How To Compare Contractor Quotes: What to Look For Before You Sign

If you’ve ever undertaken a remodeling project or even built a custom home or ADU in the past, you know that quotes from general contractors can vary widely for what seems to be the same project. With such variation, it can be difficult to compare contractor quotes and understand what you are getting when you sign on the dotted line to get your remodeling project started.

Without clear information and an understanding of what is included in your cost, it’s common to have misunderstandings during the project. This can lead to higher costs than expected, incorrect assumptions about what is and isn’t included, project delays, and frustration. 

To avoid this unnecessary tension and enjoy a more streamlined experience, it’s essential to take the time during your initial research to understand and compare contractor quotes. You’ll ensure you know what you are paying for when you sign up and, hopefully, avoid any regret about the general contractor you choose to work with.

Here, we’ll share information about what should be included in your estimates, the items that create the greatest variation in cost from one estimate to another, what to look for when comparing contractor quotes, and red flags to watch out for.

Building Cost Estimation: Why It's Complex

Part of the reason that contractor quotes are so difficult to compare is that they are complex. The larger the project is, the more complex a contractor's quote becomes because there are so many different pieces to consider. 

From the type of lumber used to the hardware on your cabinets and from the plumber installing your new kitchen sink to the siding contractor, there are many different aspects to consider. Add in your personal preferences, style, home location, and what was already a complex estimate becomes even more complicated.

Why A Cost Per Square Foot Comparison Is Misleading

Often, people will compare contractor quotes by looking at the cost per square foot. However, this number can be misleading. Consider a 600 sq ft primary suite remodel. One contractor's quote is $140 per square foot, and another’s is $250 per square foot. On these numbers alone, $140 looks a lot better than $250. 

When you take a closer look at the inclusions, one includes the lowest cost light fixtures, and the architectural details you discussed with the remodel contractor are optional upgrades, not included in the estimated cost per square foot. While the other includes a healthy allowance for you to select light fixtures, along with the architectural details you have in your plans. It also includes a higher-quality carpet and built-ins. 

If you only looked at the cost per square foot when comparing contractor quotes, you may be surprised down the line when you have to pay more for the light fixtures and wainscoting you want in your remodeled bedroom. 

This is why understanding and comparing contractor quotes before you sign an agreement is so important.

Details To Look For When Comparing Contractor Quotes

The two components of contractor quotes that have the greatest impact on the cost to remodel or build a custom home are the materials and the labor. 

Materials

Materials are likely the area that has the greatest variation and therefore causes the greatest differences in the cost of a project. As the size of a project increases, so too does the variation in the cost of materials.

Flooring, Fixtures, Finishes: Visible Materials

Think about, for example, a single bathroom faucet. On one end of the spectrum, you can have a Moen faucet that costs around $100, and on the other end, you can have a Brizo bathroom faucet that is closer to $800. This $600 difference is just one faucet in one bathroom.

Multiply this difference across all components in the bathroom, and you can see considerable variation in the cost of materials even if you are only doing a small bathroom remodel.

The Importance Of Allowance Transparency

With such variation in the cost of materials, all of your contractor quotes should have allowances included. An allowance is a budgeted amount for your selections that have not yet been made. When you are in the quote stage, you may not yet know the exact bathroom faucet you’d like to install, so your contractor will put an allowance for bathroom fixtures into your quote. 

Included allowances should be realistic based on the preferences and style you’ve communicated to your general contractor. To avoid higher costs later, it’s important to understand where the allowance numbers came from and make sure they are realistic.

It’s always a good idea to ask the contractor how they determined the allowances included in your quote. Knowing where the allowance budget came from will give you a better idea of how realistic it is and allow you to better compare contractor quotes.

Non-visible Materials

There are also differences in materials that are a little less tangible to see, but are worth consideration. For example, if your project requires new framing, one contractor may include kiln-dried lumber in their quote, which tends to dry straighter and truer, making it less likely to warp as it dries. This leaves you with straighter walls and less need to make repairs as your house settles. Alternatively, another custom home builder may choose to use green lumber, which is lower cost but is also more likely to warp and lead to non-straight walls and the need for repair in the future. 

These differences are not always apparent if you haven’t gone through a remodel or home build before; however, if you notice a line item in one contractor's quote that is much different than another, be sure to ask about it. A general contractor should be able to clearly explain the material costs and help you understand the benefits, short and long term, for any materials selected.

Labor

When it comes to labor, the complexity of the work and the skill level of the crew are the two greatest factors driving cost. 

Experience & Skill Level

As the saying goes, “you get what you pay for,” and when it comes to building, a more highly skilled crew is going to cost more. The upside is the superior quality of work you’ll receive in return. 

