It seems the general public thinks that comparing one quote for another is easy….. I’m sure your clients do, right? Yeah, no worries, we will get 3 or 4 quotes from builders and we will immediately know who has the right deal for us….. heard that before?
It has to be one of the biggest misconceptions out there…. and the problem is often not just with homeowners who are receiving quotes, it can also be with builders who are receiving subbie quotes. Let me explain further…
These guys think that all quotes are created equally….. they do not know the difference between the effort gone into one versus another. This is one of the biggest reasons we have issues with disputes further down the track…. Assumptions are made often by both parties because the project documentation (which includes the quote document itself) was never clear. It comes up because a homeowner will pick what they believe to be the lowest bid offer… without comprehending the grey areas that are not clarified or understanding the fine print. You and I know the difference between a detailed tender letter with plenty of tags and clarifications versus a number written on the back of a napkin….. your homeowner has no idea, they just want the job done for the cheapest price. If that price happens to be the napkin job, and very often it is, then its time for me to park up with my deck chair and my G&T and just wait for the proverbial to hit the fan.
A lot of the time builders have really good relationships with their subbies, and this is really important because of the requirement to work together and get things sorted out on site. However, I regularly hear from builders that they ‘didn’t realise’ something was tagged out of their subbie’s quote, and they end up having to make up that shortfall themselves or try to convince the homeowner and subbie to come to the party. Neither situations are pleasant… and both are a surefire way to start hacking into what should be a builders profit.
Luckily, the answer to sorting out both homeowner and builder regarding quote comparison is the same. However it’s not something that you just intrinsically know, it’s generally something you need to be taught. I was!
How it actually goes down
In very basic terms, the way it needs to be approached is with a desktop exercise. A column for each builder/subbie across the top and each item tagged or clarified down the side. An example might be; Bob the Builders price was $500k, but he tagged out the deck and the driveway and the curtains. Joe the Builders price was $550k, but he tagged out the excavation however had included for the curtains. George the Builders price was $600k, but he had no tags.
You then go through each column and either add or subtract for each item and then re-total at the bottom. If an item has been tagged, then you make an assumption of cost based on the other quotes so that you are comparing apples for apples. Example here, Joe tagged excavation, however, Bob and George included for it and the average price was 50k, add 50k to Joe’s price and that item is now fairly compared.
This sounds a bit complex, I understand, it is complex! If you think your homeowner might not know how to do this for an entire building job…. It’s no small undertaking, after all, then either help them out or send them to a QS to help them!