Building a new home can be a pricey endeavor, and it can be tempting to cut costs wherever possible. This makes competitive bidding look like a great idea. However, when it comes to finding the right contractor, there are far more things to consider than the price tag. Finding quality building services isn’t anything like shopping for a new car, it’s about building a relationship.
What Is Competitive Bidding
Competitive bidding in the construction industry is when two or more companies are all trying to obtain the same project and are forced into a price competition. The competing companies will analyze and estimate the work needed to complete the project and then attempt to arrive at a competitive price for the project.
Often you won’t usually have complete plans for each of the contractors to look at, and in this situation a good contractor will factor in the cost of anything missing from the plans. Things like moldings, light sockets, and so on are often overlooked, and this leaves room for an dishonest contractor to lower the apparent cost. Eventually, you will be made aware of those extras and end up paying for them anyways.
Why’s It So Bad?
Assuming all of the contractors in the bidding war aren’t trying to ‘trick’ you, a bidding war still puts a distasteful element to the owner/builder relationship.
This simple reason alone should be enough to make you avoid a bidding war at all costs. The competitive bidding war is the start of your owner/builder relationship and it can put you and the builder on opposite teams. It’s not surprising that many owner/builder relationships that are born of competitive bidding turn adversarial. Now both you and the builder will be in financial competition with one another.
Because no attempt was made at establishing a genuine relationship, both parties will start to look at each other as cold, heartless, business entities.
What Can You Do to Avoid it?
Meet your prospective contractors face to face. Talk with the staff, their references, visit completed job sites, and search the internet for awards and certifications. Once you’ve done that with a few different companies you should be able to determine which contractor will be best for your project.
Finding the right contractor is the one thing you’ll want to invest a little more money into. In the end there needs to be a mutual trust between both you as the owner, and the builder. Unfortunately trust is hard to build when you start a relationship with competitive bidding.
