Are your plans build ready with all the pertinent info on them such as electric, plumbing, framing, etc?

Yes, the plans are ready to build. We still need to choose some of the finishes and fixtures, but I figured those items would have allowances anyways.

Not common around where I am at all. I got 4 bids and none charged. It may be the builders I got bids from really needed or wanted the job so no charge. I find $3000 to high.

Find a new builder who is willing to invest in the relationship.

I didn't get any actual 'bids'. I got 4 estimates, or ballpark figures...they each met with me and we talked about things that would make it be on the higher end/lower end of my quotes (finishes, doors, etc). At this time I talked to each builder about his process.) From that point that, I KNEW which one I wanted to work with...at the time I committed, he then did the detailed bid. I felt comfortable that the price would be within my range since he'd given me a ballpark :)

Oh, and you WILL be over your budget. Always.

The ballpark price should be enough to know if he's within range of affordability, and give you a chance to know if you'd want to work with him.

If the $3k is a retainer, and gets credited to your build if you hire him, it's probably okay, as long as you're comfortable with his ballpark, and you like him, personally.

If he wants $3k JUST to do a bid, and that's not part of the cost of the build, he's probably out of your price range.

Talk to some of his former clients and get their opinion on how this guy treated them during the process. A 3K fee is a fairly small amount to pay up front if he actually can nail down your price within 10% of actual cost. But his clients would know if this is the case or not.

We got 3 bids with no fee, but not one of them was accurate. I can say that with assurance because all 3 builders would have been forced to use the same concrete guy because of our location, and all the foundation bids were miserably low.

I got 4 actual bids - not estimates. It did take a long time and the one we chose was actually real close to the bid. I do not think charging a fee is bad as it does take time, but less than 3000 and maybe if you go with that builder, he would hopefully credit it back.

I charge for bids from build ready plans, but first provide a guesstimate of where I think the project will land. I normally charge 1-2% of the estimated project cost. The reason I do this is several fold:

1) to get a true cost plans need to be distributed to all vendors and subs for their quotes. This takes a tremendous amount of time and effort on my end, typically 2-5 weeks (depending on the complexity of the project). If I am one of several builders competing I am not willing to invest the time an not get compensated for it.

The above phase, in my case, includes meeting with the architect and site engineer if required to do so.

2) During this process questions and comments come up and my expertise gets used to assist the prospective client in clarifying issues with design and material selection. This type of expertise deserves compensation.

3. At the end of the bid process I submit my proposal with a detailed Standard Features List. This list gets included in my contracts when I am awarded the project. If I am not awarded the project, the prospective client has a comprehensive list they can go shopping apples to apples with. This list eliminates most ambiguities and misunderstandings. This material deserves compensation.
   
   The above steps go into much further detail and there are most steps than I described, but I wanted to provide you a snapshot of what goes into a true bid. My process involves charging the client for the bid, providing the proposal with a price per the Standard Features List and Plans. The price I provide goes directly into a contract. Also, I credit the bid fee to the contract price once the contract is signed.
   
   Give the steps above, if someone is not charging you, they are either very hungry for work or simply taking short cuts (padding the price or low balling it in many cases) hope to make it up during the project.
   
   If you want to work with a true professional you need to value thier time and effort (as long as its reasonable).
   
   Good luck with your project.

Well Girsh, that can get very expensive for someone who wants to build a home. For example we're looking at a build price of approximately 600k. If we give out the bid to 3 builders, that's 18,000 or assuming we choose one of them, 12k down the toilet. I understand your time for the bidding is worth something, but is it really worth $6000?

There's a difference between an estimate and a bid. You are talking estimates while the pros are talking bids. There IS a difference. Biggest is the details, and that one is binding where one is not. A bid can be turned straight into a contract with just an addition of some legalese An estimate cannot.

If you haven't narrowed your initial estimates down to where you are getting no more than two bids, as a tiebreaker, then you have not done enough initial legwork, and are not really ready for bids.

