5 Reasons Why You Shouldn’t Always Trust Contractor Bids

When planning a home remodel, one of the first steps is to compare the cost of working with different contractors. While it’s good to explore your options, not every price you’re quoted is an accurate estimate of the project’s cost. As a result, many homeowners find out the hard way that you shouldn’t always trust the accuracy of contractor bids.

As one of the Portland area’s top remodeling companies, our team at Lamont Bros. has worked with hundreds of clients who have navigated the process of bidding out a remodeling project. One of the most common concerns people have is whether or not their contractor’s initial bid is accurate. After all, nobody wants to begin a project expecting one price, only to get halfway through and discover it will cost significantly more.

In this article, we’re going to discuss 5 reasons why contractor bids aren’t always helpful estimates you can trust. Using the information below, you’ll be able to understand the risks of relying on bid prices when selecting a contractor. The topics we’ll discuss include:

What’s the Difference Between a Bid Price and a Budget Range?

To understand some of the challenges of working with contractor bids, it’s important to first understand what a “bid” actually means. In remodel construction, most remodelers will either handle price estimates by using a bid model or a budget range model. Here’s the difference.

What is the Process for Estimating a Bid?

Using the bidding process, homeowners or architects begin by defining a specific scope of work for a project and then soliciting bids from different contractors.

The bids received may vary significantly due to contractors making different assumptions based on the defined scope. This process places the homeowners or architects in control of the project’s scope and allows them to compare and evaluate multiple bids to choose the most suitable contractor.

However, the bidding process can often give homeowners a false sense of confidence. The bidding process is often too early to actually assign the project a specific dollar value, because there are still too many unknowns.

In the traditional bidding process, the homeowners compare bids from different contractors.

What is the Process for Developing a Budget Range?

On the other hand, the budget range process involves working with a remodeling company that utilizes a budgeting system from the early planning stages of the project.

In this approach, the homeowners and their contractor form a collaborative team. They work together to both establish a budget and define the project’s scope accordingly. By having a budgeting expert on their team, homeowners can benefit from the guidance and insights provided by the remodeling team regarding costs and scope considerations.

This approach promotes a more integrated and cooperative relationship between the homeowner and their contractor. It also helps to align the project scope with the available budget from the outset. The budget range they provide in the beginning is intended to account for and quantify the unknowns of the project into a value range that covers where the actual cost will likely fall.

With the budget range approach, the homeowners work with a designer and budgeting expert to develop plans within the project budget.

Why Shouldn’t You Always Trust Contractor Bids

At this point, you should better understand the different processes for bidding a construction job. Now, let’s look at some reasons why you shouldn’t always trust contractor bids. Almost all single dollar value construction bids come with one or two inherent flaws. Here are the 5 most common.

1. The Contractor Has No Incentive to Thoroughly Estimate the Project

In projects that use a bidding approach, most contractors aren’t paid for their time spent budgeting a project bid.

You’ve probably seen contractors advertise “Free Estimates” before. However, this isn’t necessarily a good thing. If a contractor isn’t getting paid to estimate the cost of a project, how much time or effort do you expect them to put towards that bid rather than other tasks they do get paid to complete?

Typically, a contractor who isn’t getting paid to do bid work can’t afford to give that bid the attention to detail required to produce an accurate estimate. This in turn results in unreliable bids that don’t reflect the actual cost of building the project as designed.

2. The Bid Doesn’t Always Include Everything In the Project

When comparing bids, keep in mind that some bids may not always include every aspect of the project. We’ve seen contractors leave out items such as permit costs, painting, or appliances. They often assume that the homeowner will find separate contractors for those specific jobs. This can lead to unexpected delays, additional costs, and coordination challenges.

If the scope of work is not well-defined or detailed, contractors may make different assumptions about what should be included in the work they do on the project. This may lead their bid to appear much lower than others. In reality, these discrepancies often only come to light after the project has begun, resulting in the cost increasing once the additional work is added to the project scope.

Some contractor bids may leave out specific trades or project tasks.

3. Many Companies Don’t Have an Actual Bidding System

It may surprise you to learn that a lot of remodeling companies, including reputable ones, lack a standardized bidding system. Instead, many of these companies leave the bidding process up to individual estimators, which can lead to inconsistent and unpredictable results.

Without a structured system in place, contractors may approach bids differently, making it difficult for homeowners to compare and evaluate them accurately. In situations like these, two different estimators from the same company will produce different bid prices. The absence of a standardized system can undermine the trustworthiness of a company’s bid because there are no defined criteria for estimation and pricing.

4. The Price Isn’t Bound By Contract

One thing to be aware of when considering contractor bids is that very few contractors guarantee their bid price. As a result, bid prices are often not legally binding. While contractors may provide an estimate or bid, these numbers are not contractually obligated.

This lack of binding agreement means that the price quoted in the bid will not necessarily reflect the final cost of the project. It also implies that there are few consequences for the contractor if the bid turns out to be inaccurate or if they incur additional costs during the project.

5. Some Contractors Use Low Bids as a Bait-and-Switch

Although most remodel contractors are good, honest people, there are a few contractors who may use low bids as a bait-and-switch tactic. This means that they intentionally submit low bids to attract homeowners but later increase the price during the project. Other times, this happens simply due to a lack of experience on the contractor’s part. Although they did not intend to offer a low-ball bid, they find during the project that their estimate was way off.

While this behavior may not be widespread, it highlights the importance of caution when evaluating bids solely based on their initial cost. Many homeowners make the mistake of choosing the contractor who seems too good to be true. Most of the time, this comes back to haunt them when the initially low project bid ends up costing significantly more than the original quoted price.

How Can You Make Sure the Initial Estimates Are Accurate?

When looking for estimates for your remodeling project, there are a few steps you can take to ensure the quotes you receive are trustworthy.

Hire an Expert Who Understands Construction Bids To Estimate the Cost

Accurately estimating the costs of a remodeling project requires knowledge and experience in the construction industry. These types of experts don’t typically work for free, but the cost of hiring them is often worth the peace of mind knowing that your project budget is accurate.

A construction budgeting expert can assess the various aspects of your project, including materials, labor, and potential unforeseen expenses, to provide a more accurate bid price. They can also help you prioritize your remodeling goals and make informed decisions to stay within your budget.

Have a Contractor on Retainer from the Start of Planning

Whether you do it by hiring a contractor to collaborate with your designers or by hiring a design-build company with an in-house build team, it’s important to have professional builders involved in the planning process.

By involving a contractor early on, you can tap into their expertise and knowledge of construction practices and costs. They can offer valuable insights, suggest cost-effective alternatives, and provide realistic estimates based on the scope of your project. In construction, we call this process value engineering. This early collaboration allows you to align your expectations and budget with the contractor’s recommendations, reducing the likelihood of surprises or budget overruns later in the remodeling process.

Want More Information on Selecting a Contractor?

Now that you have a better understanding of the bidding process and some common pitfalls that affect contractor bids, do you feel more confident in your ability to find a contractor you can trust? If so, take the next step in your remodeling journey. Check out our article, “How to Choose The Best Contractor For Your Remodel.”

Ready to start exploring your remodeling dreams with the help of professionals? If so, click the button below to get connected with a member of our design team. We’ll help you explore your budget and scope options to find the right remodeling plan for you.