Apples to Apples: Comparing Home Improvement Project Estimates Gets Peachy Results

Comparing apples to apples, it’s a phrase that comes up regularly on both sides of the buying and selling opportunity. Here we’ll look at it in terms of the home improvement market, but the thinking applies from chicken coop to opera house—if it’s worth doing, it’s worth doing well. And doing it well has everything to do with the earliest stages of a project: the planning and the pricing.

Of course, the buyer is an instrumental part of the process. It is usually the buyer who will initiate, receive, pay for, and then live with a project outcome. So when accepting prices, the ability of buyers to compare estimates will go a long way toward achieving the usual aims of fair pricing, ideal functionality, and good looks.

Much — but as this article proposes, by no means all — project information will be generated by the seller, or contractor. It is useful to consider sellers’ motivations for a moment as they will form a large part of a project’s financial element, and will likely serve at least in some part as a planning resource. In short, from a seller’s perspective, the seller with integrity is hoping that the buyer will take the time needed to look closely at the project cost, bid, or estimate they have provided to their potential client. There are two reasons.

First, the buyer will know exactly what the seller is offering to do. This is crucial for both parties in fruitful business relations. Second, as the astute buyer is also accepting other project bids, this seller wants the buyer to know exactly why a price is what it is, what works and materials will be applied to the task, and most importantly, that the price is competitive with other cost estimates received by the buyer. As mentioned, the seller might also have contributed ideas of form and function intended to better the job, and hopes the client notes these and any costs associated.

This is where the buyer comes in, one who presumably wants the best result at the lowest price. In general, all sellers want their prices to compare favourably during the bidding process, but this can’t happen unless, in short, the buyer compares apples to apples. It is important that buyers make detailed comparisons between bids, because the choice they make will usually greatly affect the result. Typically, the necessary comparison can only be done by the buyer as sellers rarely have access to the bids concerned until, perhaps, after the job is awarded. This means that no one else can do the job of cost comparison better than the buyer!

Let’s proceed with an example, say, using the common yard fence, and set up a scenario typical of buyer and seller relations, and the task at hand. By this, the flaws all too common in many home improvement negotiations can be illustrated. First, the homeowner wants a fence replaced. OK, Homeowner, write that down! And beneath that, write every element of the job you can think of. This should be one of the buyer’s first moves and the list should start something like this:

New Fence Project

remove existing fence including concrete at post bases
dispose of all (remove from property)
do not disturb dahlias if possible
install new posts in concrete
install new fence (cedar)

OK. Let’s pause the list for a moment and look closely at it. Points 1 and 2 are clear enough, and can be priced easily and without confusion. Points 3, 4 and 5 however, beg distinction. Let’s start with the dahlias. Representative of other flora on the site, these will be damaged with certainty without precautions. Contractor A prices to protect them, but Contractor B says, “Don’t worry, they’ll be fine! “ Contractor A’s price is lower as he’ll employ the hit and miss approach to protecting the dahlias.

Naturally, the reader is on tenterhooks with concern for the dahlias and is wondering how it all turned out, but this can be guessed. Contractor A wins the bid, and Contractor B, who has attended in her price to the client’s concern, has priced herself out of the running.

Much valuable information can be gleaned from point 3’s small but significant outline. The first is that the lowest price is not always the best price. The second is that the phrase, “if possible,” allows too much wiggle room of the kind that the legal mumbo-jumbo typical of most contracts is designed to prevent. In general, if an item is important enough to mention in constructing the outline or “scope” of a job, then both the buyer and seller need to take steps to ensure the requirement is met, in bidding and on site. Special notes need to be made on this point by both parties, by which the seller clarifies his or her offer—and the price will reflect this—and the wise buyer will not only stipulate, but also track and ultimately enforce such points.

Returning to the list, points 4 and 5 seem straightforward enough, and though not abstract, they require more detail nevertheless. How much concrete and what size and wood-type of posts, for example? Contractor B prices for a utility-grade post and uses half the concrete Contractor A uses. A has a line on some great budget-priced factory-built fence panels, while B uses similar, but higher quality panels costing 25% more. B assumes also that the posts chosen will be made of an equally high grade of cedar like those used in the old fence. She forgets, however, to note these details on her estimate, leaving the homeowner wondering how B’s overall price could be 30% higher than A’s.