Great question cpartist. It really depends on the value the you place on pre-planning. Typically, by the time I get to this point, the client has already received the estimates from various builders, have done their due diligence and are ready for the next step with me and perhaps and/or one more builder. Rarely does this involve several builder at this point. Up until this point I have reviewed plans and produced a price range estimate without charging anything.

Per my comments there are many more intricacies involved in my process which I did not go into. One of the first steps I take is an in depth and extensive interview with the client (generally lasts 4-6 hours). Based on that interview I am able to get specific direction to produce the Standard Features List (SLF) which the bid is base on. This step, not only helps the clients formulate a specific scope of work int their mind, using my expertise and experience, but it also produces the SFL which has zero ambiguities.

If the client already has this information, I have no issue with reducing my rate. However, most clients don't, and if you read many of the posts, many builders do not give specific details besides relying on the plans. This ofter leads to miscommunication, cost overruns and job delays. Not only costing the client money but lots of aggravation and distrust of the builder.

So if you take your scenario, the $12K extra you may have spent, if you use all 3 builders for this type of paid bid, providing you with the security of price and the elimination of ambiguities will save far more money in the long run.

You need to create trust with the builder you use, but that by no means indicates that you should trust the builder to know what you want within the scope of work. I take my client's subjective expectations and convert them to real objective line items. This way everyone is on the same page.

Unfortunately, the builders and clients who don't go through this process, many times (not always) wish they did in hindsight to prevent the conflicts that arise.

I have had one client who approached me with an architectural plan that fully specified every detail and selection (faucets, paint colors, species of hardwood floor and pattern it was to be installed, etc.). That client received a much more favorable rate since I saved many hours of work. However, that client also spent $50K and 1 year on their architectural plans before we met. Most of my clients have architectural plans and an idea of their wants and needs and need to be walked through the process.

There is tremendous value in the process I provide, the above is only one of the several step. At the end of it, if the client does not want to proceed with me, they don't have to go through that phase with another builder as they already have the precise scope of work. They can simply hand it to the other builder. However, my time and professional expertise is has value.

Finally, not only do I spend approximatly 120-150 hours on this bid ($40-$50 per hour in your case) but I, many a time, bring value to the project by identifying plan conflicts, coordinating with the architect and civil engineer, giving the client lots and lot of advice, and smoothing out lots of items that would cost the clients more money in the long run.

So, if you have three builders give you three free estimates, I guarantee you they rarely will spend the proper time and energy on the bid. Also, many times the bids are padded to protect the builder since they rarely take the proper steps. Anyway you look at it you will spend the money, less now or potentially more later. Its better to know what you are spending now then to have the builder come back asking for more money because you thought you were getting Kholer comfort height toilets and the builder budgeted for the home depot special.

I wrote this post above, since I think many folks building a new home should really pay attention to the process before they commit to a builder. Simply getting a price without making sure the builder has provided the appropriate focus to your project, generally (again, not always), leads to issues and lots of aggravation.

Then other piece of advice that I urge everyone on this site to take is to hire a very good real estate attorney to represent them. Its crucial that both parties are on the same page before a permit is pulled.

I am happy to offer any other advice regarding this matter.

Have a great weekend.

By the way, at the end of the bid process my price is the contract price and stays that way till the end of the project. Its not a close price or approximate price, it is a guaranteed price, unless the client, or their professionals, changes the scope of work. That is value and comfort for both my clients and myself.

I understand why the amount of work makes charging seem a reasonable option. But I have a real problem with the idea of a bid process as a profit making vehicle. I am OK with some cost splitting but actually making money off a bid troubles me. It violates everything we know about the agency issue. It vests the client in the builder without vesting the builder at all. I am sure you are an upstanding guy and I am sure you believe that you treat people fairly, but I question whether or not you even can. The research to date suggests you can't.

