Construction Bid vs. Estimate: Understanding the Difference for Your Home Project
The difference Between a construction bid & Estimate
Building a new home or remodeling your existing home is a significant undertaking that requires careful planning and financial consideration. If you’ve never been through this process before or don’t work within the industry, it can be challenging to understand the difference between a construction bid and an estimate. Then, you may also hear the terms budget, quote, proposal, etc.- the list goes on and on.
The first step is to interview general contractors or design teams – in our case, we are both a general contractor AND a design team. Ask friends for referrals or research teams online to narrow down a list of prospects and then give them a call! Explain your goals and let them walk you through their process. If they sound like they may be a fit, then schedule an in-person meeting. For further details, please refer to our SERVICES PAGE.
Even after understanding your goals, contractors face a common dilemma when clients request “quick pricing” for construction projects. While a client may desire a rough idea of the costs involved to determine if their goals are financially feasible, it’s crucial to recognize that providing an accurate price without specific project details is impossible. So, how do some companies produce these numbers so quickly? The answer is that they are giving you their best guess, estimate, as they don’t have the required design plans and selections to get the project properly bid to provide you a final quote for construction.
Why can’t general contractors provide a “real price” based on estimates? New construction costs, for instance, can vary significantly, ranging from $100 to over $700 per square foot. The quality of construction, materials used, and desired finishes all play a role in determining the final cost. Different selections, such as a marble countertop versus an engineered quartz will impact the price of your home. Remodeling projects can present an even greater challenge when it comes to preparing accurate estimated costs. Unlike new construction, where certain elements are predictable, remodeling involves dealing with existing structures and all the unknowns that lie within. A contractor may not discover a framing, electrical, or plumbing issue until they have completed demolition.
To better understand why design plans are necessary for construction bids, consider the analogy of purchasing a car. The price of a car will differ greatly between brands but also depending on the level of features and finishes. Are you purchasing a Kia or a Lamborghini? Does the car have a custom paint color, leather interior, heated seats, 360-degree cameras, or the latest technology? The same principle applies to construction. The choice of material, technology, craftsmanship level, and finishes significantly influence the cost of construction.
A dealership can’t price a car, nor would you feel comfortable buying a car, without knowing the features it has that validate that price. Comparably, a general contractor can’t price your construction project without knowing its specific features. If you opt to skimp on the bidding process by neglecting proper design documentation and selections, you will likely find yourself over budget and/or with a home you didn’t quite envision.
MOnarch & Maker’s Approach
At Monarch and Maker, we recognize the importance of transparency and accuracy. Our design process begins with Phase I Design and Construction Documentation, which can include but is not limited to mood boards, design vignettes, floor plans, renderings, elevation drawings, electrical plans, etc. Phase II is solely for budgeting, considering material selections and craftsmanship levels. Because we consider financial constraints ahead of time, we can help value engineer your project to consider the spaces and materials important to you while keeping you within budget! This meticulous approach ensures that our clients receive reliable and realistic bids, not only from us but from other contractors as well. This approach truly is the foundation for a successful construction project.