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A few years ago construction was still in a slump from the housing crash due to the recession. Contractors were still needing work just to stay in business. Now construction and home sales are booming. Contractors are busy so if you get a cheap bid, you are going to get cheap work most likely buy a guy that doesn't do all that great of work because otherwise he would be busy. So basically, you can forget what you paid a few years ago or add probably 30% to it to get you in the ball park.
Do not give them your budget unless you are going all out with a generous budget (which you obviously are not). Also, since it is busy right now, they may be shooting you high prices because they really don't have time for your job but if they can make some good money, they will fit it in. Another thing, experienced contractors are good at sensing when a potential customer is going to be a pain in the ass so they either do not give you a bid or they price it high to make it worth dealing with.
To be honest, your post reads like you are trying to dictate to the contractors what you will pay for the work you want done. It doesn't work that way and you may be throwing up red flags for them from the get go. They may just not want to do the job for you. Typically, if you get several bids and they are all in a comparable price range within about 10%, you can average them and that is what the job is worth. You aren't going to get it done right for 20 or 30% less just because that is your budget.
The reason to get multiple bids is to get the best available market pricing. If they are coming in over budget, then your assessment of the market is wrong.
Contractors don’t really care too much what your budget is. They care to the extent that they want to get paid of course, and you having enough money is key to that. The bigger factor is how much the job is going to cost them. They have wages and materials to cover, plus their overhead which pays for equipment etc.
If they don’t think that they can turn a profit based on your budget, they have three choices.
1. Do the job anyway, and take a loss on it. This may happen from time to time, usually in economic downturns where any money coming in is better than nothing.
2. Don’t submit a bid if the homeowners budget is too low.
3. Submit a realistic bid. If that is higher than the homeowner wants, the decision is up to the owner to drop the project or come up with more money.
A few years ago construction was still in a slump from the housing crash due to the recession. Contractors were still needing work just to stay in business. Now construction and home sales are booming. Contractors are busy so if you get a cheap bid, you are going to get cheap work most likely buy a guy that doesn't do all that great of work because otherwise he would be busy. So basically, you can forget what you paid a few years ago or add probably 30% to it to get you in the ball park.
Do not give them your budget unless you are going all out with a generous budget (which you obviously are not). Also, since it is busy right now, they may be shooting you high prices because they really don't have time for your job but if they can make some good money, they will fit it in. Another thing, experienced contractors are good at sensing when a potential customer is going to be a pain in the ass so they either do not give you a bid or they price it high to make it worth dealing with.
To be honest, your post reads like you are trying to dictate to the contractors what you will pay for the work you want done. It doesn't work that way and you may be throwing up red flags for them from the get go. They may just not want to do the job for you. Typically, if you get several bids and they are all in a comparable price range within about 10%, you can average them and that is what the job is worth. You aren't going to get it done right for 20 or 30% less just because that is your budget.
You beat me to it. A few years ago in some places, contractors were eager to get work. Now they can pick and choose jobs, or at least some of them can.
I would never state a number limit for budget.
For one thing, it turns the process into a game of who “wins.”
For another, there is a general belief that building budgets ALWAYS get blown by more than X percent. We even were told to assume that we should count on spending X percent more than what the estimate is. The builders assume that customers will always upgrade a lot of initial choices, and some customers think that a pie-in-the-sky budget not based on reality will somehow magically come true.
For another, if there is any doubt as to exactly what is included in the scope, this could throw off numbers by a large amount. Maybe one party or the other did not include landscaping; one party considers a bit of lawn and a few bushes out front to be adequate, but the other party has more elaborate and larger scope of work in mind. This is just one example of single thing possibly blowing up into multiple times its estimated cost.
If you can do some work yourself, that helps, but it likely won’t save you huge amounts unless you do major items.
When I did contract work (different industry) I was not interested in negotiating requirements as it easily makes both parties less happy. I submitted a bid to do the work and managing the customers budget was not my job.
When we had a large landscaping project a few years ago, we listed out the things we NEEDED, the things we WANTED, and things we'd CONSIDER.
We told our contractors that we wanted a couple quotes - one for just the stuff we NEEDED, one that added in the wants, and then if they chose, they could offer other things that we'd consider.
We did not mention our budget.
The numbers were all over the place (between $8K and $55K) for the NEEDS-ONLY quotes. We picked a contractor that was recommended to us that came pretty close to our budget ($15K), and worked with them to determine what we'd have done. In the end, we came in under budget ($12K), got all our NEEDS done and even got a couple WANTS done as well.
Some of these responses are really interesting and clearly from "industry." We don't play those games.
We have a 30K budget for a small lot with repair work to a retaining wall and some regrading/hardscaping-- more than enough in my area. Yes, we have had several bids come in on or under budget. I am more discussing those who went over and it sounds like a few think this is an okay strategy.
If I tell a vendor, any vendor, this is how much I have, I expect that they believe me. Its not being a pain in the ass, its being truthful. I run a business myself and if one of my clients says the same thing, I will do my best to find a solution in their budget. Its not always possible if the budget is unrealistic but this budget is very much in line with costs in my area.
I have had a contractor come back three times after "finding extra money" in the budget when I asked about the cost of particular items in the scope. "oh, i counted that twice" kind of thing. This is either sloppy or the budget is padded.