To properly communicate the issue, I need to go into full on professor mode - which people here hate. So I am going to avoid a bit of that and really oversimplify it. The agency problem is really born in the idea of rational action theory but you don't need to understand that to understand the agency problem. When I hire you to perform a service for my benefit, you become my agent. But you will never do anything in my interest that is against your own. So to really get you to perform in my interest I have to incentivize the relationship. In other words, I have to align our interest, to make your interest and mine the same. The basis of this is well studied and there have been half a dozen Nobel's given for it.

Paying someone a profit to produce a bid disincentivizes their production of a competitive bid. I understand that you spend a lot of time on it, but that is your skin in the game. As a client my skin in game comes from finding the person who I really believe will build me the best house.

I did pay one of my three bids (and I assure you, I know the difference between an estimate and a bid) for the services you provide. But we met with someone for 12 - 15 hours, we went over preferences, construction methods, produced a contract with a spec list, and he charged $1,500 for that, he provided almost $800 in receipts for work he paid to have done in the process. The bid is then provided separately, and he provides every subcontractor bid along with his thoughts on the bids. The other two builders didn't charge but we used his work as a basis to evaluate theirs. He was the highest of the three and is getting the bid because his sales pitch was during that whole process. I realize in the end he is getting paid for all that extra time by getting people to pay more, but it was my choice to pay him, not the other way around. He put in a decent amount of skin in the game.

thank you Girsh. Excellent info and it's what I'm trying to do now with our potential builder. And yes, I agree everyone should run it by a lawyer. However, I tend to agree with Bry

Contractors use many methods with which to qualify their customer's ability or motivation to move forward with a project. Mentioning a fee for a bid is one such method. It does help to weed out those who would be less than serious, or are underfunded for the build.

Often, the fee isn't implemented with customers who have done the required initial spec work with the architect and have realistic ideas of their build costs. It's the people who bring half done plans for a 4000 square foot house and think 250K is ''outrageous'' for the construction costs that get hit with the ''you need to pay for my wasted time up front'' fee.

I think many of you would be srprised at how large of a contingent of people plan projects that will never happen, just for their entertainment value to them. Many people think nothing of wasting a realtor's time carrying them around to look for homes that they have no intention of buying, or a designer's time planning a remodel that they know that the spouse will never agree to do, or getting bids on self drawn plans that they will never build. If you're in the business long enough, you learn that an up front retainer for services is magical at making them waste someone else's time that hasn't learned that hard lesson.

Bry, I understand your perspective and completely disagree with you. Perhaps if you were in my business for the duration I have been in it, you would appreciate and value my perspective.

I have performed many many bids without charge, historically, and find it to be an immense amount of time for me and an amazing opportunity for the client to take advantage of my expertise at no cost to them.

In the long run the fee I charge produces a lot more in value to the client than they pay me (focus, savings, smooth process,etc.).

I value my time and experience and work with those who do too. If you don't value my process, then I have been doing this long enough to know that we are not a good fit. That's ok too, there is a shoe for every foot, including yours.

I am grateful that we are all still free to decide what is appropriate for us and we can work with whichever builder we like.

As I stated, I am always glad to spend a few days reviewing plans, and client produced expectation, to come up with a price range at no cost. The next phase is a different story.

You get what you pay for, there are no tricks or short cuts here!

Sophie, I assure you that, as an accounting professor, I am using the word profit correctly. Revenues minus expenses is profit, and yes I am aware of full costing, including any reasonable overhead allocation method.

Second, I spend hundreds of hours developing and maintaining our classes, since I am also the dean. I do it because it's my job. But other than that, where is your principle-agent relationship there? You can't name any job on the planet as a good example of an agency issue. They exist where a benefit is available to you at the expense of the person who hires you in their interest. Charging $5,000 to $10,000 to bid a $500,000 house is a clear agency issue. A fee is revenue, another less common term for revenue is "fees earned", putting a word in bold and capitalizing it doesn't make it true. Pretending that $5,000 - $10,000 is expense mitigation is laughable.

