An estimate from someone who's not going to do the job isn't worth much. Have you received an estimate broken down into labor, materials and subs? Are there bids from subs or just estimated costs?

My plan has always been to go with the builder recommended by my architect. I actually had to dismiss a candidate (when I was interviewing architects) because he didn't have any contractor contacts in my part of town. :-/

I have zero interest in bidding jobs out to multiple GCs. I want the job done right, and am going to trust the guy that my architect trusts the most. Unfortunately, I still have to find land to build on, lol, so I won't know how crazy I am for at least another year or two.... :-D

Request copies of general liability and worker’s compensation insurance certs. Check the licensing board for disciplinary actions. Check civil and criminal records if you can do so free or cheap. Remember that most businesses will eventually have a disagreement or two that may end up in civil court, but lots of cases with the contractor listed as the defendant should be a red flag.

We met the contractor and liked him a lot. Checked all the boxes for communication, attention to detail, etc... Our very experienced architect has worked several jobs with him. She thinks he's great. He's working on a "cost plus fixed fee" estimate. He'll send it out to all of the subs and use their estimates, plus his experience to give us as accurate estimate as possible. Then he will share the invoices with us and we will pay every 3-4 weeks to stay up to date on how expenses are shaping up. That all sounds golden to me. So my sense is to trust all of that and go with him. I don't think we will go with anyone else, but my father's voice is in my head saying, "always get several estimates!". I don't want to waste anyone's time. And I don't want to be foolish. Thanks for your thoughts! I feel more secure with more than just me thinking it's ok to go forward.

We didn’t shop around. We knew we had a good contractor.

SDU

i did exactly that. I’m using my architect’s recommended builder on a cost plus fixed fee basis. I also like that he’s a small builder and we had to wait for him to finish two projects before he could start ours. I

So he has people skills. I’d still check licensing, insurance and civil/criminal records. He’s not exactly going to tell you about any complaints or lawsuits where he was sued for shoddy/incomplete work.

Hi, S.D.U.,

You're pursuing a cost-plus fixed fee arrangement. You know the fixed-fee component with certainty, but not the cost component-- which is probably 4X the builder's fee. You are right to be concerned about it. Many folks obsess about the builder's fee and miss the fact that the other costs contribute far more to the overall cost.

I don't think there is much value in getting multiple estimates. Instead, I suggest you sit down with your builder--with your architect in tow-- and have the builder explain how their construction cost estimate was derived. Are the cost line items guesses or are they based on material take-offs and firm price proposals from trade contractors for the scope of work shown in the architect's plan? Ask to see them. Are the line items for fixtures, appliances, custom cabinetry, etc. real-world numbers that represent what you are likely to spend or are they low-ball placeholders? You can make some selections and test those before signing a contract. You can also ask to see financial summaries for a couple of the builder's recently completed projects which were completed on a cost-plus basis to see how the final costs compared with the original estimates. And you can call a couple of past clients. That should give you confidence and set the stage for a good outcome.

Best wishes for a successful project.

I have had 2 houses built for me. In both cases, I only considered using 1 company. I knew my local market and I knew that although I may be able to find something slightly cheaper, I was unlikely to find a better price to value ratio in a company I would let near a house I wanted to live in.

If you know what you're doing (and the people upthread are giving you good advice), playing the "need the cheapest price" game can lead you in a bad direction.

This is most of my projects.

This is our situation, as well. We're our second project (first was a large addition, this one is a whole house) with our builder, but even when we were using him for the first time he was the only one we considered. He came exceptionally well recommended from family and friends who had used him.

That said, while we only got one estimate for the overall project, our builder often gets estimates from multiple subs, and he shares them with us to weigh in on the final decision, so it's not as if we're just agreeing to a single black box estimate from the start.

It’s small potatoes compared to an entire house, but we recently spent 27k getting our two (massive) brick chimneys partially taken down and then rebuilt and we only got the one estimate from the company we hired. But we hired that company because they had also done our roof (before we bought the house) and we wanted to make sure we didn’t void any of the warranty on our roof... plus we knew they have an excellent reputation in our area (both for their roofing work and their masonry division). We did find out from other people we know in other states, that work as contractors or in the building industry, that the price they charged us wasn’t anything outrageous and that made us feel a little better about the whole thing. (I’m sure we COULD have found someone to do it cheaper, but we didn’t want to risk a poor job on this!) Anyways, they did an excellent job on both of the chimneys and new custom fitted SS chimney caps. I do think that was the first time we only got one estimate on any job we’ve ever hired out though.

There is value in the competitive bid process beyond price shopping. The reality that we live in, especially with contractors often charging for bids, is that multiple bids are often too costly. Having said that, it just turns hiring a contractor into a moral hazard problem and that really isn't a good thing. One of the first things I learned in real estate is never get so invested in a deal that it is hard to walk away, which is exactly what this system is encouraging.

I simply don't understand the logic of removing competition from the equation, we know that competition drives quality as much as, or more than, price. Look at the effects of reduced competition on the market and look at the state of construction industry and then try to tell me the two are not related.

