Step 1 - Organize your Ideas
One of the most important steps before you begin meeting with Contractors to work up estimates is to educate yourself about the work you want to have completed. The internet, library, neighbors, etc. are all good places to start.
Your goal is to get several estimates or bids that are all based on the same scope of work; apples to apples if you will. You have to be able to provide the Contractor with enough information so they can prepare an estimate that meets your goals and you must provide each Contractor with the same scope of work. If not, the pricing that you get from each Contractor will be very difficult to interpret which could slow you down and ultimately cost you more money. The last thing you want is a Contractor that is going to "Change Order" you until your pocket book has dried up. So, try to finalize as many of the details as possible.
This means that you, the Homeowner, must put all of your ideas and scope on paper including photocopies of pictures, any layouts, designs, sketches, etc. And never give your originals away because you may not see them again.
Step 2 - Schedule Meetings with Several Contractors
Look for Contractors affiliated with the Better Business Bureau, National Association of the Remodeling Industry (NARI), National Kitchen and Bath Association (NKBA), National Association of Home Builders (NAHB) or any other local building or remodeling association. Look at each Contractors website to see what type of work they perform. What are their specialties? And if they do not have a website, you should be cautious if you decide to contract with them.
As a Contractor myself, when we show up to a job for an initial meeting with a Client, the most organized Homeowners hand us a typed copy of a basic scope of work with copies of any pictures, layouts, designs, sketches, etc. And we love them for it because we know exactly what they want!
During your meetings with each Contractor, hand over your information that you compiled and walk the job with each of them. Be prepared to answer numerous questions. Some will be easy to answer and others may need some additional research on your part. Either way, try to stick with your initial scope of work and do not deviate. You want the bids to be apples to apples and changing the scope during your meeting with the Contractor will only make it more difficult for you to interpret the figures on each bid. You can always adjust the scope after the estimates are gathered and you have narrowed down the potential Contractors.
Ask each Contractor how long it will take them to prepare the estimate and make sure they honor those dates. If they don't, that should be a red flag.
Step 3 - Review & Compare each Bid
This is where your initial homework starts to pay off. Each estimate your receive needs to be in writing and it should have a specific scope of work that mirrors the information that you provided them. And in most cases the estimate will have more detail. If the Contractor's estimate is vague and lacking specific details relating to the work, this is a Contractor that you may want to pass on. If you accept an estimate that does not specifically describe the work that the Contractor is proposing to complete, you are leaving yourself open to costly "Change Orders" at the discretion of the Contractor. It's not a good position for you, as a homeowner, to put yourself in. So keep in mind, it's your responsibility as a homeowner to make sure the Contractor has a complete understanding of the work you want completed and it must be conveyed in writing on the estimate.
Once you have established that each estimate is for the same scope of work, let's now look at each price. When it comes to remodeling, the saying "You get what you pay for" is a good guideline but it definitely doesn't mean that a more expensive bid is your best choice. For example, you could have (2) bids that are somewhat higher than your budget and a lower bid that may be a little less than your budget. Most of us would automatically consider the lowest estimate initially but we have to figure out why that Contractor's bid is much lower than the other two. Below are some questions you need to ask each bidder.
- Did the Contractor omit a portion of the scope of work? If so, have them revise the estimate.
- Does the Estimate include having the Contractor prepare architectural drawings, if necessary?
- Are they using lesser quality materials (paint, cabinets, tile, etc.)?
- How long will it take to complete the work?
- Are they insured with a General Liability policy?
- Can they provide a minimum of 5 to 10 references from previous projects?
- Are permits necessary and if so, is the cost included in the estimate?
- Is the Contractor willing to let you visit several of their jobs?
- What type of Warranty does the Contractor provide?
When it comes to interpreting a bid that may be higher than your budget, you still have to ask all the same questions. And just because the estimate is on the higher end of the spectrum, don't assume that the bid is all inclusive. As a General Contractor, we have bid on and successfully completed several projects and found out later that some of our competitors pricing for the same work was 50-75% higher than ours. This can be attributed to higher overhead as well as a desire for higher profit margins. The bottom line is, you don't have to overpay to get quality service and workmanship.
Step 4 - Select your Contractor
After reviewing all estimates, it's time to narrow down your selections to one or two Contractors. Call their references to see how well they did on previous projects. Did they finish on time? Ask their references about the quality of work and if they would recommend them. Did they keep a clean and safe job-site?
If they are a member of the Better Business Bureau or any other remodeling or construction association, are they in good standing? Try http://www.bbbonline.org to check.
These are all good clues that will give you the inside track as to whether this prospective Contractor will be the right choice for your project. You also need to ask yourself if you feel comfortable with this person and are they willing to openly discuss materials, methods, and details regarding your project?
Step 5 - Execute the written Contract
Most often, the Contractor will provide their own Contract for you to sign. Be sure to read it carefully and do not hesitate to ask any questions for language that may need explanation or clarification. Ask the Contractor how the payment schedule will be put together. Never give a Contractor more than 50% of the contract amount up front. If the Contractor has to purchase a large amount of materials prior to starting work, a payment or draw for the materials is understandable.
The payment schedule (aka Schedule of Values) should be spelled out in the Contract. After a specific portion of work is completed, the Contract will say how much money the Contractor can Invoice you for that work. For example, after all cabinets are installed, the Contractor can request a draw of say $1000 as spelled out in the Contract. After the countertops and tile backsplash are both installed, the Contractor can request the next draw of say $3500 for this work. And, so on. Be sure that the last draw equals 10% of the total contract amount and do not pay this until the Contract is 100% complete. If you give the Contractor their last payment before 100% completion of work, you could have issues with them completing the balance of work in a timely manner.
The following items need to be included in the written Contract:
- Scope of Work
- Design Selections
- If using Architectural Drawings, they need to referenced in the Contract
- Total Dollar Amount of Work
- Construction Schedule
- Detailed Explanation of the Contractor's Warranty
- Payment Draw Schedule
And now you're ready to take on your next renovation. It's going to be challenging, but it doesn't have to be cumbersome. That's why it is so important to do your homework upfront and find the right Contractor that will meet your needs and turn your dreams into reality.
Cheers!
Watermark & Co
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