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There are three ways to approach the process of building
your remodeling project:
Design/Build
| Negotiated Contract |
Competitive Bid
| 1. DESIGN/BUILD:
In this approach to selecting a contractor, the homeowner and contractor
become a team. There are not the traditional opposing needs of contractors
and homeowners in relation to making money vs. saving money. The Design/Build
contractor seeks to design a project within the customer’s budget
range that meets the needs and wants of the homeowner.
Here’s how it works:
The homeowners decide that they want to add a sunroom to the back
of the house, but they don’t have a clue about how big they
want the room or how to make it look good on the house. They also
don’t know anything about the mechanics of doing this type
of job. In other words they don’t know how to start the process
of an addition, but they do know a couple of things.
1. They want a professional company or contractor
to do the work, because it will add more value to their home in
the long run.
2. They want a company that can help them with
the decision making process in the selection of styles and colors,
etc.
3. They want someone who has experience with
the process. They want someone who can hold their hand, a guide.
4. They want some they can trust. In other words,
they want a friend to do their job, one with experience.
With these thoughts in mind, they start their search
for this contractor/friend/designer. They call the neighbor that
had an addition built a couple of years ago, they call their uncle
and aunt that just built a new house. In this way they collect names
of firms or individual contractors. They also ask these people if
they were satisfied with the work that was done. They decide whether
this contractor is the type of person that would meet their needs.
After they narrow down their list of contractors to a select one
or two, they call these contractors and interview them to get their
own personal feel for the way they work. “Am I comfortable
with this person? Is this person a team player? Is this person someone
who is honest? Will they advise me as a friend? Do they have the
credentials necessary? Do they communicate well? Do they have experience?
Is this the type of job they normally do? Are they professional
(timely, clean and neat, organized, etc)?”
When they find the company that most fits these
criteria, they meet with them. At this meeting, the contractor spends
a lot of time listening to their needs and wants. The homeowner
shares budget requirements. At this time the contractor can evaluate
whether the type of project they want will fit into their budget.
If after these discussions the contractor and homeowner are comfortable
that the relationship is mutually beneficial, they enter into a
two-part agreement. The first part is the design/planning phase;
the second part the building phase.
In the design phase the contractor obtains:
•All necessary measurements
•Any specific information concerning special needs
•Any selections of products that have been made
•The way the addition will be used, i.e. relaxation, entertainment,
playroom for children, number of people that will use it, etc.
•Any other desire and wants the homeowner has regarding the
project
The design contractor then incorporates all of
this information into a plan that
1. Fits the existing structure
2. Fits the budget
3. Meets most or all of the homeowners’ needs
With the success of the first phase, the team proceeds
smoothly to the second phase: building the project. If all has been
done well in the first phase, the second phase goes much more smoothly.
Communication is good. The homeowner and contractor understand each
other and each has a good understanding of the project. With proper
planning and design, there is less need to make changes during the
course of construction. This saves money and effort. The job is
completed more quickly and with less disruption to the homeowner’s
lifestyle.
DESIGN/BUILD
SUMMARY:
Pros and Cons
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Pros: Creates a good working relationship
Improved communication
Smoother job flow
More efficient use of homeowner and contractor’s time
Jobs completed quicker
Better quality workmanship
No opposing needs between contractor and homeowner
Homeowners know the quality of materials they are getting
Homeowners know how their project will look before building is begun
Homeowners know that the project will meet their needs
Homeowners are more involved in planning
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Cons: The project may cost slightly more to begin
with, but long-term savings
usually more than offset that.
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2. NEGOTIATED
CONTRACT: A Negotiated Contract is very similar to the Design/Build
process, in that it is a team approach to building. The biggest difference
is that another professional may already have done the design work or
plans when the contractor is selected.
In this method the homeowner sets his/her budget and chooses a contractor
in the same manner as Design/Build. The contractor then helps to specify
materials and other things needed to be able to build the desired plans.
If the contractor doesn’t feel that the plans the homeowner wants
can be built for the budget, then they may negotiate. The owner can either
scale back the job or do some of the work or provide some parts of it
themselves. In this way the owner can get most or all of what he/she wants
and needs, and the contractor is assured of doing the work for a reasonable
profit. They are both aiming for the same target.
3. COMPETITIVE
BID: This is the old and worn out way of selecting
a contractor. This is the way that rewards the contractor who
either cuts the most corners in building the job or forgets to
include everything in the estimate. This way goes against the
old maxim that you get what you pay for. Generally, the more thorough
the estimate is, the higher the price is going to be.
Here’s how it works:
The homeowner decides to add a sunroom the back of the house.
They start calling contractors to get bids. Quite often, this
process is begun before they think of two very important things:
The type of contractor they should hire and his/her qualifications,
and what they want or need in their addition.
They get three to six different contractors to come out and look
at the job. The first contractor comes out and asks how the owners
want certain things done. The owners’ response is, “I
don’t know. We hadn’t thought of that.” They decide
the answer, and the contractor goes on his way to prepare their
estimate in the best way he can.
The second contractor comes out the next day, and he or she raises
some additional questions. They make some decisions to answer
these questions and this contractor goes to prepare their estimate.
The third contractor then comes to visit the job, and he really
has a good idea. If the sunroom were just two feet bigger, they
would be able to incorporate an additional doorway into the master
bedroom. This contractor prepares a bid.
The owners think, “We need to call the two previous contractors
and tell them to include this feature.” They call the first
contractor and he says, “Yes, that’s a good idea, but
I have a better one. We wouldn’t have to enlarge the whole
room, just the back four feet to accommodate the door to the master
bedroom.” The fourth contractor comes to look, and the process
is repeated. And when the fifth contractor comes, more changes
are made.
Through the course of this process, the homeowners have been thinking
that they could have this job done for about $25,000. Where did
they get this amount? That was the cost of a garage addition they
had built eight years earlier, and they figure since this room
is smaller than the garage, that is about what it should cost.
They forgot the garage wasn’t finished inside (which will
cost more) and forgot to allow for eight years of inflation.
The contractors come back with their bids, which range from $35,000
- $55,000. The owners immediately think that the $55,000 bid is
a rip-off and that the $35,000 bid is probably a good deal. If
the homeowners are smart and spend a lot of time analyzing the
bids, they will see wide discrepancies in what is included in
the bids. If they research the five different contractors, they
also begin to realize that all contractors are not created equal.
This process takes a tremendous amount of time and effort on the
part of both the homeowners and the contractors, and they end
up with five different prices which there is really no way of
comparing. The point of this is that with competitive bidding
it is very, very difficult to get “apples to apples”
bids.
Even if the homeowners provide each contractor with a spec. sheet
and plans, there is still enough variance in ways to build and
produce a job to get a wide range of prices. Because all contractors
and companies are not equal, the higher priced bid may actually
be the best value.
COMPETITIVE BID
SUMMARY:
Pros and Cons
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Homeowners get to meet a lot of contractors
Homeowners get many ideas
Homeowners may save money
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Hard to get “apples to apples” bids
Emphasizes opposing needs of contractor and homeowner
Conflicting ideas for project
Lots of time and energy spent
Does not create a good long term working relationship
Quality of workmanship suffers
Leads to a lot of change orders and add ons during the job
May lead to more call backs and warranty work (cheap contractors don’t
honor
warranties.) |
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