Bid Day Surprise OR SHOCK!
By Henry Staggs, RRO
Getting a new roof, whether you are a homeowner or a commercial building owner, is a huge undertaking and very expensive. Especially when its done wrong, and you don't get the right roof or roofer. Most people on the buying end of the deal know very little about roofing, so they lean on what they know, which is cost. They know how to look at the price, and they know which bid is higher and which bid is lower, and since we all want the lowest bid. Well, people end up choosing a contractor based on price alone. This only works when every contractor is vetted and qualified, and their bids are apples to apples. If not, well, you are just tossing the dice.
One of the things I deal with every time I do a project as a consultant is the client's expectations; often, clients don't take into consideration what it might cost. Based on what someone they know told them, or work they had done some years ago. Or the worse, a low ball bad contractor misleading them. On some occasions, the client already went out and got a loan for the work before getting bids, based on terrible information, and ended up falling way short. When I was reading through a book written by the Construction Specifiers Institute, I found a small chapter titled "Bid day surprise," what I've been experiencing with my clients far too often, and I thought it would be a good idea to write about it. Maybe YOU won't be a victim of bid day surprise, or better-said SHOCK!
We get the bids, and everyone is on pins and needles to see what this project is going to cost. Will it cost a lot, will it be a reasonable price, will I have a heart attack and fall over?
Here are the various possibilities when you are not prepared.
Higher than expected
The bids are higher then you budgeted for, which means you may have had bad information going in, which leads to unrealistic expectations. It could lead you do hiring a lousy contractor for an unrealistic price and probably get ripped off either financially or with substandard materials. Or you end up going back to the beginning of the process, with better information, looking for the money to pay for this project. If the roofs are leaking, then your cost is only going up. With each repair while the project is being delayed or even canceled.
The low ball bid
Some contractors will play this low bid game where they bid with little to no project margin to get the job and make it up with change orders. Another reason why it is crucial to have a realistic expectation going in. If one bidder is ridiculously lower then the others, that is a clear sign that they are playing the low bid game. If you do hire them, you are likely going to end up being held hostage with one change order after another, and pay more than the highest bidder, to begin with. It's not a secret either, the players in the industry know who these guys are, and some times won't even bid on a project if their name is on the list. We need to be sure the lowest bidder is still reasonable and close to the other bidders.
The highest bidder
On the other side of the fence, there is always the high bidder, who has this idea that they can sell the work based on how great they are. They often pad the bid with sales stuff, and testimonies, and other kinds of company literature. Or want to be present at the bid reading, to pound their chest and tell you why the other bidders just too low. Their goal is to make you think the other guys are playing the low ball game, can't do the work for less than they are charging, and you have to hire them. It is nearly as bad as the low ball bidder game, and more intimidating for the owners who often end up with buyers remorse.
What do YOU do?
Scope of work
To start with, you want to be sure that your invitation to bid is"apples to apples" bids, including using a bid worksheet and being very clear that you don't want "proposals" you want "bids." What the difference? A "bid" is when you present a contractor with a complete scope of work and ask "how much to do this." Whereas a "proposal" is when you request a contractor, to prepare a scope of work and present you with a scope and a cost for doing that work. Inexperienced owners get wrong information; when they ask for three proposals they are not going to get "apples to apples" bids, they will get some wildly different numbers and scopes of work. It is essential to make sure that you are starting with a well written, complete, and detailed job specification (scope of work).
Vetting a contractor is not as easy as the "how-to articles" online make it seem, and never use contractors from those "lead" companies who advertise on TV. Good contractors don't need to buy leads; they are too busy to mess with them. Leads companies often sell those leads over and over. I used to work this with a great guy who did pretty good work for the most part. Well trusted and liked by most everyone, and then one day, he chained up his doors and vanished with hundreds of thousands of dollars.
Even so, do your very best to make sure that the contractors you are inviting to bid are as equal and as qualified as you can. I wrote an article on vetting contractors that you can read here. I think I put this article out there more than any other one that I have written; it's just that important. Keep your eyes peeled for that low ball bidder and the high pressure highest bidder. Honestly, all the bidders should be with 10% to 20% of each other. They all depend on the same labor market, the same suppliers, and if the bids are "apples to apples" the same scope of work. Realistically, why would anyone of them be more than 10% or 20% different?
Don't come into this with unrealistic expectations about what the cost might be. It will buffer you from the sticker shock or bid day surprise and from delaying or canceling the project entirely. If you are in the industry, this part is easy; we already know what a project should cost since we deal with this every day. If you don't, however, then you might find it a little harder to get a realistic idea, but there are some ways you get close. If you do an online search on "what a shingle roof should cost" or whatever roof system, there are numerous web sites that can help you calculate the estimated cost.
Before you can calculate your estimate, you need to know the measurements of your roof, which you can get easily from numerous satellite measurement companies. A little cost upfront might save you from an awful experience later.
Keep in mind that nothing is perfect, the bids are still going to come in different then you might expect. I suggest you add about 30% to the number you come up with, giving you some wiggle room for a variation in your estimated cost and the actual cost.
WARNING! With all vetting and planning, you can still find your self stuck with a bad player who ends up cheating you. Like the guy I mentioned before, no one and I mean NO ONE saw it coming. Make sure that above all things, the contractor you hire has an active license with the Registrar of Contractors, is insured, and has added you as an additional covered before they set foot on your site. If you do find your self in a pinch, you can call a roof consultant, a construction defect attorney, or the ROC who does offer a free service they call "Building Confidence Program." If you think the contractor is not doing a good job, you can call them, and they'll come out and have a look. It is not a formal complaint, and no one gets in trouble unless the contractor just did a bad job, and the ROC investigator requires corrections. There is help out there when things go wrong, even after you have done all you can to avoid problems
If you have questions and need a little push in the right direction, call me, email me or send us a carrier pigeon. I am happy to do what I can for you and at the very least get you pointed in the right direction.
Roof Consultants and Roofing Industry Advocate