How to make your remodeling bids more accurate
Providing accurate bids to homeowners is a challenge. Homeowners believe a remodeler should be able to assemble a number after one visit because “all kitchens cost $60,000 these days.”
But remodeling is not a one-size–fits-all business. Here’s one way to ensure you’re not providing a client with an inaccurate bid.
Hidden expenses, over-the-top product selections, change orders—all of these items can break a budget, but these situations are magnified with a bad bid. Unrealistic pricing or scope of work comes out during the critical sales phase, where homeowners rely on your price to make their decision. Contractors often rely on software programs to produce estimates, but even those don’t account for everything.
Chris Keilty, CR, of Keilty Remodeling Inc., based in Boise, Idaho, has a solution for accurate bidding on every project. “We’ve had very few surprises in the last 22 years,” she says.
Keilty organizes a diagnostic meeting, or bid party, where she invites her vendors and production manager to the home for a site visit. The party takes place after preliminary design, but just before an accurate bid is presented and a contract is signed. Depending on the size/scope of the project, she will charge a design fee upfront.
“I schedule everyone in 15-minute intervals according to what order the project is done,” Keilty says. “So I will schedule the painter and drywaller at the same time, since they will be working together.”
Depending on the scope of the project, the bid party could last anywhere from one to three hours. The subcontractors are given a week to send in their bids to Keilty, and she turns those into a formalized proposal within 10 days.
“It’s a lot of work and time upfront, but the clients get a firm proposal and knows exactly what they are getting,” Keilty says. She says that she has a 50% conversion rate from bid parties to signed contracts.
The bid party allows subcontractors, production managers and homeowners to walk through the entire project, listing details that otherwise would have never made it into the proposal.
“The subcontractors ask a lot of questions, like whether they wanted canned lights or pendants, and it gives everyone a good idea of the work that is involved,” she says. This also goes for products—even though clients have not made selections, Keilty and her subcontractors walk away with a very good sense of product costs based on how the homeowners respond to questions.
The visit also gives subcontractors the ability to not only see the size/scope but investigate all areas of the home they will be working in, including full inspections of attics, crawl spaces and the exterior of the home to locate evidence of hidden issues.
“By accessing these areas of the home, they can eye things pretty well for potential problems,” Keilty says.
Accurate bids make everyone happy
It may sound time-consuming to arrange subcontractor site visits on leads, but Keilty believes she’s saving time (and agony) in the later stages of the projects. Especially in the case of a lawsuit, the iron clad proposal would hold up beautifully.
Subcontractors say the bid party makes them feel more secure in what they’re doing, where they will be working and with whom.
On smaller, more straight-forward projects, Keilty leaves it to the subcontractors to decide whether they want to do an on-site visit.
The bid party is a hit with the homeowners as well. “Clients like the fact that they get to meet the subcontractors and project manager ahead of time,” Keilty says. It serves as a good final push for their hiring decision after witnessing how professional and competent everyone is.
There’s an educational aspect to the walk through, which helps set realistic expectations for the process and all the details and people involved on making it happen. “It gives people the understanding that a kitchen remodel is not just installing cabinets,” Keilty says. “They start to realize how many things they hadn’t thought of.”
When homeowners finally receive the bids, they know the proposal reflects exactly what they want.
In fact, the bids may be a little too thorough. “Our numbers tend to be higher, but the allowances are minimal, and there are virtually no change orders unless they change their mind,” Keilty says.
Clients walk away impressed with the preview of what to expect from Keilty and her crew.
“They say when the other contractor came over, he never took out a tape measure, and when he gave them a bid for $60,000 kitchen remodel, they had no idea what that included,” she says. –Morgan Zenner
| 5/23/2013 12:00:00 AM