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Why competitive bidding doesn’t work

Perhaps you’ve heard this quip when a spacecraft is launched: “There goes the lowest bid.” In my mind, trying to get the lowest bid for a remodeling project is just as foolish.

And a lot of contractors agree with me. Gayler Construction explains very clearly how buying remodeling services is not even remotely like buying a new car. And check out how Baywood Building explains the problems with competitive bidding.

So why not?

First off, you won’t have complete plans for each of the contractors to look at in order to get an “apples to apples” bid. Complete plans are too expensive for an architect to create. So the honorable contractor will include all the elements (like moldings and light sockets and so on) that are not on the plans, but should be.

The shady contractor will not include those things, and will therefore give you a lower bid. That’s called low-balling. Later on, you’ll be made aware of those extras, and will pay for them. By then, it’s too late to turn back.

Also, some people get bids in order to see how much the project their architect designed will cost. That’s an enormous waste of time for the contractor, and many self-respecting contractors will no longer do competitive bidding.

So, what to do? I suggest you find an excellent contractor (whom you judge by face-to-face meetings, talking to staff, talking to references, visiting prior jobs, searching the Internet, considering awards and professional certifications), and an excellent architect or designer (judged by the same criteria), and put these two stellar individuals together to design your remodel. Find the great people first, then move forward as a team. This should eliminate the finger-pointing architects and contractors are famous for.

Or, hire a design-build company where the designer and builders are in the same firm. This way, when the designer comes up with an idea that would blow your budget out of the water, the contractor will make that known immediately.

As one construction loan agent told me, the country is littered with architectural plans that were put out to bid and then abandoned after the bidding process revealed the project would cost two to three times what the clients could afford. That’s sad.

So how about you? Have you found competitive bidding to be a satisfying way to achieve a remodel?

1 Comment on Why competitive bidding doesn’t work

  1. Cassandra Stajduhar // May 12, 2007 at 9:52 pm // Reply

    When you ask a contractor to bid a project, pay them a reasonable fee for their time. This way they know you are serious and you are also starting the relationship by showing you respect the value of the contractor’s time.

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