How to Review Contractor Bids

Ask questions when bids vary widely and don't leap at the lowest price first

By Glyn Sheridan

Photo by iStockphoto.com

When you're ready to build a new house or tackle a home improvement project that requires the use of a professional contractor, you should always obtain more than one bid. However, reviewing bids isn't always simple. Your contractors may be using different materials or they may propose different solutions to the same problem. The lowest bid isn't always the one best suited to your project.

• What You Need to Know
• There are a few materials you'll want to acquire before proceeding with a contractor. You want photographs of your existing structure, sketches of your desired outcome, and all the calculations, dimensions and details necessary to quote the project.

Step 1:

Compare the total price but also compare the costs for individual parts of the project. If one contractor's bid in any section is significantly different, investigate why. Find out if time or materials are responsible for a particularly expensive or cheap bid.

Step 2:

Note the time factor included on the bid. If you're in a hurry to complete the project, you may decide to go with a slightly more expensive contractor. Be aware, however, that some contractors cite ambitious start and completion dates that they may not be able to achieve.

Step 3:

Review the contractor's change order policy. Some contractors will work with the homeowner to change small details as the job progresses, while other contractors charge a fee for any change once the project is underway.

Step 4:

Find out who will be doing the work. If you have a large project, the contractor may hire subcontractors to complete specialized portions, such as electrical work, plumbing and roofing. This may raise the cost of the contractor's bid.

Step 5:

Look at the payment requirements for each contractor. Most reputable contractors do not require payment in full before the job starts. Instead, it is typical to make a payment for materials and then make subsequent payments at the completion of various stages of the job.

Step 6:

After comparing the cost of materials and labor and each contractor's proposed solution, take the time to contact the contractor's references. Visiting with recent clients is a valuable way to determine if the contractor is closely monitoring his projects and completing them on time and on budget.

• Tips & Warnings
• Beware of a very low bid. It may not contain the same amount of work as the other bids. Occasionally, inexperienced contractors may underbid and then walk away from a job when they discover they are losing money.
• Request that the contractor state the condition in which she will leave the property. Some contractors clean up the site but others may stick you with that task.
• Ask the contractor what kind of warranty he or she offers.