What you need to know about bids and estimates

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New construction or remodeling projects can be exciting, but also intimidating. What to build? What permits are required? How much will it cost?  How can I protect myself? How can I find a contractor I can trust?

The Virginia Department of Occupation and Professional Regulation is a particularly useful resource in this area. Their detailed publication WHAT YOU SHOULD KNOW BEFORE YOU HIRE A CONTRACTOR has excellent information from “Before You Begin” to “Planning” to “Bids” to “Contracts” to “What If Problems Occur?” The brochure is available on-line. Simply search for that title.

Finding a Reliable Contractor

Probably the most important part of any project is finding a trustworthy contractor. There are several strategies. One of the best: ask friends or neighbors who have dealt with various contractors for feedback and recommendations.

If possible, view other projects the contractors have completed and speak with the clients. Are they satisfied overall with the project? Was it completed in a timely way? Was the contractor easy to contact and work with? Were the workers competent and polite (especially if they will be working inside your home)? Was the project kept as tidy as possible with other parts of the dwelling protected from dirt and debris? Were the terms of the contract fulfilled?

Ideally you also want a local contractor who has been in business for a while and one who has worked on projects similar to the one you are planning. Check with the Better Business Bureau (BBB) about complaints against any contractors you are evaluating. Although the BBB doesn’t endorse any services or businesses as a matter of policy, some businesses pay a fee to become BBB-accredited. This demonstrates they are committed to good practices, have met certain BBB standards, and are committed to make a good-faith effort to resolve any consumer complaints.

Check the contractor’s credentials such as license number at: www.dpor.virginia.gov or (804) 367-8511. Not only does the license indicate the contractor has the necessary knowledge and experience to deliver good work, but when you contract with a licensed contractor, you may become eligible to receive compensation from the Contractor Transaction Recovery Fund in case of improper or dishonest conduct.

These days a web search on a specific business may find comments, reviews, or complaints at sites such as Yelp or Angie’s List. (Be skeptical about a single posting on any website and never rely on postings on the contractors’ own websites.)

You also want to be certain that workers are fully insured by the contractor.

Seeking a Bid or Estimate

Take time to plan exactly what you want done because this will help contractors make accurate bids or estimates. A list to hand to prospective builders might include items such as the size of the project, the type of exterior or interior finish you want, window styles and sizes, cabinetry desired, plumbing needs, lighting fixtures, and other details. If there is an important time frame, this should also be made clear.

Do you want to engage each contractor yourself or do you want a general contractor who will arrange for extra tasks such as electrical, tile, plumbing, gutters, masonry or other portions of the job? If you are handy and can do portions of the project yourself, see if a potential contractor is willing to work this way to lower your cost.

Once you have found several contractors with good reputations that you feel comfortable with it’s time for the bottom line—comparing costs. It’s not always easy to compare the figures you may be given. Some people don’t go for the very lowest figures if they find they really prefer one contractor.

To help with the process, decide what kind of contract you are seeking so you can compare apples to apples. Generally, contracts are either fixed-price proposals which are usually called bids, or estimates for time and materials.

What is a bid?

A fixed-price proposal, also known as a bid, guarantees that certain specific work will be accomplished for a specific price. If it is accepted, it is generally legally binding on both parties.

For example, a bid might read: “Screened porch to be installed over existing decking with screening underneath, one screened door to existing deck, one door with double-paned glass into house. Roof, paint, and gutters to match existing house. No electrical or plumbing work. Contractor responsible for all permits, inspections, and removal of debris.” A specific cost would be included.

With a bid, the cost will not be more than the bid unless the actual work is changed or different materials substituted. Such adjustments would be detailed in a “change order” agreed upon by both parties such as an upgrade to a counter-top or changing to more expensive windows, tile, or flooring. Change orders can also lower the final cost if the homeowner decides on less expensive options.

In a competitive bid situation, be sure contractors are bidding on the same thing by being very specific on factors such as the quality and/or brand of lumber, flooring, roofing, fixtures, the amount of demolition or removal of previous walls, bathroom fixtures, or other extra tasks not necessarily related to actual construction.

Since fixed-price bids make it easier to compare several contractors, many homeowners prefer the certainty of knowing there is a fixed cost for the project. A percentage of the cost is customarily paid according to “milestones” such as completion of foundation, completion of framing, and completion of roof. Since these percentages are laid out in the contract, the homeowner knows exactly how much must paid and when.

Contractors often prefer fixed-price bids. Although they must make a more thorough evaluation of the project at the start, they can also build in a substantial “cushion” to cover unexpected problems. This cushion, of course, becomes an additional profit for the contractor (and extra cost for the homeowner) if, for example, the job is completed ahead of schedule so there are lower labor costs.

What is an estimate?

An estimate, also known as a Time and Materials (T&M) contract, will usually itemize tasks and materials as line items. These will include general costs such as supervision, possibly insurance costs, and obtaining permits and inspections. Then there also will be specific costs such as lumber, flooring, plumbing or lighting fixtures, roofing, windows, maybe even renting a portable toilet if that is required in your jurisdiction or you prefer workmen not use your facilities.

With a detailed T&M contract there may be hundreds of line-items to review and this can be overwhelming. On the other hand, it can make it easier to compare contractors by checking, for example, what each believes your plumbing expenses or the cost of installing that bay window might be.

This is where it is particularly important to be very specific in what materials will be used. If there is a type of flooring or siding you expect or a brand of countertop, window, or roofing material you prefer, make sure this is stated in the estimate.

Usually, an estimate doesn’t have a “cushion” in its figures, so homeowners are billed only for actual hours and materials. As the project progresses, the homeowner is usually required to pay by “milestones,” but may not know ahead of time what the cost will be. Some contractors will keep a document comparing the estimate and the actual items billed. This will provide a running total.

With a T&M contract, the homeowner is paying what is actually spent to complete a project. On the other hand, because there is no fixed price, costs may exceed the estimate. This is when careful assessment of the reputations of various contractors can be very important.

Combination contract

In some cases, contractors will write a contract combining various aspects of the fixed-price and T&M contracts. For example, a T&M contract could be written with a maximum price. In some cases, the contract is written so that if the final project is completed for less than that maximum price, the contractor and the client share the difference, making it a win-win for both parties.

Once you’ve signed a contract.

Once you’ve signed a contract, be sure you can contact the contractor easily by phone, cell, and/or email. You might want to set a time each day or every other day to touch base. Be sure the contractor can contact you quickly in case of an unexpected problem. Consider posting contact numbers at the project in case workers need to contact you in an emergency when the manager isn’t present.

Ensure the contractor knows the shutoffs for water, gas, and electrical service to the house. In some cases there may be more than one shutoff for water. Discuss the storage of materials when they have been delivered.

Especially if you will not be home while workers are there, agree on measures for securing your home, ensuring the safety and comfort of any pets home while workers are there, limiting noise or problems for neighbors, and protecting your home and yard from damage. Agree whether workers may use your bathroom or refrigerator. Some homeowners find that a clipboard, pad of paper, and a pencil on a string are very useful for questions, comments, and suggestions that are not immediately time-sensitive.

By Marilyn Pribus

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When Marilyn Pribus and her husband added a screened porch to their Albemarle County home, they interviewed four contractors before engaging Roy Kidd, a well-recommended individual who had completed work for several neighbors. They were able to save money by doing the painting themselves and they love their porch.