Chief of Content

Erika Taylor is the chief of content for Professional Remodeler. Contact her at etaylor@sgcmail.com or 972.803.4014.

Construction Project Bids: Transparency and the Numbers Game

On home improvement estimates, feeling ripped off, and transparency

October 23, 2017

My husband and I need a fence on our rental property. Nothing fancy, it just has to contain the tenant’s dogs and not be an eyesore. A fence company comes out, looks at the job, and the rep texts me a bid. It’s a lot of money, considering. I text back questions: “What size is the top rail? How deep will you set the posts?” He answers. 

My husband isn’t happy. The man’s estimate has personally offended him. “That’s not a bid,” he says indignantly. “That’s highway robbery! And what, he can’t take the time to type it out like a normal human being?” 

“You sound like someone’s grandpa,” I say. He raises his eyebrows. “I am someone’s grandpa.”  

The second bid is also high but is more reasonable, and we hire the company. Yet it’s not the lower price that makes the difference, instead, it’s two problems with the way the first company handled the estimate. Neither issue is necessarily a deal breaker, but taken together they represent a mind-set that can negatively affect close rates, especially with lower-dollar, higher-volume remodelers. 

First, there’s the question of how to communicate information. Many companies text their clients, and we’ve published columns from successful replacement contractors that highly recommend texting as the best way to stay in touch. But not for a bid. 

I wasn’t put off by the rep’s text, but I do want an emailed bid for my records. My husband wanted that as well, but also felt, on a visceral level—a Baby Boomer-generation level—that if you’re going to submit a request for thousands of someone’s dollars, you should at least take a minimal level of care in the presentation. 

The second issue is more complicated, and it ties into this story. My husband wasn’t told the factors that went into the price, and that made him feel like he was getting ripped off. He’s well aware of overhead, materials, and labor costs, but not having any of that clearly broken out made him suspect that the first fencing company’s bid was overinflated. 

So, how much of that information should a remodeler share? How much transparency will make a homeowner feel secure, while still preserving the professional’s right to privacy and respect as a business owner? (I’m always shocked when I hear stories of potential clients who ask remodelers how much they will make on their project. No one would ever ask a doctor or an attorney that question.) 

Our story looks at the way four very different remodeling professionals handle transparency. Their insights are detailed and illuminating. Enjoy! 

Comments

The owner has two separate issues. The first, he does not know what the money is for, what he would get. The bid should clearly delineate what the client is buying. There should be no question regarding what work will be done and how much the price is. That's what a bid is.

As for overhead, profit, materials costs, labor costs, insurance costs, etc, that really isn't the clients business. Moreover, actually breaking out all of those items would be time consuming, inaccurate, and not provide any useful information to the customer.

When customers asked "What if it costs you less than you expect?" my reply was always "You will never know, and if it costs me more you won't know either." That never failed to handle the question.

I agree with Thom Wright--at least on the first point. A competitive bid (the so-called apples-to-apples comparison) is rarely that. In the case of a fence, different companies will offer different products which may or may not be comparable. The prospective customer is left to sort that out and they often don't have the expertise required to do so. In the case of a true competitive bid, the prospective customer will have invested in the preparation of a set of plans and specifications that clearly articulate what they want and all bidders will be quoting exactly what is shown and specified. Expecting a bunch of different companies to invest the time and energy to produce plans and specs for you is, I would argue, an unreasonable expectation on the part of the prospective customer.

In reading the article regarding Numbers Game. I sometimes text a figure to a potential customer regarding a bid before spending hours detailing it. I am never the lowest bid and don't want or need to be in that category. If someone is shopping for a price I always tell them that I will not be the lowest upfront. Many times homeowners get several bids, not just a few. This wastes lots of contractors time

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