Home Remodeling – Using a Different Approach to Control Cost and Quality
When buying a television or appliance it is best to shop around. But when looking for a service provider like a hairdresser or dentist do you really want the one that charges the cheapest price? The same is true with a home remodeling contractor. The general advice people receive when they are considering a construction project is to solicit bids from at least three contractors. But do you really want the cheapest contractor? Are you going to make your choice based only on price?
I’d like to introduce you to an alternative to competitive bidding which you may not be aware of, a negotiated bid. This is not a situation where you haggle the price with the contractor. Rather, you and the contractor become allies in making your project a reality.
The procedure for negotiating a bid goes usually goes something like this: First, you pick a contractor you like and trust before the design process has begun or is in its early stages (there are many ways to find a good contractor; referrals from friends, NARI.org or NKBA.com). You and the contractor work together as a team to develop a project which fits your needs as well as your budget. This is a simple explanation of the negotiated bid process. You’ll probably require a bit more information before being sold on the concept but before we move on let me draw your attention to a few key words which need to be understood in context: trust and team.
This is a different relationship than most people have with a contractor. The contractor is a valued member of the team. He gives his input during the design process and based on his knowledge of construction and what really happens on construction sites he contributes valuable information to tweak the design in order to maintain the budget. It is a powerful collaborative effort.
During this process you will become more educated about the impact of each decision you make and how they affect the overall cost of the project. You will be pushed to think through details and make decisions early in the process. This is one of the best ways to control the dreaded “budget creep”!
Additionally the contractor will be able to let you know what alternatives are available and how they can affect both cost and design. For example, suppose you want to add French doors and add a deck outside your kitchen. The initial design idea shows a door which will have to be custom made, with transom windows above. The contractor’s preliminary estimate on the deck and door work is more than your budget. However, by collaborating with the contractor it is determined that a simpler stock French door unit will significantly lower costs. As you can see, the contractor is working with you to create a project that call be built within your budget but still satisfy your desires.
Another significant point to consider is that you and the contractor will have developed a good working relationship. All too often in a competitive bid environment the potential exists for a design professional to be aligned with the owner against the contractor in an adversarial relationship. If all parties involved are working together this is less likely to happen.
It must be made clear that the contractor is most likely not going to give you his time and advice for free. Remember that he is bringing you a wealth of knowledge that may save you a substantial amount of money and aggravation. You should understand that during this pre-construction planning you will be charged for the time that your contractor spends. Some contractors request that they be paid an hourly rate for the planning work they do; others might request payment only if, for some reason, they don’t end up doing the job. In any case, this usually runs between 4 percent to 8 percent of the overall cost of the job, depending on the size of the project. This is well worth the investment as the contractor’s input before construction might save you thousands of dollars.
Should you put your project out to bid? Or should you find a contractor whom you can work with to negotiate the project? If you are concerned with overall value, the quality of the construction process, as well as the quality of the work itself, and you want few I surprises, I strongly suggest you negotiate the bid.