I didn't say bids should be free, but under no circumstances would I ever pay 1 -2 percent. I even stated cost sharing is OK.

I am very aware of the bidding process, I have helped my father work up many bids. There are many ways to qualify a customer that don't run into the agency problem. Among them are things as simple as bank preapprovals, land purchases, and pre bid budgets. I am fine with cost sharing, unloading direct cosrs to customers and eating the indirect gives both customer and builder a vested interest in the relationship.

Girsh - I am sure you are a great guy and if your system is working for you, then great. For me, it would be an ethically gray area.

This is going to get a bit theoretically and sage on stage'ish. If you are not interested, then stop reading.

When you do a bid for free, you don't have any duty to give your best bid. You can look at the client and say I can already feel these people are going to be hard to work with, so I am going to add in 3%, just to deal with them, or I am bidding against Abe and Bob, they are good guys but they have never bid lower than me in their life, so I can beef up this bid a bit and still get it, and even, I am never getting this, but if they want me to bid it, I will. All of those things are fine because you don't have a duty to the clients. The same holds true if you are using some kind of relevant (marginal) cost recovery method.

However, if you make profit from the bid or even offset non marginal costs, you create an ethical duty to the client. In other words, if you look at a bid and add $2,000 to a $2,000,000 home because you think that these customers are going to be a pain to work with, then you have taken money to act in the best interest of the client and violated it. Essentially, by accepting a profit, you are obligated to act in the best interest of your client and you are stealing from them if you don't.

Now these things do seem academic, I mean what effect does this have on the real world. Agency issues are the root cause of most financial collapses including the 2008 mortgage collapse, they are a prime reason why the U.S. is trillions of dollars in debt with no plan to get out. In everyday business agency issues conservatively cost businesses hundreds of billions annually.

The larger issue is that now you have a reason to bid a contract that you know you will not get. Customers can never know if they are getting your best effort, because the bid itself is profitable for you. If you have ever done a bid you were unlikely to get then that is a clear violation of agency.

It screams of bad business to me. If you want to make a profit doing those extra things, then separate them from the bid process. Charge them $5,000 to work up a specific parts list and go over what a good contract should have in it, and why, go over subcontractor bids and explanations. Hand them all that information without any bid, as a basis to get all bids. Then ask them if they would like you to bid it. You have then separated the profit making mechanism from the bid itself, which is what my guy did.

Builders are not a homeowners agent. An architect fulfills that role. If you don't want to pay money for a bid, pay it to the architect to create better specs on the front end.

bry911, from a legal standpoint I think builders are in most situations viewed as independent contractors rather than agents. When the builder is just preparing a bid, he/she really isn't either of those.

If Girsh already provided an estimate, and has told the prospective client the fee for the bid as fair compensation for the additional work, I don't see the issue. The prospective client could just say no. If Girsh is in such high demand that this process works, good for him/her. As folks mentioned above, it is one way to evaluate whether the client is serious -- so the client also has some skin in the game. Builders have limited time and resources. Aligning incentives works both ways. Otherwise what's to prevent bid shopping by folks who are serious about building a house, but not serious about using a particular builder? The builder can allocate his time to preparing bids for the three prospective clients willing to compensate him for his time, rather than another five who have invited him to do all that work just for a shot at the project.

Anytime someone pays you to provide a service, the relationship exists. If you work at McDonalds flipping burgers, you have agency to the shareholders.

Although agency is the underlying issue, it is not the problem. I only brought up agency so you all could read about it if you want.

A builder's goal is to make profit, a buyer's goal is to get they want for the money they want. There is no goal alignment. I understand the argument that his time is valuable, but we are not talking about recompense, we are talking profit. The fact that the builder can make a profit and not build a house is crazy. They call people who do that architects, not builders.