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All the research that we have suggests that people are generally incapable of aligning goals without an incentive to do so. Your contractor is probably a good person and it is doubtful that they are intentionally inflating their bids, but we don't believe you can move away from that. So without competitive bidding you need some mechanism in the contract that aligns goals.

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Not that there is a lot that anyone can do about it really. Which is the kicker, just take some time to ensure that you and the contractor are working towards the same goals.

If you like the GC and feel comfortable and the architect recommends more than likely you will have a great outcome.

It's a mutual relationship from the contractors sides as well, we want to be able to work with reasonable people.

Great comments! Thanks so much. I feel much more informed and comfortable.

Do you have a budget price and is it inline with the architects and your expectation? If yes and all other check boxes are checked then no need

Architect I worked with made a recommendation and their budget price was way out of line. Didn’t even bother with a bid.

i did four bids for my latest project. There where four eliminated upfront before bidding as they either wouldn’t provide a budget range or they where way out of line. I don’t have to pay for the bids and learn quite a bit from the contactors during the bid process To make the call beyond price.

Of the bids the lowest was $45K lower than the high bid. The other two where close to the lowest bid.

Lowest bid was eliminated due to spotty communication and not crossing the “T’s”. Highest bid was eliminated - don’t care how good they are.

For peace of mind - trust but verify - I’d get two bids at the end of the day.

"But am I foolish not to get an additional estimate?"

No. Be grateful the architect has sold you to the GC. This ain't 2008,

We built with the first builder we met with. I had a feeling they got us, their communication was good, their budget was what we were okay with. That said we still did compare options. Not all in but enough to confirm we were content with our first pick. It wasn’t perfect but it was within the budget we wanted, the timeline we wanted, and the communication we wanted. But most of all we got the house we wanted so even with hiccups we are haply

Maybe you have already clarified this but is the "Fixed Fee" a "fixed $ amount" or a "fixed % of construction cost"?

In either case, the Fee is binding and the estimated Budget isn't so you could bid the Fee with other contractors without requesting a budget estimate of the cost of the work.

The Budget only becomes binding when there's a Guaranteed Maximum Price in which case contractors usually increase the price to cover their increased risk.

Cost control for this type of delivery method occurs later when the GC bids the subcontracts. If you are not shown the bids and allowed to choose the one you want (with the GMP increased if you don't choose the low bid) then there is effectively no cost control and you must hope the GC's interaction with the subs will control costs. But the use of favorite subs without competitive bidding is the norm in home building so you must choose your GC well.

I did get only one official bid for my current job. I got guesstimates from several contractors before I had final plans and was trying to figure out what to do for the job. I had buildable plans drawn up, and sent back out to the top 3 I liked. Only one got back to me in a timely way. He has a great reputation, and couldn't start for months. I did not pursue getting new contractors to give bids. I am picking the person not the price. So far so good. I keep telling myself I would rather pay more for the right person than less for the wrong person. ((The plans came in over budget, so I did have to simplify and take things out such as roof details and clerestory windows. I worked with just the one contractor on modifications to meet my desired budget)). I did question some of his prices such as the stucco bid seemed high. And he said he doesn't shop around for best prices, he uses the subs that do a good job so it is done right the first time etc. I figure that I am paying for a quality final product, not lowest cost.

I like the points about relationship and trust, and "better to pay more for the right person than less for the wrong guy". Thanks everyone. I believe I have the right guy. Perhaps things are always more expensive than we wish, but "you get what you pay for". If I get burned, or find that I was naive, and made a mistake... I will come back and let y'all know!

Getting a guesstimate from multiple contractors like @lafdr did should let you know if you are in the general ballpark.

I knew I had the right guy and went with just one estimate. Worked out perfect, no drama. Could I have saved money, who knows, but I went with someone I had trust in.

I like the points about relationship and trust, and "better to pay more for the right person than less for the wrong guy".

I feel sure I will not make any friends right here, but I question how multiple bids have anything to do with the above statement.

In fact, it seems constructed of several false assumptions. Many people have some rationalization that is completely reasonable for deciding not to competitive bid their project, but do those reasons stand up to scrutiny? The answer is that most simply do not.

Here is the only reasonable question to ask yourself when considering whether or not to competitive bid a project: "will the value added from competitive bidding exceed the cost?" I don't know the answer to that question for you as I don't have a real picture of the cost, but I can tell you with something that approaches certainty, there is value in competitive bidding.

We understand much of that value. For example, we know that projects that are competitive bid are more likely to finish on time, they are less likely to have cost overruns and are of higher quality. What I personally don't understand is why this is even in question. Seriously, competition drives performance...if that is news to you, then welcome to earth, and what else would you like to know about the human condition? We keep score for a reason. Just two days ago, San Francisco lost the Superbowl, do you honestly believe they would have played just as hard if there wasn't a scoreboard? The guy who finishes the race in third place still ran harder than he would have if he were running alone.

It isn't about the cheapest, it is about better.

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There is no doubt that there is comparative value in multiple competitive bids, it is also likely to yield a flat increase in the quality of information, however, there is a cost. That cost might be monetary or non-monetary and it is completely reasonable to decide that the additional information and quality is unlikely to be worth the additional cost and just go with one bid for that reason.