Once again, it becomes clear that, though in general the two estimates received seem to be pricing the same job, in reality, Contractor B might as well be pricing a fence rebuild down the street, because as a brief look at the details show, it’s often these that make the difference between excellent and poor outcomes. Obviously, with a 30% price difference, apples have been compared to oranges, and though the savvy seller will have done her level best to alert the buyer as to why, it falls to the buyer to sort out discrepancies, again, because they are the only party with all the information.

Further, it is conceivable that the buyer is not in possession of all the information. It is possible that the seller offering “budget” fence parts doesn’t want this fact advertised. Misleading? Outright dishonest? Perhaps so, but sellers have a powerful motivation to keep prices low to keep working and eating, and as he doesn’t want to take the hit in labour, material choice is a common area for corner-cutting for this contractor. As well, finding shortcuts in labour expended are often more readily observed. Here is all the more reason for informed bid comparison. Though usually used to compare value and quality, diligent analysis can also show also the absence of these.

With these thoughts in mind, when the list above is complete, it will reflect at least these details the buyer is privy to, and it should, therefore, better address the kinds of value concerns important to most buyers. Yes, attending to these important details can be time-consuming and even painstaking, but as stated early on, most agree that if something is worth doing, well….

Experienced buyers of residential building products and services use these methods, and many others besides including drawings and photographs. Used always in larger scale projects, these basics are all too often neglected in residential and home-improvement markets. For the inexperienced client, one who may have only one fence built in a lifetime, the question arises, “How much do I need to know about this project and its almost overwhelming level of detail…isn’t that what professionals are for?

Experienced buyers might even chuckle at this question, knowing what every true home improvement pundit already knows: The buyer needs to learn the very same standards and norms the professional builder does, and though they can’t be expected to know the “How” or practice of doing a job, they will certainly need to know much of the “what and why,” the theory or thinking behind it. Otherwise, how could they possibly know the difference between a fair, accurate price intended to get them the best bang for their buck, and one intended to minimise a job cost to win the bid, while maximising contractor profits?

Assuming the buyer accepts the importance of understanding the finer points of the task at hand, there are a couple “nutshell points” that will help buyers get what they’re looking for.

One, do not accept the lowest price simply because it is the lowest price. This is where the value of estimate comparing best proves itself. Until the buyer is sold on the contractor’s proposal whatever the cost, the buying strategy of accepting the lowest price is folly. As the identical job can never be done twice, we will never know if the losing bidder would have protected the dahlias or installed a better looking, longer lasting fence. We will know, however, immediately and in time how well, or not, the winning bidder attended to the details, but by then, it’s too late.

Two, don’t accept free estimates simply because they are free. It is certainly easy to see how offering a free estimate gives a seller a competitive edge, but because most people will agree that we get what we pay for, it is a wonder the practice continues. Granted, some home improvement projects really don’t take a lot of estimate time, but when non-standard or custom work is needed, time is required to produce an accurate price, one that will not be inflated at or near the end of the job when the seller realises he will need to either try to charge extra or cut corners to meet the budget.

Three, consider using a consultant. A good one can tell a buyer how much concrete a given-sized fence post needs, for example. In many home-improvement areas, they don’t exist. Buyers, then, will often be accepting the input of a biased party, in this case a fence builder who hopes to win the job. At the same time, no reputable builder will knowingly misguide a buyer, particularly on paper, and almost every one will attend to a client’s questions, especially when being paid for advice. If in doubt, use the old Common Knowledge rule which implies that a piece of information is likely accurate if found in at least three sources. Getting a second opinion is common in other pursuits, so why not seek one? For those having trouble envisioning themselves bucking out for home improvement advice, try thinking of it as part of the investment.

While none of these suggestions will guarantee buyer satisfaction, they are a very good start. In the end, a project’s scope outlined on a stack of paper an inch thick will not ensure this. As always, the astute buyer will check contractor references, visit earlier works, and as the above hopes to illuminate, learn as much as possible about the intended project beforehand. Hopefully, with some research, skill, and a bit of luck, the ability to compare apples to apples will go a long way toward getting project results that are really peachy.

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Posted on January 19, 2014