The Hidden Cost of A Low Bid

Tuesday March 07, 2017

 

Everybody loves a bargain. Nobody wants to pay more than they should for products or services—from everything to your home, to a huge commercial building project. Sticking to a budget is on most people’s minds, and for good reason. There are times, however, when a “bargain” is really no bargain at all.

We’ve all heard that you get what you pay for. Quality doesn’t come cheap. And while pricing needs to be competitive, accepting a bid based on a low price alone can really come back to hurt you.

 
Here are five tips to consider when deciding which proposal is best for your project.

1. How Low is the Lowest? If you have more than one bid and there is a big difference in price proposal, that could be an early warning sign of potential problems or disputes down the road. Sometimes low bidders have made errors in their bidding or be using a “low ball” bid just to get their foot in the door (with expensive add-ons coming your way after you award the contract).

2. Does Each Bid Cover the Same Amount of Work? At first glance, a low bid may seem like a money saver, but be careful that you are comparing apples to apples. Check the scope of work outlined on each bid and make sure they match your expectations and the requirements of your project. Clauses in construction contracts that state the bid can be changed due to unforeseen circumstances could add up to surprise bills down the road.

3. Are Your Bidding Contractors Insured and Licensed?  Sometimes bids can be lower from companies that cut corners on industry requirements (such as liability and workers compensation insurance or license and certification requirements) unbeknownst to you. Make sure you check your contractors before you hire them, with reference checks or prior work review. Easy acceptance of a low bid without due diligence could lead to costly redo’s or shoddy workmanship.

4. Are Your Contractors Equally Qualified and Experienced? Many contractors can claim to offer different services, however, they may not all be cut from the same cloth. This could mean the difference between a thorough job done properly versus an incomplete job.

5. Is the Bid to Good to be True?  If it seems like it, it probably is. There are countless stories about homeowner’s and business owner’s paying to re-repair poor workmanship that caused more trouble down the road. Don’t pay twice to get your project done correctly. Be willing to take the more realistic bid to make sure your work is done properly and that you get full value for your money. Trust your instincts. 


Saving money upfront can cost you in the long run, make sure to take in all the factors that go into a bid, and not just the cost.

To hear more about how you can keep your project within a budget, call Chapple Electric today. 









 

 

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