Find trades and compare proposals

Three proposals for the same kitchen can differ by thirty thousand dollars and still be describing the same work, or they can be within two thousand of each other and describing three different jobs. This module teaches you to tell which is which: how to give bidders a consistent scope, what to ask, what to check, and how to level proposals so that the numbers you compare describe the same job. Levelling improves your understanding of what each bidder has offered; it does not establish the final cost, which only the finished project does.

1. What a proposal is, and is not Understand

Four words get used as if they meant the same thing. They do not, and the difference is where money is often lost.

• An estimate is an opinion of probable cost. It can be a number on the back of a card after a walk-through or a page of line items. Either way it is not a promise. Contractors give estimates when the scope is not yet defined well enough to promise anything.
• A bid or quote is an offer to do a described scope for a stated price under stated conditions. Its value depends entirely on how well the scope is described. A bid against a vague scope is an estimate wearing a suit.
• A proposal is a bid plus the contractor's terms: what is included and excluded, allowances, payment schedule, how changes are priced, schedule, warranty. Most residential contractors send proposals. The terms are often more consequential than the price.
• A contract is the signed agreement. In many places the proposal becomes the contract when you sign it, which means every line you did not read is now a term you agreed to.

The job of this module is to get you from several proposals, each written on the contractor's own form with the contractor's own assumptions, to one comparison in which every column describes the same work. That process is called levelling (or "apples to apples"). It is clerical, slightly tedious, and the single highest-value hour you will spend before signing anything.

2. Who you are hiring, and where to find them

What you are collecting depends on the role you chose in Module 1.

Where good trades come from

• Your designer, architect or engineer. They see contractors' work finished and know who returns calls. Ask for three names and for the reason behind each name.
• Suppliers. The lumberyard counter, the plumbing supply house, the tile showroom, the window dealer. They know who pays bills, who orders correctly and who is busy. Ask "who do you see doing careful work on jobs like mine?"
• Other trades. A good electrician knows which plumbers leave a tidy site. Once you have one trade you trust, ask them.
• The licensing authority's public lookup, where one exists. It tells you whether a license is current and, in many places, whether there are complaints or disciplinary actions. It does not tell you whether the work is good.
• Neighbors with finished projects, especially ones a year old. Ask what went wrong and how it was handled; a contractor who handled a problem well is worth more than one who claims there were none.
• Lead-generation sites and review platforms are where you start if you have nothing else, not where you stop. Reviews describe the sales experience more reliably than the construction experience.

Expect to contact two to three times as many contractors as you want proposals from. Some will not answer, some are booked for a year, some will walk the site and never send anything. That is normal and is not a judgment of your project.

3. What to check before you compare prices

Do these checks for every bidder who makes the shortlist. They take an hour per contractor and they remove the bidders whose low price is low because something is missing from their business rather than from their scope.

4. The bid package: giving everyone the same job

Levelling is only possible if every bidder priced the same job. The way to make that happen is to hand each one the same package and to answer every question so that everyone hears the answer. A bid package for a residential project contains:

1. Drawings, as complete as they are. If the drawings are preliminary, say so, and say what will change. Bidders price uncertainty; the less they have to guess, the lower the guessing premium.
2. Specifications or a finish schedule: what the materials are (not "tile" but "porcelain tile, 12 by 24, allowance $12 per square foot material, owner selects"), what the fixtures are, who supplies what.
3. A scope narrative: one or two pages in plain language describing the work room by room or trade by trade, and the existing conditions you know about (year built, known lead paint or asbestos testing results, panel capacity, septic, access). This is the document that catches what drawings miss.
4. The exclusions and the owner-supplied items list. Write down what the bidder should not price (appliances you are buying, the landscaping your cousin is doing) so they are left out of every proposal rather than some.
5. The allowances list. For anything not yet selected, state the allowance you want every bidder to carry, so that allowances are identical and the differences are in labor, overhead and judgment. Module 6 explains how to size allowances.
6. Schedule expectations: when you can start, any hard constraint, whether the house is occupied, working-hours limits.
7. Site conditions: access, parking, where a dumpster can go, where materials can be stored, bathroom availability, power and water.
8. A bid form: the line items you want prices broken into, so the proposals arrive in comparable shape. Even five lines (demolition and disposal; structure and framing; mechanical, electrical and plumbing; finishes; general conditions and overhead) make levelling far easier than three lump sums.
9. Questions deadline and bid deadline. Promise that every question and its answer goes to every bidder. Then do it.

