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Posted by Nehmo Sergheyev on May 21, 2006, 2:32 pm
Many Home repair/renovation-advice TV segments, government pamphlets,
web pages, newsgroup postings, and so on, advocate that the homeowner
get three (I've even seen recommendations for more) estimates before
selecting a contractor. These advisers then have a variety of methods
to proceed: average the estimates and keep looking, pick the middle,
pick the guy you like, or sometimes they provide no further advice. The
homeowner, lacking any better criteria, may very well take the lowest
bid or estimate. Consequently, often the homeowner then gets the lowest
quality job.
Most of these advisers don't encourage the homeowner to spend time
actually educating themselves on the type of work they want.
For residential jobs, everything associated with houses, the standard
is for the estimates to be free to the homeowner. Thus, contractors are
wasting time, gas, and aggravation unless the estimate yields a job.
Occasionally, a homeowner will recognize this and thank the contractor
for his time, but usually the homeowner is oblivious.
Let's look at this form the perspective of the *average* contractor,
that is, average in his ability to land jobs. Assuming all customers
get three estimates, the contractor must then do three estimates in
order to get one job - a day's work, perhaps. When we factor-in the
many customers who will never buy the job from anybody, the
contractor's ratio gets worse. When we figure-in that the contractor
must refuse some jobs, the ratio gets worse yet. So how does the
contractor compensate for this loss? The same way stores compensate for
employee-theft and shoplifting, they charge the paying customers for
it. That's where all the money comes from.
What else does the contractor do to limit his losses? He qualifies his
customers. In other words, if while on the call with a potential
customer, the contractor perceives the customer to be shopping, or
worse, *just* shopping, the contractor will then find some way to end
the call. The then rejected potential customer may try the next
contractor on his or her list, but he of she has lost the opportunity
to use the rejecting contractor, and often these people are the best
contractors.
Sometimes when you can get something for free, it's not ethical nor
beneficial to take it.
How then should a customer select a contractor? First he or she should
educate themselves on the work that needs to be done. Then, calling a
few contractors is fine, and even getting three estimates is correct in
some situations. But indiscriminately wasting people's time is abusing
the system and it will put off the contractor who is perhaps the
homeowner's best bet.
--
(||) Nehmo (||)
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Posted by marson on May 21, 2006, 3:20 pm
Nehmo Sergheyev wrote:
> Many Home repair/renovation-advice TV segments, government pamphlets,
> web pages, newsgroup postings, and so on, advocate that the homeowner
> get three (I've even seen recommendations for more) estimates before
> selecting a contractor. These advisers then have a variety of methods
> to proceed: average the estimates and keep looking, pick the middle,
> pick the guy you like, or sometimes they provide no further advice. The
> homeowner, lacking any better criteria, may very well take the lowest
> bid or estimate. Consequently, often the homeowner then gets the lowest
> quality job.
>
> Most of these advisers don't encourage the homeowner to spend time
> actually educating themselves on the type of work they want.
>
> For residential jobs, everything associated with houses, the standard
> is for the estimates to be free to the homeowner. Thus, contractors are
> wasting time, gas, and aggravation unless the estimate yields a job.
> Occasionally, a homeowner will recognize this and thank the contractor
> for his time, but usually the homeowner is oblivious.
>
> Let's look at this form the perspective of the *average* contractor,
> that is, average in his ability to land jobs. Assuming all customers
> get three estimates, the contractor must then do three estimates in
> order to get one job - a day's work, perhaps. When we factor-in the
> many customers who will never buy the job from anybody, the
> contractor's ratio gets worse. When we figure-in that the contractor
> must refuse some jobs, the ratio gets worse yet. So how does the
> contractor compensate for this loss? The same way stores compensate for
> employee-theft and shoplifting, they charge the paying customers for
> it. That's where all the money comes from.