Otherwise what's to prevent bid shopping by folks who are serious about building a house, but not serious about using a particular builder? - That is the entire point of the bidding process. If you know who you are going with before you bid, then why waste time getting bids. I was involved in a bid once, that racked up several hundreds of thousands of costs for a contract we were not even likely to get, we didn't bill the client. If we were competitive in our bid the awarded contract would cover the cost. It also meant we were unlikely to bid contracts we didn't want, and it protects the clients by ensuring they maximize value.

bry911, I am confused as to what definition of agency you are using. In any event, I think there unfortunately are a number of reasons why people would want to get multiple bids even if they have a particular builder in mind, for example: to put pressure on the desired builder to negotiate his number down; to get alternate ideas regarding the construction/finishing that could be used by the desired builder; because someone told them they should get a minimum of three (or four, or five) bids because that's what they're "supposed" to do. Unfortunately, a typical builder might not have the business or margins to afford to routinely take four or five figure gambles, much less six.

Possibly the disconnect is whether or not Girsh or other builders are making a profit in the bidding process? Sounds like you have that view but that's not what I took away at all -- it sounded to me like he is just trying to recover some costs. Maybe Girsh or other builders could clarify.

it sounded to me like he is just trying to recover some costs - He doesn't say anything like that. He is doing exactly what Green says - He is using a serious financial commitment to qualify clients.

The house we are building is 7,910 square feet. The total out of pocket expenses for the builder were a few dollars over $800. Those expenses included a soil test for the septic system, some very preliminary site work and a few other items we decided to pay for up front. All of those things are usable on all the bids and were turned over to us. Things are certainly not as expensive as some of the Western states here, but they are not free either. So you can't tell me that charging $6,000 to $12,000 for these services is marginal cost recovery.

I think there unfortunately are a number of reasons why people would want to get multiple bids even if they have a particular builder in mind - Bids exist because selectors want price pressure in the face of asymmetric information. Or simply put they want to ensure the builder is dealing faithfully with them. People may use them for a variety of other reasons but they exist for the reason I stated.

someone told them they should get a minimum of three (or four, or five) bids because that's what they're "supposed" to do. - There is significant research done by architects and builders that suggest three bids is the number of revealed bids that a client should get. More than three and builders lose incentive to produce a good bid, less than three and you have no basis for comparison. So that someone who told them to get three bids are the industry professionals.

a typical builder might not have the business or margins to afford to routinely take four or five figure gambles - If a builder isn't successful enough to stay solvent while producing a bid, would you want that person building your house?

What you missed, bry, is that the client is getting material product and not just a bid number. You can call by any title you like, call it profit, call it a consultation fee, or can call it a non-refundable deposit. You make it seem as if my process is meant to exploit the client and that I am using an unethical tool to enrich myself. Once again, that could be furthest from the truth.

My bid provides many pre-contract benefits to the client including: construction cost savings, design ideas, material specifications (that the clients or architect did not produce) and many other concrete materials besides simply a firm price to build their home! If you place no value on those items then you are simply looking for a "free lunch" like many others and, therefore, I would be glad not to waste my valuable time and expertise past an estimate. That is precisely the point!

Also, your perspective is very arrogant in discounting any form of intelligent thought by the client themselves. This too can be furthest from the truth. I take great pains to go over the fee I am about to charge (not simply bill the client after the fact) and explain my bid process to each client as well as bring samples of other bids I have successfully completed. It is up to them to either agree or not agree to move to the next phase. There is no coercion, there is no mandate, people are free to choose, that is ethical and fair to both sides!

Although you have every legal right to question my ethics, when you leave the safety of your classroom, become a
builder, go through the practical process (this is not a theoretical think tank) of what it is that we
do and all that we risk, your opinion in the matter will have a lot more validity. Its very nice to theorize in an academic setting and point fingers. I am confident that I can analyze your process and be insultingly critical of your ethics too. What practical value does that have?

I do what I do, transparently, legally, morally and ethically and to the satisfaction of many highly intelligent clients.

You are too fixated on the word "profit" and perhaps its blinding your judgement and causing you to feel as if you can insult my ethics.

