When You Go Low Bid

“Construction firms often make unrealistically low bids to get jobs…but they can count on finding plenty of reasons later to jack the price up enough to allow for a profit. When the building is underway, it becomes prohibitively expensive to fire the contractor and start anew. The owner has become a hostage.” [Wall Street Journal, 12/05/07]

The 5 Top Reasons to be Very Wary of the Low Bidder

We understand that there is a strong motivation to choose the low bid especially if it is within your budget and everyone else is above your budget. Unfortunately, it rarely works out. Before you sign any proposal consider the following:

1.  There have been countless news stories by leading national and local news magazines about unscrupulous contractors that disappear with homeowner deposits, operate without a license or never complete the work.

2.  Some contractors will simply throw out a low bid as a negotiating strategy. Contractors with integrity give their best price the first time and include specific details of all materials to be used in the proposed project.

3.  Every contractor is in business to make money. If you receive a bid that is 15% or more below another bid – it simply isn’t the same job. It can’t be because there isn’t that much profit margin in a project. The contractor either isn’t using the same materials or will cut corners on installation in order to make a profit. There are many places to cut corners of which the unsuspecting homeowner/client is unaware.

4.  As noted in the quote from the Wall Street Journal above, it is easy to be fooled by the low quote and a “nice person”. If a bid seems to be too good to be true, it is. Call at least 10 references and ask about the total job cost at completion versus the proposal pricing.

5.  Many times, the low bidder isn’t licensed to perform the work proposed. An unlicensed contractor either does not have the experience or competency to secure a contractors license or has cut a corner to save money by avoiding the cost associated with being licensed, bonded and insured.

6. Unfortunately for homeowners, if they hire someone who is not licensed, they have no recourse through the ROC complaint process or the Residential Contractors’ Recovery Fund.

If you are seriously considering hiring any contractor with a very low bid please refer to “How to Choose a Professional General or Remodeling Contractor” – Ask all the questions and get the answers in writing to every question before you sign. You will be glad you did.

Specific Examples of What Can Go Wrong with Low Bid Contractors

Tile Work – leaking, wicking in showers causes drywall problems, mold, grout cracks, floor may have lipping if tile is laid unlevel. If they don’t use good quality flex guard material you will have cracks that will run the length of the room. All of these are extremely expensive to repair ” after the fact.”

Cement – If they don’t install rebar steel prior to pouring, the cement will crack and heave when it settles. This causes the flooring material above it to crack which can be very expensive to replace.

Cabinets – Cabinets of poor quality will fall apart, hinges come loose, tracks fall off, and draws may fall apart. Improper ordering can cause huge install delays which will add several weeks to the project. If not properly configured they may not fit the space well or provide the functionality desired in the workspace.

Granite – bad seams, sub decking shifts – causes seams to spread, if/when filled it looks unsightly… a big investment that looks mediocre.

Landscape – timers broken – grass, plants that can die – systems may have leaks causing huge increase in water bill. Sink holes people can open causing trips or falls and you get sued.

Framing – walls that aren’t plumb create problems with drywall and finish work, cabinets, trim work isn’t flush with wall or ceiling. You will have gaps that are difficult to fill in and look unsightly.

Drywall – seams show, uneven sanding – doesn’t show up until later and then it’s too late… using inferior sheetrock from China can create health issues.

Electrical – wrong load count used will cause circuits blowing, GFCI not working or the reset button is hard to locate… hang Xmas lights and suddenly every time you turn on your hair dryer half of the lights in your house blow out.

HVAC – Heating and Cooling – uneven airflow distribution – home won’t heat/cool well in all rooms – unbalanced airflow causes an increase in utility bills. Is can appear to be cheaper up front but it is much more expensive in the long run because the energy efficiency (SEER) rating will have a direct impact on your monthly utility bill.

Plumbing – Leaks resulting interior damage, inferior cheap plumbing components may break quickly and be difficult or impossible to repair as parts may be hard to locate. Can create mold issues which is resulting in a huge increase in mold related litigation. Mold is very expensive to remediate… If noted on insurance CLU report; your home may be considered uninsurable in which case it can’t be sold. Go too cheap on toilets you end up having a plunger be a permanent fixture in your bathroom.

Low Voltage Wiring – Security system is completely dependent on installation – only as good as the install. Technology is changing rapidly – the contractor may just be meeting your needs today instead of giving you the ability to grow, expand and reconfigure your technology needs as they change in the future.

Windows – improper installation (i.e. lack of or poorly installed flashing) will create leaks and the associated problems with leaks. The type of windows you install will have a direct impact on your utility bills each month. Is what’s being recommended something that is cheap upfront but more expensive in the long run?

Roofing – Improper or inappropriate installations will create problems with storms and the associated winds and rain. This can create leaks that may result in damage to drywall, cabinets, carpet etc… Flat roofs can be really expensive to repair/replace if the roofer uses low quality material – it will not hold up under the AZ sun and heat… causes leaks and associated interior damage. It will be very expensive when you go to sell and the inspection report comes back with the news that the roof needs to be replaced. It will likely cost thousands of dollars and may even cause a buyer to walk away.

Stucco – can look uneven; cracks are hard to repair; looks bad and is expensive to fix…If not properly lathed, water can seep into the home between the stucco and framing… this will cause mold and all the associated problems and expense.

Paint – only as good as the prep work… uneven seams, lines present from rolling brush; if cheap paint is used you have no wash-ability – paint comes off and you’re looking at drywall mud… trim work that is sloppy looks bad.

Read a real life story

“At V.I.P. Services, Inc., our reputation continues to grow because we believe that your project is about YOUR vision. By working hand in hand with you through every phase of your project, we deliver a quality product, on time and on budget.”