Congratulations. You’ve received the quotes and/or estimates
from the contractors you have invited to look at your project. You’ve done your
end of the arrangements by being prepared and clear on what you want included
in the work to be done. Your thoroughness will have paid off for you at this
time. Now it’s a matter of reviewing the information they have provided to you.
Obviously, what you are about to do is a comparison of each and it is important
to be sure that all of the items that you listed are included in the list you
get from the contractor. Some may have actually added a thing or two because
they thought of that necessary item only when they sat down to crunch the
numbers. What you need to do when reviewing them is reduce the basic
information down to one sheet for yourself. Lets call it the “Comparison Page”.
For each of the contractors it would include their company name, their pricing,
extras or omissions of requested items, notes on how you felt about the experience
they have given you thus far and any other notes that are important to you. Be
sure to write down in their column any questions you have for when you call
them back.
You will immediately find that the format of what you have
received differs from contractor to contractor. Each has their own style and
method of how they provide you with the information. Common to all of them is
the “bottom line” or, how much the work will cost in the end. Also, it must
contain the key components like proof of insurance, GST/HST Number, etc. Be
sure to check if taxes are in the final line. That’s a common detail that gets
overlooked. Some may list out each item you have requested. Some may give a brief
description of the work in a paragraph. Some may list all the items and pricing
for each. Some may include no information with the exception of the bottom
line. Review them all and get that information into the Comparison Page. Once
you look at it you will have that information in your mind and easily referred
to rather than flipping through multiple documents. With this finished document
in hand you now have the big picture. If you need any more information or
clarification on an item drop the contractor an email then get that info down
on the Page. Now its time to decide. Just how do you do that anyway?
There are lots of opinions on how to select the best
contractor from a list of others. Do I go with the lowest quote? Do I discard
the lowest quote? Why is this quote so high and that one so low? All things
being equal, of course you will always go with the lowest. However, none of
them will be the same. There are always differences.
Quality is the first thing to go when it comes to lower
pricing. Do they take their debris to a landfill or throw it at the end of a
road somewhere? Do they protect your home from dust and damage when on site? Workmanship
is another factor on pricing. Like, “Wow, that drywall looks really horrible!”,
just when you see their tail lights leaving your driveway… forever. You can
expect that in most cases the workmanship is of a lower standard on the lowest
price. Its not a rule but is generally accepted.
What about the mid-price? You’ve likely heard that this is
the one to choose, again with all things seeming equal, there is some truth to
this. To understand this you need only to look at the next level of pricing and
why the highest got to be that way. Again, generally speaking, the highest
bidding contractor is busy. He has lots of projects on the go and it is
possible that your job may stretch his human resources to an uncomfortable
point. He may also rightfully think that he is worth the extra money. After
all, if he’s busy that means his services are in demand and therefore worth
more. Having said this, the mid-range option just might be your best option. He’s
hungrier, fair and confident enough not to under price his work. There is,
after all, no bottom to pricing and those who use the lowest price as their
main selling point generally don’t give the best work.
With all of this in mind only you can know through your
dealings with each contractor on your list which will best suit your
requirements. It’s a holistic approach that I have laid out for you and you’ll
need to make your decision based on that accumulated knowledge.
Ethics
It is now a good time in the course of this series of articles
about home improvement to talk about ethics. When dealing with your money it is
natural for you to want to keep as much of it as possible. When you are at this
stage; about to negotiate with contractors on final pricing and scope of work, you’ll
think of creating ways for them to sharpen their pencil. There are methods that
customers use very frequently that have no place in negotiations and it is not
because they are evil. It is because they don’t see the implications to
themselves, the contractor or society at large. They genuinely just want to
save some money and mean no harm. Let me give some examples of what should never
enter into the negotiation.
Can we do this without paying the sales tax? Now lets look at
this closely. First, you have put this fellow in an awkward position because if
he complies he would be breaking the law. By refusing he is at a competitive
disadvantage. Secondly, do you really want a contractor in your house, doing thousands
of dollars of work hiding money from the government? If he is that dishonest
then you shouldn’t have considered him in the first place. Tax evasion is a
serious problem in our country. Don’t ask the question.
Do not reveal the other quotes until you have rewarded the
contract. The successful basis of the bidding process lies in the fact that the
bidders are putting forth their best estimate of what the job will cost all the
while considering that the other bidders will be competitive. How ethical is it
then to tell the highest bidder that if he lowers his price to the lowest bid
he can then get the job? The lowest bidder put in great effort to tender his
bid and has disadvantaged himself already by coming in at a lower price. Now he
has no work and the big guy gets the job. Meanwhile the middle guy is out of
the picture too. So, after all of the effort that the GCs put into the bidding
process, it gets short circuited by an unethical approach by the customer. Its
not like buying a consumer good where the price is known beforehand. The effort
that the contractor put into the quote is real. The bid that the contractor
supplied to you is actually an accumulation of years of knowledge tailored to your exact needs. Pricing a job
correctly is a skill that requires a vast amount of trial and error, failure
and success. GCs wouldn't go through the process of bidding if they new that their own bid was going to be used against them. After the contract is rewarded it is actually good practice to
inform the other bidders where they were in the cue. It helps them to stay
competitive on their next bid. So keep those bid numbers secret!
Why do I mention this soap-boxy stuff? Because in the end it
actually protects you. By being unethical you will have set the tone for the
rest of your dealings with the GC. Keep it professional and you'll have a great project.
So what can you do to get the price down a bit after the
bids have been tendered? The simple way is to just ask. Tell the contractor
that his bid was higher than you had budgeted for and could he adjust his
pricing. He may have had more time to think about your job and may be happy to trim a few dollars off to get the job. Let the others have that same opportunity. All of this is fair and is
simply an ask. The GC has every right to stick to his pricing or adjust it at
his will. It keeps the tone civilized when you act professionally.
I’ll go into the contract process in more detail in my next instalment.
Ill cover things like the contract itself, specifications, extras, addendums
and holdbacks. All very exciting!
