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Understanding Contractor Proposals

I recently read an interesting article about the complaints that the Better Business Bureau (BBB) receives. It was surprising to learn that the Better Business Bureau of Minnesota and North Dakota received 24,500 complaints in 2010. According to the article, here is how contractors ranked.

General Contractors – Ranked 5th
Roofing contractors – Ranked 6th
Construction and Remodeling – Ranked 7th

How can this be? How do you pick the right remodeling company for your remodeling project, and feel confident in your decision? Most people would like to say that cost is not a factor when choosing a remodeling company, but it is. The challenge is finding a balance between a company you trust and the cost (the balance is going to be different for everybody).

When you first start planning your remodeling project it is not uncommon for you to get two or three proposals for the work. The hard part is comparing the proposals, since no two proposals are going to be a like. So, which proposal is right? Well, there is no right or wrong answer.

You might wonder, why do proposals differ from one another? They differ because each company is going to have their own price scale, view the scope of the job differently, and will break the proposal down differently. Not to mention each will have a different format for presenting the proposal for you! Since we are always here to help I’ll explain what I think is important to have listed in every proposal.

Proposals should have:

  1. The cost for labor including: carpentry, plumbing, electrical, HVAC, and etc.
  2. The cost for construction materials: including lumber, screws, nails, and etc.
  3. The second section of the proposal should be the allowance items. Allowance items are the selections that you can choose.

Some examples of allowance items include cabinets, flooring, countertops, doors, and etc. I gather as much information as possible when meeting with a homeowner on what they may choose for the applicable allowance items, helping me tailor the allowance for them.

Beware of the proposal that does not separate the allowance items for you. You have the right to know what the amount is for each allowance item.

And last, don’t forget to ask questions and for clarification if you don’t understand something. Before you choose a contractor based on their proposal it is best to fully understand it and feel confident in your decision. In my next post I will provide a sample proposal that we use for our clients.

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