I cannot sit here and not defend my practice and ethics as I am proud of both. However, this post was for the handyman923 question and I hope that I gave handyman some perspective on the issue.

Good day and best of luck with your project handyman.

Hi. For the purposes of this discussion I would consider myself a millwork subcontractor. Rather then get into a long argument I would just like to state a simple fact. We were incorporated in 1968, I started with the company in 1991 full time, before that summer and winter vacations.

Of the 1000's of completed projects we have produced/finished over the years, I can tell you that we have never ever been compensated for producing a bid, estimate or proposal for any client/ contractor/architect/ home owner. No matter how complicated the project was.

Question for Girch- Do you compensate your subs for there proposals?

handyman923, I suppose I would say that if a 5-10% variance from the builder's estimate would be out of your budget, then that's cutting it pretty close and you probably should be considering other builders and/or reducing the scope of your project.

For bry911 and R J Hoppe, would you be less troubled if Girsh charged hourly and called it a consulting fee? Because to me his services sound quite a bit like what bry911's builder charged for, but a different pricing model. I'm having a hard time understanding the disconnect.

Girsh - You said, "If the client already has this information, I have no issue with reducing my rate." - I took this to mean a reduction of the fee and not a removal of the fee. If that is true, then you are charging for the bid and the design services.

The question is about bids and not design services. If you are adding portable value to the project, then fine. The ethical gray area attaches at the bid process.

Finally, charge whatever you want, the problem is not you charging, it's customers paying. If you think intelligence bars stupid decisions, I would like to call your attention to congress. Not understanding economic and market pressures doesn't make someone stupid. There is a lot of stuff out there and no one knows it all. Just as a test - off the top of your head, can you tell me the even the year we confirmed the Higgs boson? It is probably the most significant scientific discovery of our lifetime and 99.5% couldn't even tell you the year it happened. That doesn't make them stupid, just uninterested.

I grew up in construction, my father owned a mechanical contractor, and my uncle is a developer. Although, 90% of what they do is commercial, I grew up working on small projects. If I were in your shoes, I would charge too. Why do something for free that you can get paid to do? But I would hold no illusions about the reason I was doing it.

RJ, when you price out a job at no cost does your process involve: 1) producing shop drawings along with the price 2) producing full kitchen layouts if kitchen is part of the scope 3) communicating and reviewing detailed bids of 15-20 subs and vendors for both compliance of the project, completion of the bid and lead times needed 3) meeting with the client several times for 2-4 hours each, proving cost saving solutions, resolving plan conflicts and pricing out various scopes in different options (brick, stucco, siding, etc.)? and many other steps along with those?

I know, as a millworker, you have to put time and focus on your bids, I just doubt that your process is as complex and comprehensive. If it is not as complex and involving, I may be wrong, but I would guess that during some of the projects that you completed, you have had to ask for additional compensation or there was a misunderstanding on the plans or via client communication due to ambiguities not discussed during pre-project.

When I provide a bid price, with the exception of the client taking longer than 60 days to decide to move forward (due to potential significant material price increases, but rarely) I stick to that price no matter what. Pre-contonstruction and pre-planning, as you know, are more crucial at times than the execution. I just don't give those services away.

I do appreciate this discussion, as it has helped me in renaming my process as a simple bid to a bid consultation. In my experience, there is a huge difference and most builders do not provide the level of service that I do, per contract!

bry, I am sorry if I was ofensive to you, I was merely sensitve at being called unethical. I am 100x more transparent than congress and this president will ever be and I agree with you about our current governmental system (both Republican and Democrat). I do not see myself in the same boat. When my clients agree to move to the next step, they have generally thought things out and have already regonized my value to the project. They are not making decisions in a vacuum, not with the amount of research most of them do, so when they do decide that paying for my service is worth it, they normally do it with open eyes and full intent.

