In a competitive bid situation, homeowners usually choose the middle of three bids. But the contractors being compared are not equal in their quality of product and service, which their pricing reflects. This process creates an atmosphere where price is the deciding factor.
When bidding, most contractors only provide pricing for the plans and specifications as shown, even if there is a better solution to the client’s needs. Otherwise, they will be more expensive and will lose the job. As a result, once the job begins, so do the change orders.
When we started our company, we bid every project but soon realized we wanted to be in the design/build business not the bidding business. So we had to reeducate our clients about the process, informing them that, just like hiring a doctor, an accountant, or an attorney, they need to consider personality and philosophy for a good fit.
We ask our clients to research other companies to see how they run their projects. And, during our presentation, we give clients a list of more than 100 references. We suggest a few questions they can ask past clients, such as how quickly we responded when there were bumps in the road; how clean we kept the jobsite; how respectful our trade contractors were of the client’s space; and whether the client felt that the team took personal care with the project and the relationship.
Your clients need to realize that they will be best served by a company that looks out for their interests and has an investment in the success of the project, not just the bottom line.
I would rather win or lose a project based on whether or not we are a good fit rather than based on price. Even in this tough economy, we have worked hard to maintain the use of negotiated bids.