Design-Build vs Competitive Bids

What you need to know about the design-build and competitive bid processes before starting your home renovation or new build project.

Is the competitive bid process a better approach than design-build for home remodeling?

True / False: A homeowner’s best way of getting what they want from a remodeler is to get competitive bids.

Answer: False
A negotiated price with trusted remodelers is the best way to get what you truly want in a remodeling project.

Here’s Why Design-Build Makes More Sense:

There’s a widespread misconception as to what makes a competitive bid. Many people assume that simply describing a project to several different remodelers will produce prices from each that can be compared one against another. The truth is, not even design drawings, let alone a description of the project, are enough for comparing prices.

Gathering “bids” in this manner will produce three different things:

  1. some accurate pricing
  2. some of what is commonly known in the trade as “lowball” pricing
  3. and occasionally, some high pricing.

Lowball Pricing

Lowball pricing carries the most potential for disappointment while being terribly enticing to the Owner. Remodelers who engage in lowball pricing must somehow make up for lost revenue. They do this by sacrificing materials or craftsmanship, by shortchanging the design, or by submitting change orders for extra work that was “not included” in the bid. The length of the project often slips weeks or months out of control, as the contractor leaves the lowball project to work on more profitable projects. The actual dollar cost to the owner may then be even higher than is fair, and the emotional and convenience cost is far greater.

A True Bid Package

A true bid package is a comprehensive set of documents produced by an architect for a substantial fee of 8 to 16% of the projected costs of construction. A bid package can take many months and thousands of dollars to produce. Unfortunately, after this cumbersome phase is completed, the bids are often far higher than expected; architects love to design, but are not always realistically in touch with costs. Re-engineering of the plans must take place at yet more time and expense. Or the design is abandoned and it never gets built.

Design-Build Negotiated Price

NEGOTIATED PRICE with a trusted design-build firm marries the construction costs with the design in the planning stages and gives the Owner control over where the construction costs will go.

Here’s How Design-Build Works:

The design-build firm interviews the Owner and together they accurately ballpark a low to high range of construction costs. The Owner chooses both the level of design and detail, and the quality of materials to keep the project within their chosen cost range. If the Owner chooses to change or add elements to the design, the firm can give immediate feedback on the added costs.

The Home Owner’s objectives are:

  • …to get the financial planning and design synchronized at the earliest possible stage
  • …to produce the most pleasing design possible for the budget
  • …and to expedite scheduling of the project.

The design-build firm’s objectives are:

  • …to product the most pleasing design (which will make for a happy client, and increase referral business from the client)
  • …for an achievable budget (which will encourage the Owner to come back to the remodeler for more work in the future)
  • …and to expedite the scheduling of the project.

This is a true win-win relationship!