1. Do not bid on all projects -- qualify bids by type of project, type of client, name of architect, or reference.
Many remodelers choose the projects they will bid on based on the type of project, the architect or interior designer involved, or the other contractors bidding. If a remodeler has a "sweet spot" -- jobs that their company performs efficiently and profitably -- they may chose to bid on only those jobs.
Chuck Dunnigan, of Dunnwell Construction, in San Diego, often receives leads from an interior designer. "Referrals from this designer are quality leads," Dunnigan says. "If he sends me something, I'll bid on it." The remodeler says that jobs referred by interior designers and architects are often larger, so homeowners are less likely to call him directly for his design/build services.
Bid requests that do not come from an architect or designer, Dunnigan treats as a cold lead or first sales call. "I approach clients who have specifications just like the ones who do not," he says.
He likes to spend time with these prospects to find out their priorities. "I have more success when I meet with clients," he says. "Besides the logistics of what is drawn, there are other things: If the homeowners already have plans, they look at the bid as more of a commodity. They believe that every contractor is bidding the same thing. I steer the conversation to the high level of management that we provide and our detailed schedule. I try to steer them away from the bottom line attitude toward a value approach, as we do with design/build clients. It helps me to decide how much time I will spend on it," Dunnigan says.
If the interior designer is involved, the remodeler asks them for background information about the client. "I often ask the designer for feedback about the client's lifestyle. If I have a good grasp of that, I might not ask to meet the client before I put together the bid," he says. This is because he relies on the interior designer to present his bid and company to the client, including the added value they will receive by hiring Dunnwell Construction.
Dunnigan says that asking clients about their budget and past remodeling experience reveals a lot. He also asks who else they have approached for a bid. "If it is a large company, I know I do not have the same high overhead and marketing budget. I know I can be competitive on price and can deliver the same service and use the same suppliers."
Bill Keilty of Keilty Construction, in Boise, Idaho, prefers to find out the names of the other remodelers bidding on the project. "Right now, with the slump in new housing, builders are infiltrating the remodeling industry. If the client or architect lists four names and the other three are not professionals, then we will bow out of the bidding. They do not have the same operation we do and they might be happy getting just wages, which we cannot do," Keilty says. The only exception is for past clients or referrals. "We do not want to stop the chain of referrals," he says.
2. Ask clients for a specification list before you bid, so you can create a more accurate bid.
Keilty says that the plans he receives for a bid proposal are not detailed enough to create an equal playing field. "The clients have a picture of what they are getting; the architect might be envisioning something else; and we remodelers are thinking something else again," he says. He asks clients for a specification list that includes cabinetry, flooring, surfacing, plumbing fixtures, etc. "We have bid without a spec sheet, but we try to narrow it down so we don't waste time. Especially when bidding against new-construction guys who are now doing remodeling work. They usually put in allowances, but the allowances can make a big difference in the final bid number."
Like Keilty, Robert Kraft of Kraft Custom Construction, in Salem, Ore., is also more willing to bid on projects that have a full scope of work. He explains to homeowners that jobs bid without detailed specifications set up a challenging relationship between the homeowner and whichever contractor they choose: "I tell the homeowner, 'If there is a gray area when I put my bid together, I might not put down what is right for you because if it costs more, I'm sure to lose the bid.' But that results in lots of change orders. It sets up an adversarial relationship from the start."
3. For more accurate bidding, ask major subcontractors to review the scope of work and submit an estimate.
Depending on the scope of the project, Leland Finley might call in a subcontractor to review the project before he bids it. "Especially if they want to modify or upgrade existing electrical or plumbing," says the owner of U Break-I Fix, in Riverside, Mo.
"You have to make a site visit to accurately bid," Keilty says, explaining why he takes a few hours to invite trade contractors to a bid party to review the scope of work and offer estimates. "I would not bid a major project without a bid party."
For Keilty, the bid party is especially helpful for HVAC systems. "Is the existing system adequate for the remodel or addition? We have that diagnosed at the bid party. What portion of the house has to be modified to accept the addition? The best plans in the world will not show that. We figure out which walls will have to be opened up, which, in turn, has bearing on drywall and painting. Our numbers will seemingly be higher than someone else who does not use the bid party process," he says.
Keilty Construction does not charge for bid parties, which take a few hours. "That time is donated," Keilty says. "But people should pay for what they get -- not just an average cost per square foot. Our bid is more realistic because we're looking at the entire scope of work."
4. Before you submit your bid, educate the client about how your bid may differ or important questions they should ask the other bidders.
"Education needs to happen before you give them a number," Finley says, adding that homeowners have been influenced by TV programs that show projects completed in one week. "The exploratory process is where the bid starts," he says. "The client has a problem or need. They want something done but are not sure what that is." He says that remodelers should take this opportunity to educate.
"Interview your client before presenting the bid to find out what they are looking for. This way, you can tailor your presentation," Dunnigan says. He lets customers know that other contractors might sell on price, but that he is selling value. He also gives them a cost range based on historical data, which, he says, keeps him from wasting his time. "If we have parameters on the project but don't know specifics, the cost will change based on the specifics. I tell them to prepare themselves for budget A to budget B," Dunnigan says.
Kraft suggests questions that the homeowners can ask the other contractors. "I tell them to find out more about the contractor and their way of doing business," he says. "Does he provide a selection process? This is the real determining factor on how the job will go. I tell the client: 'I develop a finish schedule with all your selections and give it to you at the beginning of the job. You will know, for example, that you need to choose 15 light fixtures by a certain date. Is that valuable compared with someone calling to say, 'The electrician will be here tomorrow. Have you picked out light fixtures?'"
Kraft also suggests that clients talk to his references and ask them tough questions such as, "What happened when something did not go right?"