News from Living Stone Construction, Inc.

Multiple bids can lead to multiple problems

When selecting a Building Contractor you must assess your motives. You must also assess what the motives are of the person that you intend to hire. Is it quality or integrity? Is it communication to ensure that there is a good working relationship? Or maybe it is details, or value? Or, is it simply just about COST. Perhaps you have not thought about this question before, but at some point you should.
Anecdotes told to me of a particular project gone bad bear repeating. It is a familiar story that I personally witness on a routine basis.
In this particular example, a very well-to-do local professional sought to build a high-end custom home in one of Asheville's coveted neighborhoods. The owner sought out 8 builders. The lowest estimate was submitted by an out-of-state builder who was approximately 15% lower than the next lowest estimate. Apparently the owners' motive was strictly cost because he awarded the project to this firm. Needless to say, the builder was financially insolvent and went bankrupt halfway through the project. Did the builder lose it all on this one job? Possibly, but most likely firms like these don't know what the true cost of construction is so they consistently underbid jobs. Eventually it catches up to them and someone has to pay.
Unfortunately in this case it ended up being the subcontractors and vendors who didn't get paid. Now, not only are their businesses suffering, so are their families and their creditors. This is a common and unfortunate problem that is becoming a more regular occurrence. Although the builder is partly responsible for this mess, he is not the only one to blame. Owners whose only motivation is cost are only asking for trouble. You truly do get what you pay for. This owner, after months of stress and distractions, had to go back to one of the reputable builders in his first bidders list and beg them to pick up the pieces to his project.
What should you do? It is essential that you assess what your motives and priorities are before you begin looking for a builder. Next, seek out builders that match your criteria regardless of your preconceptions. (Quality/reputable builders are often thought of as "too expensive." This is not always the case. You do get what you pay for, but that doesn't necessarily have anything to do with the builders' profit margin.) Interview them and look at numerous projects. Speak with as many of their references as possible. Research the firm, beginning with the NC Licensing Board. Once you've found one or two that you are still satisfied with, ask them what they intend to charge you. Finally, get a detailed and thorough estimate of what they think the project will cost.
Remember, your project is going to cost what it really costs. By that I mean that your builder's cost of materials and labor are knowable and somewhat fixed. The difference between bids should only be the profit margin, assuming an "apples-to-apples" comparison is made. If your builder knows that everything is not to be sacrificed simply for cost, and that he is not "bidding" against a handful of his competitors, you will get a much more accurate estimate for the construction of your new home.

This article was written by Sean Sullivan for submission in the Black Mountain News, ACT, and NC Builder Magazine.