Getting Estimates or Proposals

How many estimates do you need? There are no hard and fast rules here. Some consumers prefer to get a number of bids before making a decision. Others find that after the interview process, there is one contractor they strongly prefer and only ask that contractor to submit a formal written estimate or proposal. What really matters is that you end up feeling that you have adequate information to make the right choice of contractor. As a general rule, with the proper drawings and specifications, three estimates will usually provide sufficient information for you to make a decision. To get estimates, especially for substantial projects, you'll need good-quality drawings and detailed specifications. You can either use an architect or designer, or you can hire a renovator who offers design services as well as renovation services. In this latter case the drawings can become part of the overall contract if you hire the renovator for the entire job. But you don't have to use the same renovator for the work. Should you choose to use the set of drawings provided by this renovator to obtain other estimates, you may be required to pay for them.

Even with a small project, a set of written specifications is needed. Be as specific as you can: what type of flooring, what kind and brand of doors and windows, what kind of finishes you want.

For a large project, it can take two to three weeks for a contractor to prepare an estimate. Ask the contractor to submit it in person so you can discuss the estimate with them. Compare the estimate carefully and make sure that everything you ask for is in the estimate. It should include everything that the contractor will have to do to complete the job. Assume that anything not listed is not included in the price. As well, make sure the contractor provides you with a construction schedule.

In some cases, a contractor will give you a “fixed price” quote. A fixed price includes all the materials, labour, equipment and fees, plus contingencies, overhead and profit. In some cases allowances are established for items which you have yet to select, e.g., flooring and light fixtures. The allowance, which is only an estimate, is later adjusted once you have made your final selection.

If it is difficult to estimate just how much the job will cost — for example, for an old house that might need extra work — you can use the “cost-plus method” for contracts.

In a cost-plus contract, you pay the contractor the actual cost for labour, materials, equipment and a percentage for overhead and profit. Cost-plus contracts leave costs open-ended, so it's best to set a limit so costs don't get out of hand.

Remember, renovation may uncover hidden problems, so make sure you include a contingency budget to cover unforeseen costs.

Another option is a design/build contract, in which a renovator designs and carries out the whole project. You can use either a fixed price or cost-plus contract, again with a set cost limit.

Don't automatically choose the contractor who gives the lowest estimate. It may be unrealistically low. The contractor may not have understood the project, may be underestimating what it will take to complete the work, or simply trying to get a price advantage over the competitors. In any case, you could risk unexpected and additional costs, or you may end up with a job that leaves you unsatisfied.

Look for a fair price. Factor in any differences in what the contractors are offering and the skills they bring to the job. Then add the intangibles: reputation, willingness to make suggestions and offer advice, the likelihood of standing behind the work. Choose the contractor you feel will give you the best overall value for your money.