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We have just received bids from contractors and they are almost twice our budget

One of the most common calls we receive is, “We have just received bids from contractors and they are almost twice our budget”. This is avoidable through using good project management techniques. 

There are two causes. Either you were not careful enough in selecting your contractor or you have an over ambitious design.

Choosing a contractor appropriate to your project is vital in order to receive competitive bids. In addition to choosing a contractor with a reputation for quality, you will want to consider both the type and amount of a contractor’s workload. 

Large contractors have greater overhead costs and may not be competitive for smaller jobs; while smaller ones may lack the confidence about larger jobs and cover their risk by quoting high. 

A busy contractor may not need the work and submit a high price for your project. It is a good idea to ask a potential contractor if he would like to bid on your project. Selecting contractors carefully ensures you receive competitive bids.

An over ambitious design is the other reason for a high contractor bid, but it can be prevented early in the design process. 

They say it’s a bad idea to go to the supermarket without a list or when you are hungry because you end up spending more than you intended, and you buy things you don’t really want. 

Designers, like the supermarket, have many things to offer, some of which you may not have thought about. Without a clear idea of what you want and how much you want to spend, you can see how you can end up with a design you can’t afford. 

The key is to break the design process down into manageable stages. This will save you money in design costs and will avoid the shock of high contractor bids. 

Breaking your project into manageable stages also keeps you in control of your project. At the end of each stage, you “sign-off” by confirming that 1) you like what you see and 2) it is within your budget.

For any project there are 6, sometimes 7, stages. Initially there is the feasibility study: finding out if you can afford what you want. 

The second stage involves selecting a designer that you want to work with to create your project and entering into a contract with him or her.

The third stage produces a sketch of the design. This is not a complicated or intricate drawing but a simple hand drawn sketch.   

The fourth stage is the development of the design. Your designer creates the detailed drawings for your project.

Projects more complex than a small home have a fifth stage which involves the creation of construction documents with more detail.

The design process ends with the documents sent out to tender. All that remains is to build and move in. 

Between each stage you confirm that you like what you see and it is within your budget. Broken down in this way, there will be no surprises when you open up your contractors’ bids.

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By Chris Potter

Chris is the owner and founder of Chris Potter Associates. He is a highly experienced construction professional with experience as a contractor and consultant quantity surveyor and project manager in the UK and Caribbean construction markets.

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