The walk-through

Walk every bidder through the site, ideally one at a time, with the same notes in your hand. Point at the things that are not on the drawings: the panel, the water heater, the crawlspace hatch, the path a dumpster would take, the room where the children sleep. Say what you know about the house's age and anything that has been tested. Then listen: a bidder's questions during the walk-through are the best preview you will get of how they think.

Questions worth asking every bidder

• What in this scope are you least certain about pricing, and how did you handle that uncertainty in your number?
• Which parts would you subcontract, and to whom?
• What do you need from me, and by when, for the schedule you are proposing to hold?
• How do you price a change? Who signs it, and when, relative to the work?
• What happens if you open the wall and find something unexpected? Walk me through the last time that happened.
• Who pulls the permit, and who schedules inspections?
• What is excluded that a homeowner usually assumes is included?

Write the answers down, in the bid comparison worksheet, next to the proposal they belong to. The last question is the one that pays for the walk-through.

5. Price structures, allowances and payment terms

How the price is built

Allowances

An allowance is a placeholder sum in the price for something not yet selected: "countertop allowance $6,500 installed." If your selection costs more, you pay the difference (often plus markup); if less, you get a credit (often without the markup). Two things go wrong with allowances. First, a bidder sets them low so the total looks good; the cost arrives later as "overages." Second, an allowance is ambiguous about what it covers: material only, or material and labor; delivered or not; tax or not. Every allowance in a levelled comparison needs the same definition. Module 8 covers how selections turn allowances into real numbers.

Payment terms you will see

• Deposit. Money before work. Some states limit the deposit a home-improvement contractor can take; the limit, if any, is a verification item for your jurisdiction. A large deposit on a lump-sum job transfers risk to you for no reduction in price.
• Progress payments on milestones ("at completion of rough-in inspections"), or on a schedule of values (a list of the job's parts with a value for each; you pay the percentage complete each period). Milestones tied to passed inspections are easy to verify. Percentages are not, unless someone qualified is assessing them.
• Retainage. A percentage held from each payment until the work is complete and accepted. Five to ten percent is common in commercial work; in residential work it is negotiated or absent. It is the owner's main leverage for the punch list.
• Lien waivers. In many jurisdictions, subcontractors and suppliers who are not paid by the contractor can claim against your property even though you paid the contractor. A lien waiver or release from each sub and supplier, exchanged for each payment, is the usual protection. Whether that applies where you live, and what form the waiver must take, is a verification item and an adviser's question.
• Change order terms: how changes are priced (cost plus a markup percentage is common), whether work can begin before the change is signed, and who may sign for each side.
• Warranty: what is covered, for how long, and who you call. A one-year workmanship warranty is common in residential proposals; manufacturers' warranties on products are separate and often need registration (Module 11).

6. See it: three fictional proposals for one kitchen See it

The scope as the owners described it in a two-page narrative with a designer's plan: a 1958 single-story house; remove the existing 180-square-foot kitchen to the studs; remove a nine-foot section of the wall to the dining room (an engineer's letter in the package states the wall is non-bearing); new owner-supplied cabinets installed by the contractor; new countertops, tile backsplash and flooring (not yet selected); relocate the sink four feet along the same wall and add a dishwasher; new electrical circuits, eight recessed lights and under-cabinet lighting; drywall, paint; owner supplies appliances. The package said the town requires a building permit with electrical and plumbing permits, that the house is occupied, and that the dumpster can sit in the driveway.

Three proposals came back. Here they are, condensed, with the lines that matter marked.

Proposal A: Northline Remodeling, $48,900

Proposal B: Hale & Daughters Construction, $63,400

Proposal C: Marrow Design-Build, $79,800

Before reading on, notice your own reaction. Most people feel pulled toward A because the number is small and toward C because it sounds like fewer headaches. Neither feeling is information yet.