The cost for the skill of the crew goes across all aspects of your remodel, from flooring installation to the plumber, and your siding contractor to the landscaping. With each additional crew member you need to complete your project, the skill and experience of the crew will impact the cost.

When comparing contractor quotes, if you see large discrepancies between labor costs, don’t hesitate to ask your remodeling contractor or custom home builder how they arrived at the labor cost. You can also ask questions about how they select the crew or contractors they work with and how long they’ve been working with the contractors they use to get an idea of skill and quality.

Difficulty & Specialty

Sometimes the materials you choose to use require special skill and experience to install. This, in turn, can increase the cost of labor for your project because any time you need additional skill or training, the cost for this skill increases. 

For example, if you are installing flagstone in a new outdoor living space, you’ll need a skilled mason for your project, versus installing perfectly symmetrical patio pavers, which require less specialized skill to install at a high quality. 

Similarly, if you are installing handmade tiles in your shower, these will require a more skilled team and take longer to install than if you were to install machine-produced tile that has exactly the same shape and length. This is because the machine-made tile is easier to align and fits together perfectly, versus something handmade that has natural variation.

Knowing and understanding that there are certain materials, features, and products that take specialized skill to install will help you understand the difference between the cost of labor in your contractor's quote.

Type of Builder or Contractor

Keep in mind that the type of general contractor or builder you work with is likely to impact labor costs. A builder that specializes in high-end, luxury custom homes and remodels is likely working with more skilled crews as their standard, versus a builder focused on volume and affordability, who is likely looking for ways to lower cost for their customers by working with a lower-cost crew.

If you have concerns or don’t understand the cost of the labor inclusions you see when comparing contractor quotes, don’t be afraid to ask. Your questions will help you to better compare and understand the differences between the contractor quotes you are reviewing.

Be Aware Of These Red Flags In A Contractor Quote

When reviewing contractor quotes, there are several red flags to look out for.

Lack of Detail

A contractor quote that lacks detailed information is harder to compare with other quotes and more likely to cause a misunderstanding during your project. Without clear details like the type of materials included or what the labor costs are, it’s harder to understand what each quote entails.

If you receive a bid without detailed information, don’t be afraid to ask for more detail. You’ll be more informed when you make a decision on who to work with, and if a contractor isn’t willing or able to provide more information, you can move on to someone else who will provide the detail you need.

A Contractor That Doesn’t Ask Questions About Your Vision

If you are in the process of choosing a remodel contractor or home builder, you know that the initial conversations provide a lot of insight into communication style and a glimpse into your future working relationship. 

The bidding process is similar. If you’ve received a bid without reviewing the details about what you are looking for, it likely means the bid you received is less accurate. This is likely to lead to change orders, higher costs, and a more frustrating process than you need to endure. 

If a contactor you’ve talked with doesn’t ask questions about your vision, style, what you want to accomplish with your remodel, or why you’re building a new home, it’s probably not worth reviewing their bid.

Large Cost Disparities Between Contractor Quotes

Any time you see a large disparity between contractor quotes, it should be a red flag. You’ll need to compare the quotes and ask questions to understand the difference between the quotes and know which quote is more in line with your project goals. It’s always worth investigating a large difference in cost rather than just going with the higher or lower cost option based on assumptions.

PGC Building + Design's Collaborative Process

At PGC Building + Design, we focus on a collaborative process when creating your initial bid. It’s important to us that we understand your vision and goals in order to prepare an accurate quote that will bring your vision to life. 

After we’ve had our initial conversation, we’ll continue with information gathering, talking with any architects or designers you are working with to understand what needs to be included in the plans you have. Then we’ll have another discussion with you to align on your vision before we provide an estimate. 

It’s our goal to include the style and quality you are looking for, along with realistic expectations for allowances that match your preferences. We also strive to provide options that can help you accomplish your vision in creative ways by pairing our building expertise with your ideas and the expertise of any other building or design professionals you are working with.

Once we’ve prepared your bid, we’ll sit down together to go through the inclusions and answer any questions you have to make sure it’s clear what we’ve included and why. If you are looking for a custom home builder or remodel contractor in Bend or Central Oregon, we’d love to talk with you. Contact us for a free consultation today.

Key Takeaways

• Material & labor costs can create significant differences between general contractor quotes

• Having clear and realistic allowances is crucial to avoid surprise cost increases during your project

• Watch out for red flags like large cost discrepancies, lack of detail, and lack of interest in your vision and goals

• Always ask questions or request more details when anything in a contractor’s quote is unclear

Taking the time to thoroughly review and compare contractor quotes before making your decision on who to work with will make the entire home building or remodeling project much more positive, smooth, and seamless.