Comparing estimates and quotes from contractors as you sort through the mountain of information and impressions you have formed of each contractor can seem daunting. It is a big job. It is also one of the most important decisions you will make about your remodeling project or house addition. There are things you need to know about contractor estimates if you are to compare them and make an informed decision about who to hire for your project.

Contractors quote or estimate remodeling jobs in one of four ways:
1. Preliminary (or rough) estimates. These estimates are often called “ballpark quotes.” They are prepared very early in the planning phase of a remodeling project. Their main use is to help you decide whether to proceed with planning and design of the project. Preliminary estimates are generally intended to be accurate to within 20-35% of the actual cost of the project. These estimates are not guaranteed. They are sometimes called “budget estimates” because their main purpose is to help you establish a budget for the project. They are not based on a large amount of detail.
2. Intermediate, conceptual, or time and material estimates are slightly more accurate and detailed. They will be based on some detail about the size of the project, the materials, and the quality of workmanship desired. They might be based on a rough estimate of the cost of the materials and the amount of of time needed to do the work and the average rate of pay for workers. They will also include average fees and an “average markup” charged by the contractor and subcontractor. They are called “intermediate” because they are more accurate and more reliable than preliminary estimates. They do not reflect a “final” price for the job, nor do they guarantee any price for the finished project.
3. Contractor’s bid estimates. These are the price “quotes” provided by contractors when competing for a remodeling or house addition project. This kind of estimate reflects the price they expect to charge to do the job. These estimates are detailed. The estimates are based on conversation about specific materials to be used, quality of materials in general, expected quality of workmanship, and schedule. They might state specific costs for each item of material and each type of work. They will state a “bottom line” price – the price for which the contractor is willing to complete the job described. The price will combine materials and labor into a single total estimated cost. Homeowners need to pay attention to the wording to be clear whether the bid is an estimate (estimated cost, subject to change) or a bid/quote (price for which the contractor is willing to do the job).
4. Fixed Price Estimates are the most detailed. Each item of material will be listed, including quality. Every fixture, fitting, etc. will be listed. Quality of workmanship will also be stated in general terms and in specific terms, for instance the estimate might state that the workmanship quality will be “industry standard” and that painters will apply a coat of primer and one coat of paint. The price quoted in these estimates is guaranteed. It will also probably have some statement that any problems encountered or changes made are outside the scope of the contract and will result in additional charges. If accepted, this estimate will become part of the final contract for the job.
When dealing with contractor estimates and contracts, it is important to know about the different types of contractor estimates. You need to know what the estimate is designed to tell you. Before you accept any estimate, review all of the details carefully. Insist on a fixed price estimate as part of your contract before you sign.