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Falling Prey to the Lowest Bid Could Cost You Millions

July 31, 2016

You’re in the market for a contractor, and naturally, you want the best price. Typically people tend to associate “best price” with “cheapest price.” Sometimes the best price does mean the cheapest price, but when it comes to contractors and construction, safety is the highest priority, and the “cheapest bid” may not be coming from the safest contractor. Ethical contractors are going to take the time to thoroughly consider the scope of the project and give you a well-thought out and accurate bid. Unfortunately, there are unethical contractors out there that won’t take the time to do this. They, instead, rely on attracting you with the cheapest bid, knowing full well that they’ll either have to cut corners or raise the prices as they go along. Neither of those situations are good for you.

Let us explain further. When a contractor provides you with a bid you want to make sure the following considerations have been thoroughly considered.

Accurate Scope

Did the contractor take the time to analyze the entire project in thorough detail, taking note of each safety measure, what extra supplies may be needed, any new/different tools, etc. If the contractor did not consider those details, and didn’t include them in the bid, then likely during the project they will come to you with add on’s and change orders. Meaning they will ask you for more money. During the middle of the project you won’t feel you have a choice in the matter.

Accurate Budget

A good contractor will make sure the initial bid covers everything. From the materials, to the labor, to any needed safety measures, etc. Some contractors may knowingly bid you unrealistically low, knowing full well how much the project will actually cost. It could be that the contractor intends on using poor materials, or cutting corners that you won’t notice until it’s too late. Ask your potential contractor if they’ve considered all of those details, ask them what materials then intend on using, etc. The more questions you ask, the more honesty you will prompt. Don’t be afraid to assert yourself and make it clear what you expect, and that you expect the bid to reflect that. Don’t sign any contract until you’re sure that  you’re on the same page.

Capacity to Perform

Some contractors may recognize that the project is out of their scope of work, or that maybe one aspect of the project is out of their scope. An ethical contractor will explain that to you and offer solutions. Perhaps the contractor can sub contract a professional who does have that skill. Those extra needs will be included in your bid, unless you’re dealing with a shady organization. Be sure to clarify with your potential contractor that all parts of the project are within their capabilities.

Schedule

Before providing you with a bid did the contractor discuss what times work for both of you? Did they analyze their own schedule and project list to make sure they can get your project done on time? Make sure you discuss both of those points with them. Of course, a good contractor will always take both of those accounts into consideration and give you honest information.

Quality Workmanship

This ties into some of the above points, but basically is your contractor going to take enough time, use the proper materials, and use the most skilled team members? An ethically calculated bid should be given based off of those considerations. If you’ve been receiving bids from multiple contractors, and one of the contractors bids is significantly lower than the rest, that is a huge red flag. If you can, try to find out what makes that particular contractors bid so much lower than the others.

Safety

This is absolutely key. A good contractor makes sure that all team members are wearing proper safety equipment and adhering to the highest standard of safety practices. That will mean the contractors prices will be higher in order to reflect their diligent safety polices. Unfortunately there are contractors out there who don’t make safety the highest priority, and if you end up contracting one of them, it could turn out to be dangerous and expensive for you, if anything were to happen on your property. This video is a great example of improper saftety protocal.

Our advice isn’t meant to scare you, just bring your awareness to what consequences and issues can arise from going with the lowest bid. That isn’t to say that every contractor offering a lower bid is going to cut corners, be unsafe, or unethical. You could genuinely come across a contractor with the lowest price, that will execute the project quickly, expertly, and safely. Just make sure that during your negotiations you ask plenty of questions, go over every detail, and sign nothing until you’re sure you’re on the same page! Also always try to ask for references, and do basic internet search. Chances are if the contractors are offering a good price for their work, past clients will have raving reviews about them. Let us know if this advice was helpful to you, or if you have any other great advice when considering which contractor to go with!

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