>
> What else does the contractor do to limit his losses? He qualifies his
> customers. In other words, if while on the call with a potential
> customer, the contractor perceives the customer to be shopping, or
> worse, *just* shopping, the contractor will then find some way to end
> the call. The then rejected potential customer may try the next
> contractor on his or her list, but he of she has lost the opportunity
> to use the rejecting contractor, and often these people are the best
> contractors.
>
> Sometimes when you can get something for free, it's not ethical nor
> beneficial to take it.
>
> How then should a customer select a contractor? First he or she should
> educate themselves on the work that needs to be done. Then, calling a
> few contractors is fine, and even getting three estimates is correct in
> some situations. But indiscriminately wasting people's time is abusing
> the system and it will put off the contractor who is perhaps the
> homeowner's best bet.
good point, nehmo!
i so often read on these groups the advice "get three written
estimates" even for jobs amounting to a few hundred bucks. in a lot of
areas, you would be lucky to get someone to call you back let alone get
a written estimate.
when i was a contractor, i refused to bid on jobs if i knew there were
other people bidding on it. first, i had plenty of work without
bidding. second, i believe in doing first rate work. if i was
underbid, it was because the competitor either forgot something, or was
cutting corners that i was not willing to cut.
in the instances where i was required to bid, i bid it high enough to
make sure that i wouldn't lose on it. if you can find a contractor you
can trust, pay him by the hour. it might be cheaper in the long run.
>
> --
> (||) Nehmo (||)
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Posted by Sasha on May 22, 2006, 3:12 pm
If you refuse bidding on project when there are other bidders I would
not even talk to you and not advise anyone to use you in any project.
Bidding is choosing best person or company to do the job at best price,
it is not choosing the winner solely on price. When you want to buy a
car do you come to the first car dealer and buy first car you are
offered?
Providing good reliable estimates along with details how and when the
project will be done is important part of a professional be he a
general contractor or aircraft designer. If you think you waste time
think when military contractors like Boeing and Lockheed Martin put
tens of millions of dollars to create full functioning models to show
to military in hope to win a bid. And only one is a winner, other loose.
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Posted by RicodJour on May 22, 2006, 4:36 pm
Sasha wrote:
> If you refuse bidding on project when there are other bidders I would
> not even talk to you and not advise anyone to use you in any project.
That's a two way street, isn't it? If the contractor doesn't do
competitive bidding, the first thing they'll ask you on the phone,
before they even come out to look at the job, is if there will be other
bidders. If so, they won't talk to you. These are not the guys that
advertise in the yellow pages. They generally have more work than they
can handle, so what's the point in advertising and engaging in
competitive bidding?
> Bidding is choosing best person or company to do the job at best price,
> it is not choosing the winner solely on price. When you want to buy a
> car do you come to the first car dealer and buy first car you are
> offered?
If I've done my homework, know the dealer's cost for the car, and he
accepts my offer, sure. Why not.
But we're not talking about cars. We're talking about custom
construction, not a commodity. There are many more factors involved.
> Providing good reliable estimates along with details how and when the
> project will be done is important part of a professional be he a
> general contractor or aircraft designer. If you think you waste time
> think when military contractors like Boeing and Lockheed Martin put
> tens of millions of dollars to create full functioning models to show
> to military in hope to win a bid. And only one is a winner, other loose.
That's certainly one way to look at it, and I can understand the
reasoning. But if you look at the situation from a different angle you
may see things differently.
I do not bid on jobs. There's really little point. I already know my
price is going to be higher than almost anyone else. Not because I'm
making more money, but because I refuse to do anything less than the
best work I can. The attention to detail and experience I offer isn't
a commodity. I'm the only one offering my services. To some people
it's not worth the money - I don't work for those people so there's
really no reason for me to give them a bid.
All of my work comes from referrals. People have seen my work and know
what to expect. Unfortunately (or not) I have to turn work away as
there's only so much of me to go around. I tell people I do fine work
and I expect to get paid accordingly.
For people that aren't interested in the highest quality of work, and
the higher or highest price, well, there are always other contractors
who are happy to take that work. Everyone wins.