I really hope this dialogue has been helpful to folks out there. As I mentioned earlier, there are many ways to agree to a relationship between builder and client, the market ultimately decides what is right in this case. I have had many people reject my process only to come back to me and ask me to move forward with it, because other builders don't want to (more like cannot afford to) put in the time and focus on the bid.

In fact I have produced bids for folks in other parts of the country, who know I will not build for them due to proximity, since they understood that after the process, they can take my product, use it in their contract, and receive true apples to apples bids from other builders.

So for some it works and for others it doesn't I am glad we all have options.

Girsh - I didn't say you were unethical, I said it is a gray area. You create both a duty to the customer and a reward for breaking that duty. It doesn't mean you have broken it. You may never round up or charge more for trouble clients and so clients get your best price always and you may never bid a contract you think you are unlikely to get or don't want.

The bidding process is designed to do two things. (1) Create value for the client by putting price pressure on contractors and (2) provide feedback information to clients about price competitiveness. When you charge for a bid those things get messed up. First, created value is diminished by the fact that you need three bids, if all three charge your project is going to be 3% - 6% more than it would have been to get the same information with free bids. Second, it almost completely removes real price pressure. If you are producing a bid for free you have a vested interest in getting the contract, while getting paid for the bid you have tied the client to you but not yourself to the client. You may well give your best price every time but you have no market pressure on you. I am not saying you are a bad guy or that you are doing anything wrong.

As far as your RJ response - Your time is worth 1% - 2% of the build but his isn't worth anything. You do more - so you get paid more. If your time is worth 1% or 2% of the final price why isn't his worth 1% or 2% of his price? Of course, you do more work getting bids than he does but you also get paid more when the construction is over. And all those price guarantees are functions of the contract, not the bid. There is not subcontractor price guarantee unless you get the contract, so that value is not established in the bid process. I mean you don't guarantee sub prices for contracts you don't get.

There is market pricing pressure to be competitive, since ultimately I am after the project and not the amount I charge for the bid.

I never said that RJ should not charge, what I was responding to was RJs comment that he had produced bids without charge. There is a difference in both scale and liability between one trade's function and the builder's function to the client. However, if RJ produces the type of work product with his bids, in my opinion, it would be very valid for him to get compensated for his time and material. Even if he doesn't produce the same level of work for the bid, if he shows the client the value of compensating him for the bid, he should charge for his time and expertise. In any case RJ can charge or not charge as he perceives the value of his time.

I am unclear about the gaurantee of the prices comment. If I don't get the job, I don't guarantee anything. HOwever, if I get the job, I do guarantee my pricing (based in part of the subs prices). I don't come back to the client, as some builders do, and ask for more compensation becuase I did not perform the bid properly. There is a contract and then there is reality. Just becuase some builders sign a contract does not mean they do not cause lots of legal havoc for the cleint in terms of pricing and asking for more compensation. The world of custom home building is different than commercial construction and tends to be a lot more pliable, especially when the builder did not put in the needed effort for the bid in the first place. The entire purpose of my process is to avoid this from happening to either side. Plenty of value there as far as I can tell.

As for getting paid more than a subcontractor when the construction is over, its all relative. I don't know RJ's margin, but my margin is well within industry standards so that I can stay competitive, at the same time my risk is much much higher than that of a single subcontractor's. I am ultimately responsible to the client for all the subs and vendors whereas RJ is most likely not. My scope of work and risk/liability are a lot higher on a per project basis than any one piece of the project no matter how valuable that part is. So producing the bid is one thing and it should not directly translate into end of contract profit. Those are two separate issues. Once the bid is accepted then we can discuss work/reward equation. Before the project is awarded, as you said, a lot more work gets done by the GC and should be compensated for, in my opinion, if the GC does not get the job.

Great discussion. I see your point and disagree with the judgement of gray area ethics. If everyone is transparent there is zero ethical dilemma here.

