Don’t Rush the Bid
Sometimes clients will drop off a set of plans on Tuesday and expect a price by Friday. Don’t cave in to this pressure. I make sure clients understand that it will take about 40 hours over a two- to three-week period to put together an accurate cost estimate for a new custom home, while a $100,000 kitchen remodel will probably require about 15 hours. And that’s only after the plans and specs are complete.
Be Careful With Subcontractor Prices
Remember that some subs will always bid low to secure the job. If I’m getting quotes from 30 subs and suppliers, I might find that as many as five of them do this. The problem is that when low bidders get the job and discover their pricing is inadequate, they tend to cut corners.
You have to be smart enough to know when a quoted price is too high or too low — which means carefully studying the plans. If one of my drywall subs gives a price that sounds suspiciously low, I’ll grill him — by asking him, for example, how many sheets he’s estimating the job will take. If he doesn’t have a ready answer, I know he probably hasn’t looked at the plans closely enough.
Set a Response Deadline and a Firm Start Date
When I submit a bid, I usually specify that it’s only good for five days, though sometimes I will stretch that as far as 10 days. If the customers don’t respond by the stated deadline, the bid document gives me the right to adjust material and other prices.
The bid should also specify the project start date. Say it’s November and you’ve submitted a bid for a March 15 job start. If the clients accept the proposal but then decide they want to start on January 15, you’ll have to adjust your schedule and accommodate winter working conditions. You may need to refigure and resubmit the bid, or include contract wording that compensates you for the altered project costs and conditions.
Be Honest and Put It in Writing
I give potential clients both good news and bad news, and I share uncomfortable opinions with them when necessary. If the architect tells me the clients cancel appointments at the last minute, I don’t hesitate to ask them about it. I usually call first and then follow up with a written letter reaffirming my concerns.
A lot of builders are afraid to be completely honest because they’re afraid they’ll lose work. But in fact, this kind of honesty improves your business because it forces you to do a better job of communicating with clients. It also breeds trust — at least with the kind of clients you want to work for.
Sometimes there’s a more immediate payoff. I once bowed out of a bid, informing the clients — a husband and wife — in a letter that I’d taken a look at the project but wasn’t interested in pursuing it because I wasn’t getting the answers I needed from them. The letter was a wake-up call; the clients called me a week later and admitted they hadn’t been communicating clearly with one another. I ended up getting the job.
Dennis Dixon is a licensed general contractor in Flagstaff, Ariz., and a frequent contributor to JLC.