Why Is There Such Variation in Quotes From Contractors?

By Dan Fritschen

One of the most frequently asked questions about working with contractors, getting quotes, and comparing estimates or quotes is, “Why is there such variation in quotes from contractors?” There could be any of a number of reasons for differences in what contractors quote on an estimate or on a job. To answer the question, let’s consider three important aspects of contractor quotes.

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First, look at the quotes or estimates very carefully to see whether you are receiving a quote based on the number of hours anticipated to complete the project at a stated rate of pay, plus materials or if you are receiving a final total quote on the entire job. This aspect of the quote can be different in several ways.

• A total final cost will include a margin for error in calculation or for encountering unanticipated problems once the job begins. A quote with a total final cost amount may be a bit higher, but it will be a set price.
• The stated rate of pay for workers and/or subcontractors can vary from one estimate to another.
• The number of hours required to complete the project can vary from one estimate to another.

Second, quotes or estimates can be significantly different according to what is or is not included. Here are some things to look for:

• Are the quotes based on the same amounts of the same quality of the same materials?
• Is the cost of materials delivery included?
• Is the cost of permits included?
• Does the general contractor’s quote include the same types and number of sub-contractors?
• What is the period of time in which the work will be completed? Is it the same?
• Does one of the estimates reflect an off-season discount (that may or may not actually apply when the work begins)?
• Is the job described the same way?
• Is the workmanship described the same way? For example, number of coats of paint, amount of trim, quality of lumber or carpet, etc.
• Are the quotes based on the same or very similar labor time estimates?
• Are the quotes based on the same rate of pay for workers and sub-contractors?
• Does the quote include disposition of trash and other waste?
• Is the General Contractor including a profit or a commission for hiring and supervising the sub-contractors?
• Is the appropriate insurance cost included?
• Are any surcharges included? Are they appropriate?

The third aspect of contractor quotes concerns the relationships between the contractor, sub-contractors and workers and their insurance, benefits, salary, etc. You can see relatively wide variations in quotes between contractors who maintain a staff of workers and sub-contractors and those who hire for each job. You can get a clear understanding by asking questions of the contractor. Here are some things that can be different:

• Is the contractor (or sub-contractor) doing the work of finding qualified sub-contractors and workers or just using a regular team of employees? What is the charge for doing so?
• Who is paying for the insurance, workman's compensation insurance, liability insurance, etc. on the workers? Where does it appear in the cost?
• If the workers are "on staff" the contractor is probably paying some benefits, including vacation and holidays. This may not be the case when workers are hired for specific jobs.
• Do you know who is considered legally liable if a worker is injured on the job?
• What happens if the contractor hires a sub-contractor or a team of workers who do inferior work?
• Are the costs of sub-contractor work comparable? If not, why?
• Is the cost of sub-contractor work a set amount or an hourly rate? What will happen to the cost if there is an unexpected problem or delay?

Comparing quotes becomes much easier when you are certain you are comparing quotes that are actually comparable and that you can identify reasons certain costs are higher and others are lower. For example, if one contractor's quote includes an unusually large amount for insurance, you should ask about it and be sure you know not only why it is larger, but also what other amount is lower because insurance is not included in it, and what the ramifications are in terms of liability. Contractors understand that you will be reviewing a number of quotes. They also understand that there will be differences. They will ordinarily be more than happy to explain any aspect of a quote that is unclear to you.

Remember - you need a good relationship with your contractor. There are many reasons for variations between the quotes of various contractors. Ask questions and be sure you are making appropriate comparisons. Dont assume someone is trying to cheat you or take advantage of you, and start hurling accusations. Although there are scoundrels out there, most contractors work up quotes with great care and want you to understand and evaluate them fairly.

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