagic.com or www.angieslist.com.
5. Job signs you see as you drive around town, followed by reference checking and observing their past projects.

Step 4: Establish a Bid Package

Before bringing in 3-4 contractors to bid your project, take a few minutes and create bid packages for them.  Write out a cover page including the following information:

• Your name and contact information
• Your address
• A brief description of the work
• The date you want to receive  bids (Allow for 1-3 weeks, depending on the project size)
• Hours you will allow workers in your home
• Your requirements for license and insurance

Combine this cover page with your scope from step 1 above, create adequate copies for each bidder, and set aside for the day of your bid walk.

Step 4:  Walk the Job

Select 3-4 contractors and set up a job walk.  You can either walk the job once with all the contractors or separately with each.  I prefer the former for the following reasons:

• It creates a healthy sense of competition among the bidders, allowing you to secure a lower price.
• Questions will come up during the walk, and once you get input from the bidders, you can decide how you want them to bid.  Everyone will hear your decision, and this prevents you from having to go back to each sub to modify their bids.
• It saves you time and expedites the bidding process.

Please note:  On very rare occasions, contractors may have bad blood between them, and this will be apparent during the walk.  Should this occur don’t fret, it’s just the nature of the business and not your issue.  Remember, you are not doing anything wrong by soliciting multiple bids!

Step 6: Watch the Bids Come In

After the job walk, you may field a few additional questions from bidders as they complete their bid.  Should your answer affect the scope of work, be sure you immediately relay the answer to the other bidders.  You are trying to get 3-4 bids that are “apples to apples,” meaning bids for the same scope of work.

Should you conduct steps 1-5 above, you will have 3-4 competitive bids defining your project costs.  Be sure you account for the following items before arriving at your final project cost.  These items may not be a part of the bids you receive:

• Permitting
• Sales tax (This should be included, but be sure you check)
• Design
• Contingency – I recommend you add 5-10% to the bids for your budgeting purposes.  This will cover the inevitable “surprise” during construction.

Congratulations!  You now have a clearly defined remodel cost using contractor bids!

In the next post, I will focus on the second method of defining remodel costs: creating your own cost spreadsheet.

Go back to Defining Remodel Cost home page.

Image Credit: www.flickr.com/photos/jeremylevinedesign/