As a consumer who is heading into the "find a builder" phase this discussion has been very interesting. It matters so much to find the right builder, a good person who will care about our project. I hope that's what happens. We are interested in several designer/builders, one of whom is clear up front that they charge to provide a fixed bid. What I have learned from this thread is that we should meet with this builder first. If we go with him, great! If not, we should have gained value from what we paid for the process and the result of the fixed bid that we can use in our discussions with the other builders.

One of the first things most builders want to know is what is the budget for your project. Very understandable from the builder perspective. But very hard from the consumer perspective to identify how much our project will cost so that we can propose a reasonable budget (we are a cash build). I have looked at a lot of internet tools for costing a build and at least the ones I've seen don't provide the help that I hope we get sitting down with someone who actually builds in our area and can use their knowledge to help us make smart choices.

In short Girch to answer your question yes I do. You see I also have to coordinate with other trades such as electrical, plumbing, data and HVAC as well as audio visual at times. The only way I get compensated for this coordination is if I am awarded the project.

Keep in mind we are not just residential but also commercial. So, while not as NASA space shuttle complex as your scenario we can get into some advanced pieces.

1)yes

2)yes as it relates to millwork

3) Obtaining and reviewing of quotes for all the various component parts that go into a millwork piece as part of putting together a bid, yes.

4) Yes. Not only the client but clients wife, GC, architect and project manager. Weekly teleconference job meetings that last for an hour and have absolutely nothing to do with me until the last five minutes.

But you didn't answer my question. Have you ever compensated a sub for providing you with a proposal even though that sub didn't get the job he was biding for you? As you have enriched your client with your knowledge hasn't your sub enriched you, if only for the fact that with out your subs bid you con not give your client a complete proposal and therefore can not charge him for said proposal?

If I walk into a car show room and ask the car salesman on hand for an estimate for the car I am looking at he might say $x depending on the options and model I had in mind. I tell the car salesman I want the big engine, the off road package, the 18" alloy wheels, premium interior and sound system, I've done my homework and know what I want. If that sales man said to me that he would be happy to give a firm proposal and the knowledge gleaned in that proposal would save me money down the line but it would cost me a non refundable $y just for the proposal, then I would most likely walk out the door.

Just throwing this out there...

My husband just began full time as a GC (with many years of experience plus a degree for it)...

He spends hours upon hours upon hours forming a comprehensive bid for a person. We've learned the hard way that those hours can be fruitless when the client sees the end result and soon realizes they cant afford to build a new home ( or the home they thought they would build).

Although he hasn't charged a fee at this point for creating a bid, we have discussed that it might be something we should do as he becomes even more established. We do know other builders who do so.

One example from our experience: he worked up a bid for a couple (hours and hours of his time...) and they were astonished at the cost at the end. Meanwhile, they found another GC who said "hey, I can build your house for $85 a sq ft" and they glowed and immediately hired him. They paid my husband $300, unsolicited, bc they knew he had put in so much time on their project and they are just nice people. Fast forward, they're 12 months into their build and 100k over (the 85 per s.f.) budget and still not quite in the house.

You get what you pay for...

RJ, I did answer your question. By the way I would suggest that as part of your bid process, you don't give away the full kitchen layout as you said you do, at no cost, to people who will take it and shop it around. Instead you can give them a sample of your work and a glimpse at the elevations without giving your entire work product away for free. Just a friendly suggestion.

Your example of a 5 minute car salesman interaction compared to over 100 of hours of work just doesn't cut it. If it was a custom car, then the salesman (if he is also the builder) should get compensated for all the things we have been discussing.

Its all good. We all do what we need to do. I happen to be successful at my process and I assume you are at yours. My clients understand what they are paying for (before they agree to pay for it) and appreciate what they get at the end of the bid, even if they decide not to use me.

I wish you a lot of success and luck in all your future endeavors.

I do understand about wanting to be compensated for a bid, however I do not provide full and final bid until the contract.

I can easily estimate foundation, framing, drywall, electrical, plumbing, etc - using prices from my current project. I do not include - kitchen, appliances, lights.