7. Practice: level the three proposals Practice

Time: about 45 minutes. Open the bid comparison worksheet and load its example rows, which contain these three proposals. Then:

1. List every scope item in the package down the left column, one per row, including the ones only some bidders mentioned (permit fees, dumpster, patching, hookup, panel, fixtures, dining room paint).
2. For each row and each bidder, write one of: included (and the amount, if broken out), excluded, allowance (with the definition), or not mentioned. "Not mentioned" is its own category: it means unconfirmed, not excluded, and it is where surprises live until you ask.
3. Choose the levelling basis. Pick one allowance figure per selection item (the course suggests the middle bidder's, because they were defined most clearly) and apply it to all three. Add a reasonable cost for every excluded or unmentioned item so that each column describes the full job. Use round figures and write down where they came from.
4. Treat the unknown separately. The panel upgrade may or may not be required. Produce two levelled totals per bidder: with and without it.
5. Write the questions that levelling raised, per bidder, in the worksheet's questions column. Those questions go to the bidders before you decide anything.

Then compare your levelled totals with the worked example in Check your work.

8. Your project Your project

9. Check your work Check your work

Criteria

• Every scope item appears as a row, and every cell says included, excluded, allowance or not mentioned. No blanks.
• Allowances are identical across columns after levelling, with the same definition (installed versus material only).
• Every exclusion has a cost added, with its source noted, or an explicit decision that you will carry it yourself at a stated amount.
• Unknowns (the panel) are shown as alternatives, not buried in one column.
• Terms that are not money (deposit, retainage, change pricing, warranty, start date) are listed in their own rows so they are compared, not forgotten.
• A question list exists for each bidder.

Worked levelling

What the levelling shows. The apparent gap between A and B was $14,500. After levelling, it is between $6,050 and $6,100, and that remaining gap buys: a defined electrical quantity instead of "per code," containment and air scrubbing in an occupied house, a 10 percent deposit instead of 50 percent, written change orders before work, retainage, a stated warranty, a license number and an insurance certificate. Whether those are worth about six thousand dollars is now a real question you can put to yourself and to the bidders, which is what levelling is for. The levelled totals are still estimates built on your own assumptions; the real cost is settled only by the contract and by what the walls contain. The gap between B and C, about $11,700 on this worksheet, rests partly on an assumption the worksheet makes for want of better information: that C would credit the panel at B's price. Until C answers, that figure is an estimate of the gap, not the gap. What the remaining gap buys is design coordination, a project manager, a two-year warranty, and a ten-week wait. Again a real question. Note that A's T&M clause for unforeseen conditions has no price at all in this table, because its cost depends on what the walls contain; in a 1958 house that is not nothing.

Common mistakes

• Levelling to the lowest allowance. It makes every bid look cheaper and every selection later look like an overage. Level to a realistic figure, usually the clearest bidder's.
• Counting "included" as settled. "Electrical per code" is included and undefined. Ask for quantities.
• Ignoring the start date. A proposal that cannot start for ten weeks may be the right one; it is still a ten-week cost in rent, interest or patience that belongs in the comparison.
• Letting the deposit slide because the number is good. Deposit size is risk, and risk is price.
• Treating a bidder's silence as inclusion. If it is not mentioned, its inclusion is unconfirmed. Ask, and document the answer; some bidders do carry unmentioned items, and the only way to know is to ask.

What is still unresolved after levelling

• Whether the panel upgrade is required (an electrician's assessment, possibly the utility's), and what C would actually credit if it were removed from their scope; the worksheet assumed B's alternate price for both, which is a levelling convenience, not C's number.
• Whether the sink and faucet are in A's and B's prices.
• Whether your jurisdiction limits deposits or requires specific contract terms for home improvement work (verification list).
• What A's licensing and insurance situation is; until shown, A is not comparable at all.
• What each bidder would do with a surprise behind the wall, in writing.

10. Knowledge check and scenario

Before you move on

• I levelled the three fictional proposals and compared my totals with the worked example.
• I wrote a bid package outline for my own project (drawings status, specs or finish schedule, scope narrative, exclusions, allowances, schedule, site conditions, bid form).
• I added "license required for this work?", "deposit limits?", and "lien waiver practice?" to my verification list with the authority who answers each.
• I have a list of at least six places to find trades for my project, with a name for each.
• I know which contract questions I will take to a qualified adviser rather than answer myself.