Contractor BiddingFinding the Win For Everyone

The nature of bids on construction work is that they are tricky for everyone involved. As a homeowner, unfamiliar with the ways of the business, you might find it extra intimidating.

There is risk for the contractor as well, they have to price based upon what they expect the project to cost them in terms of labor and materials. They are as much at risk by underbidding as you are by over paying.

The Risky Business Of Construction Bidding

So, there are some practices in the business that have developed over the years that help everybody to come out even at the end of the day. One such practice is to obtain three competitive bids any time that you are considering a substantial construction investment.

This practice helps you to research the pricing in an industry where nothing is really standard. The most significant factor in anything about real estate is that every property is different. So it follows that the price to improve any structure will depend on factors unique to that site.

Three Is The Magic Number

When contractors cost a job they do not have a simple pricing model. This is why an estimate of labor and materials is used based upon the contractor’s experience and the profit they determine that they need to make in order to survive to bid another day. It is something of a hard knock life, where contractors learn to price jobs through learning hard lessons from expensive mistakes.

This is why you need to get multiple quotes for any job. Having taken painful losses in the past even the most fair-minded contractors will think nothing of commanding the highest price possible; it’s a tough business.

The Justification Behind The Numbers

It might also be that a contractor has a premium position in the marketplace and can command higher fees. The best solution for you the homeowner is to play the competitive nature of the market in your favor. That is the essence of the rationale for getting three bids on any work. So when a price comes in high it doesn’t mean that you are going to blindly pay much more than you have to.

This practice is standard in the business and contractors will expect it. Two bids is not enough to get a true sense of the market rate and if you take four or more bids contractors will lose interest as, from their perspectives, the chances of success are too low to justify the effort of bidding. That is the reason three bids on any construction project is the right number.