Exposing the 3 Bid Rule

We’ve all heard it over and over “Get three bids”.  It’s the old adage that is suppose to give you peace of mind that whoever you hire isn’t cheating you. Admittedly, for many areas of home improvement this is advisable but for large renovations or custom homes it doesn’t work. When does it work?  Let’s say you are in the market for a new HVAC system, definitely get 3 bids because it’s straightforward to compare apples to apples.  For a new fence, definitely get three bids because it’s also straight forward.  Getting three bids works well and offers peace of mind when what you’re doing is uncomplicated and quickly understood.

However, with complex jobs assuming that all three bids reflect all the same specifications with the only difference being price is a very dangerous assumption and unreliable.  The old way of thinking tells us that participating contractors estimate the same plans, scope of work and specs the same exact way.  This just isn’t the case because contractors, professional or not estimate differently. As a result, the prices they will come up with are also different therefore, not true apples to apples but apples to oranges. The differences could be subtle or maybe not, however, the bigger issue is that it isn’t reflective of the true cost of your project which leads to improper expectations and eventual conflict.  Further, with this three bid method your contractor of choice is reduced to a number which is the absolute worst way to select a builder you will spend what could be, a couple of years with. 

When shopping for your next contractor, it is far more important to consider experience, skill set, personality, reputation and overall ability to get the job done.  This is why Key Structures, LLC does not engage in competitive bidding and one of the first questions we will ask a potential client.  If you’re shopping around and focused on price we are not your builder.  As veteran contractors, the value we bring to our projects is why we’re hired.  You need to figure out what you consider to be valuable. Is it price, or is it trust, is it experience, is it character and integrity?

You want to find a builder you can join forces with, collaborate with and be a team with.  In order to do this you need to consider “fit” i.e, do you like this person, does this person listen well, does this person demonstrate character and integrity, does this person have a reputation for quality work and does this person offer a warranty?  If you can answer “yes” to these questions then trust is established and the issue of worrying if you’re being cheated is removed.  Team members do not cheat one another or steal from one another, they trust one another and have each others backs.

We have a questionnaire that we ask potential clients to complete prior to a first meeting.  The final question on it is “What is the most important criteria when selecting a builder?”  Our options are 1. Price 2. Experience 3. Trust and 4. Aesthetic.  If Trust isn’t chosen as the number one important criteria we are not a good fit.  It’s an easy elimination tool for us.  Over the decades we have learned if trust isn’t established from the beginning it’s an uphill battle that is never worth it.  A person that doesn’t trust is suspicious of everyone and everything the entire job and this spawns uneasiness and dread for everyone creating a toxic work environment.  If 1. Price is selected as the most important criteria, what we believe homeowner’s are really saying to us is that they want “value” for their dollars, which we all want.  However, when price is the focus and the most important criteria you will get the lowest cost products installed by low cost employees or subcontractors resulting in zero value. For most homeowners, your home is your largest single investment, why do you want to use a cut rate contractor to improve or repair your major investment?  Where is the value when things have to be redone due to shoddy workmanship or cheap parts? The old classic and timeless adage comes to mind, “You get what you pay for.”  Renovating isn’t inexpensive, it isn’t easy.  It requires a commitment of client’s time, energy, focus and finances for an extended period.  With older homes, unforeseen conditions are found once the project begins that are discovered inside walls, ceilings, floors, etc. that can cause delays and often times requires additional money to rectify.  If this has happened to you or does happen to you, do not blame your contractor. This would be akin to blaming your doctor for an unfortunate health diagnosis.  Be realistic and patient when renovating an older home, in the end you will have something that building new does not offer i.e., character, history and most likely the location will be in a beautiful older established neighborhood where neighbors exemplify pride of ownership.  Historically speaking having 10% to 30% of your projects cost for additional expenses i.e., unexpected findings and for things you will want to change or add is recommended.  It’s uncommon for a large renovation project to not have changes.  If you do not spend it great, but if you need it, it’s there.

We hope this has provided you with a different perspective that you may consider using the next time you are in the market for a contractor.  If you should have any questions or comments please feel free to reach out anytime.

 

 

 


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Key Structures, LLC
Chesapeake, VA 23322
757-435-9459
Virginia General Contractors License #2705132708

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