We are all are used to making cost comparisons while shopping, so it’s natural to think of home construction in terms of a competitive bid. The difference in custom home building is that an estimate is based not only on a product but also on a service. What assumptions have been made within a given price? How timely with communication, and how attentive to details, will one contractor be compared with another? A formal bid requires a higher level of detail, specification, and decision-making up front. It also requires several months to coordinate, administer, draw comparisons, and make a decision. De-rigueur for commercial work, formal bidding is far less employed in residential work.
Over the years we’ve sought a balance of specifying what is useful to customers and contractors, while allowing some flexibility to control costs. At the upper echelon of residential service, Architects are compelled to provide an enormous level of documentation that can include dozens of drawing sheets and reams of specifications. But what is appropriate for work on a limited budget? At one end of the spectrum, extensive documents can be burdensome for small contractors to manage and to estimate. At the other end, builders might be left with many unanswered questions and have to improvise on site. Much depends on the nature of the project, and one aims to provide an appropriate level of service for each.
As a small practice we strive to keep services and documents to a reasonable level. There should be enough information at a given stage to allow estimates within a cost range, and allow for a bid process should that be desired. Yet good residential contractors are often busy without resorting to the time-consuming and uncertain process of formal bidding. Depending upon timing and availability, some contractors might choose to pass on a project requiring a competitive bid.
This is not to suggest that projects should ever start without a thorough estimate– that is an essential prerequisite to the start of construction. But there is much to be said for selecting a contractor early in the process. As a committed team member they can provide estimates as the plans are refined. They can also provide logistical support and input prior to the preparation of final construction drawings. Given a customer's commitment and time frame, they are then able to schedule a project farther in advance. The relationship between the owner and contractor is crucial, and the sooner it is established and demonstrated, the better.
There is another approach between that of a formal bid and hiring a contractor outright, call it a schematic estimate. Here the owner might meet several contractors, talk to previous customers, or rely on my recommendations. Several are then invited to prepare an estimate based on schematic design plans. There is no formal deadline, and the process usually takes about a month. Generally the estimates can be quite firm on the structure, exterior, rough-ins, and all the work up to and including drywall. The finish work beyond that point can be estimated with cost ranges for various trades and items. By going through an interview process and having a solid estimate in hand, an alignment can be found between the scope of a project, the owner’s expectations, and the budget. In our practice we’ve found that this approach helps to establish a rapport and comfort level for both the customer and contractor in advance completing drawings, and prior to construction.