R
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Posted by M&S on May 21, 2006, 3:22 pm
Nehmo Sergheyev wrote:
> Many Home repair/renovation-advice TV segments, government pamphlets,
> web pages, newsgroup postings, and so on, advocate that the homeowner
> get three (I've even seen recommendations for more) estimates before
> selecting a contractor. These advisers then have a variety of methods
> to proceed: average the estimates and keep looking, pick the middle,
> pick the guy you like, or sometimes they provide no further advice. The
> homeowner, lacking any better criteria, may very well take the lowest
> bid or estimate. Consequently, often the homeowner then gets the lowest
> quality job.
>
> Most of these advisers don't encourage the homeowner to spend time
> actually educating themselves on the type of work they want.
>
> For residential jobs, everything associated with houses, the standard
> is for the estimates to be free to the homeowner. Thus, contractors are
> wasting time, gas, and aggravation unless the estimate yields a job.
> Occasionally, a homeowner will recognize this and thank the contractor
> for his time, but usually the homeowner is oblivious.
>
> Let's look at this form the perspective of the *average* contractor,
> that is, average in his ability to land jobs. Assuming all customers
> get three estimates, the contractor must then do three estimates in
> order to get one job - a day's work, perhaps. When we factor-in the
> many customers who will never buy the job from anybody, the
> contractor's ratio gets worse. When we figure-in that the contractor
> must refuse some jobs, the ratio gets worse yet. So how does the
> contractor compensate for this loss? The same way stores compensate for
> employee-theft and shoplifting, they charge the paying customers for
> it. That's where all the money comes from.
>
> What else does the contractor do to limit his losses? He qualifies his
> customers. In other words, if while on the call with a potential
> customer, the contractor perceives the customer to be shopping, or
> worse, *just* shopping, the contractor will then find some way to end
> the call. The then rejected potential customer may try the next
> contractor on his or her list, but he of she has lost the opportunity
> to use the rejecting contractor, and often these people are the best
> contractors.
>
> Sometimes when you can get something for free, it's not ethical nor
> beneficial to take it.
>
> How then should a customer select a contractor? First he or she should
> educate themselves on the work that needs to be done. Then, calling a
> few contractors is fine, and even getting three estimates is correct in
> some situations. But indiscriminately wasting people's time is abusing
> the system and it will put off the contractor who is perhaps the
> homeowner's best bet.
>
> --
> (||) Nehmo (||)
>
With regards to your first question, from a contractors point of view, I
think you best answered the question yourself when when you say the
contractor "qualifies" his or her customers. Thats all one can do.
We have always chosen to flip your scenario on its head making "us" the
ones who "choose" to work for the customer not the other way around.
Qualifying the customer is exactly what we do. That said, we have always
been fortunate to have work booked out a for months or even years, which
has allowed us to basically say "hey, you want on the list, fine, but
dont waste my time if your not serious". Of course we say it nicer than
that, hehe.
In our business we have always been up front and honest with the
customer telling them point blank that the detailed quoting process is a
very time consuming and costly investment and that we will give them
some very clear/firm numbers based on the general scope of their project
but then it is up to them to decide, based on our work/references, and
their "feel" for us, whether we take it to the next level. Once a more
firm commitment is made we will begin to invest the real time but we are
not doing itemized quotes on speculation.
As far as the customer goes, I personally think very little of the
decision to commit to a given contractor is based on the quote. Perhaps
in commodity type work (replacement windows, simple decks, etc.) its
different but I am talking more in the line of homes, additions, design
work, and so on. Our experience is that it is more so based on their
impression of you, your work, your ideas, and so on. From our customers
we know that we are more often the higher contractor rather than the
lower. Our customers have always said the decision is all about a
combination of reputation, references, ideas/creativity, personality,
and the like. Price is almost never in the list.
Commodity work would be a whole different ball game in which I wouldnt
want to play, but none the less much of the same applies. It definitely
applies to landing more work down the road and building a better
reputation making one more sought after allowing one to get out of the
commodity business.
Thats just our take on it,
Mark
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