My fiancee flat out refused to discuss budget with many of these people and they refused to give a bid. This is nonsense. When they said "what is your budget?" he said "tell me what it costs and I will tell you if we can do it. We are looking at multiple contractors" they kept pressing. Its VERY common from the people we talked to have them ask this question up front and if you seem like you don't want to answer, some will get quite upset. To me, that is a poor business practice.
So, no we don't have unrealistic ideas of what should happen. We know what we want. There were several people who got that. But a full half of these jokers thought it would be a good idea to inflate the bottom line. They were not selected. If someone didn't really want the job, they had a funny way of showing it as we let them know nicely that we could not consider a bid so high and three of them "reworked" the original to try again. Clearly they just thought we weren't serious.
I suspect that part of this is that we have a very upscale home in an urban area with high property values. I inherited this property. Of course we didn't share this info, but if it were not for the inheritance, we would not be able to afford this address at this point in our lives. I think it may give the impression that we have "money to burn" when this is very much not the case.
Last edited by kickingthebricks; 02-21-2018 at 10:21 AM..
As already spoken, give the plans and exact plantings/specs to each qualified bidder. Be VERY clear about what the project entails: drawings, plants by name and size, quality of materials, etc. Your architect/designer will pull this together for you, and normally in a landscaping setting, they would be one of the companies bidding. If you use them, they normally throw in the plans for free or reduced cost.
So, you know exactly what you need, and you communicate that to the bidders. They respond literally by filling in the blanks. So many XYZ plants of 5 gallon size, so may yards of top soil, so many hours of labor to fix wall, etc. The bids should be pretty close. Those that are way under are cutting corners; those that are way over are telling you they don't want the work.
Narrow it down to a couple who bid rationally and understand the job and see which one you feel the best 'vibe' working with. That's your pick.
(Disclose the plan; don't disclose your budget. If they press, tell them the bids have been coming in between $20,00 and $40,000. Let the bidders figure it out).
1. Should you always lie about your budget for a project and under represent what you might be willing to spend when getting bids?
No. You shouldn't share your budget until you've chosen the contractor you want to work with. If you tell the contractor that you've budgeted $10,000 for a job and he knows he can do it for less, what do you think his bid is going to be?
Quote:
2. Why would someone who is bidding for a job come in so much higher than the budget? Is there a prevailing opinion that people magically can come up with thousands more dollars? Or does everyone just lie and say that they have less so people bid what they THINK the homeowner really has?
Usually because the cost of the criteria you have stipulated is higher than the budgeted amount. Better to come back with a bid for the actual price and work with the customer on trimming it back than tomake assumptions as to what the customer would want to cut out.
My fiancee flat out refused to discuss budget with many of these people and they refused to give a bid. This is nonsense. When they said "what is your budget?" he said "tell me what it costs and I will tell you if we can do it. We are looking at multiple contractors" they kept pressing. Its VERY common from the people we talked to have them ask this question up front and if you seem like you don't want to answer, some will get quite upset. To me, that is a poor business practice.
If they keep pressing, that's when you tell them to leave and you will find another contractor. As long as you are clear on what work you want performed, they should be able to provide you an estimate and not need your budget. Are all the contractor's that have come out to quote the work licensed? I've used licensed contractors and have had many provide quotes for work to be performed. I have never had one ask me what is my budget.
Some of these responses are really interesting and clearly from "industry." We don't play those games.
We have a 30K budget for a small lot with repair work to a retaining wall and some regrading/hardscaping-- more than enough in my area. Yes, we have had several bids come in on or under budget. I am more discussing those who went over and it sounds like a few think this is an okay strategy.
If I tell a vendor, any vendor, this is how much I have, I expect that they believe me. Its not being a pain in the ass, its being truthful. I run a business myself and if one of my clients says the same thing, I will do my best to find a solution in their budget. Its not always possible if the budget is unrealistic but this budget is very much in line with costs in my area.
I have had a contractor come back three times after "finding extra money" in the budget when I asked about the cost of particular items in the scope. "oh, i counted that twice" kind of thing. This is either sloppy or the budget is padded.
My fiancee flat out refused to discuss budget with many of these people and they refused to give a bid. This is nonsense. When they said "what is your budget?" he said "tell me what it costs and I will tell you if we can do it. We are looking at multiple contractors" they kept pressing. Its VERY common from the people we talked to have them ask this question up front and if you seem like you don't want to answer, some will get quite upset. To me, that is a poor business practice.
So, no we don't have unrealistic ideas of what should happen. We know what we want. There were several people who got that. But a full half of these jokers thought it would be a good idea to inflate the bottom line. They were not selected. If someone didn't really want the job, they had a funny way of showing it as we let them know nicely that we could not consider a bid so high and three of them "reworked" the original to try again. Clearly they just thought we weren't serious.
I suspect that part of this is that we have a very upscale home in an urban area with high property values. I inherited this property. Of course we didn't share this info, but if it were not for the inheritance, we would not be able to afford this address at this point in our lives. I think it may give the impression that we have "money to burn" when this is very much not the case.
There is the possibility that those that overbid it didn't want the business badly. It could be that there was more meat on the bone with other projects, or that they didn't want to work for you, or that they value their work more than the other guy, or weren't certain on how badly they would get off schedule and budget based on what they found once they started digging, etc... I know one plumber that, for new construction or remodels, is booking out to June. He routinely bids twice what his competition bids. Yes, he pads the bid to avoid having to go back and around again if they change the vanity they want. And, since he's booked full for several months, isn't overly worried if you in particular don't want him as his work and reputation stands on its own.
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