5 Questions to Ask when Evaluating Contractor Costs

As part of the services provided in our design phases – cost estimates are developed – either in house, by the Architect or an experienced consultant. These numbers are not fairy tales. They are based on historical data from similar projects, current market conditions, as well as contractor and supplier input. If the Architect is left out of the bidding review or the Owner forgets or disregards the ‘budget’ or ‘design phase’ figures prepared by the Architect then the seeds for trouble are planted.

It is very tempting to take the lowest bid – but remember that even when government agencies accept a low bid – it is the lowest responsible bid. Someone asks questions, gets clarification, and finds out if an ‘offer they couldn’t refuse’ or one that seems too good to be true, should be refused – or was too good to be true. It’s hard for anyone to pass up a seemingly good deal – especially when spending a big chunk of money on a project.

You can avoid growing trouble by deliberate and thoughtful analysis. Review (or get help to review) the figures provided by your contractor.

Some questions to ask (of yourself or the GC) when reviewing the figures:

1. How does this figure compare to the design phase numbers furnished by the Architect/Estimator?

2. Are the construction document drawings referenced by the bidder in some way? These drawings ARE the Scope of the Work. Lack of reference to the documents leaves the pricing open to interpretation.

3. What allowances are included, if any?

4. How are you, the GC, paid? What is your Fee? Unless it’s a cost-plus contract, no one ever asks, assuming it’s built into the overall or into each line item.

5. What contingency is included? Even if the contractor doesn’t include a contingency – your overall cost plan should include one. This is the appropriate way to address unforeseen or unknown conditions.