COMPETITIVE BID FAQ

Will you produce a hard bid in a competitive bid situation?

Unless we have been retained through a Pre-Construction Services Agreement (PSA), we can only offer a rough preliminary cost estimate, which will be a price range that we feel the final project cost will fall within. A hard bid that (i.e. a number that we could confidently go to contract with) takes a large amount of time and effort to produce, and as a small company we cannot afford to absorb that cost without the protection of being compensated for our time. If we have been engaged by a PSA, though, we will be happy to produce a hard bid, even if there are still other builders in the picture.

Is a preliminary estimate a good way to compare builders?

Not in the slightest. The free preliminary estimate that we provide our potential clients is based upon a collection of guesstimates applied to a (typically) undeveloped set of plans, so the estimate should only be used as a sort of reality check that will help you determine if your current design goals are within reach of your budget. This is why we will provide you with a cost range instead of a single number. Dozens of assumptions must be made by a builder at this phase due to the lack of detailed plans, selections, engineering, etc., and because every builder will make different assumptions, it’s a very bad idea to treat competing estimates as apples-to-apples bids. We do everything we can to make sure that the estimate range is a realistic representation of what your eventual costs will be based upon experience and historical pricing, but ultimately since the cost of your project is a direct result of the scope that you dictate, the final budget is, in actuality, entirely up to you. To that end, the preconstruction services that we offer under the PSA are designed to help you—through working closely with the architecture/design team—dial in the scope in a way that best balances your wish list with your budget goals.

A builder I’ve been speaking with has—after only a short period of time—given me a detailed hard bid. Why do you require a retainer to produce the same thing?

Because it’s not the same thing. If you get a “hard bid” back from a builder after only a week or two—especially if the plans are not completed—you should run the other way. That’s not nearly enough time to secure the number of hard bids from subcontractors that would be needed to produce an accurate overall bid. An accurate bid can take months to produce, so a fast “hard bid” is almost certainly inaccurate, possibly embarrassingly so.

Follow up: But the builder claims that they can go to contract with that bid, so it must be pretty accurate, right?

No! If a builder is willing to produce a contract to build after only a couple of weeks—again, especially if the plans are not completed—that’s because they are offering a cost-plus contract. With that cost plus contract, the client is responsible for ALL costs, regardless of whether or not an item was noted in the scope description or contract budget, so any increase in cost caused by omissions or inaccurate estimating is 100% borne by the client. In essence, the builder has zero risk in this scenario, so they are not incentivized to spend the time producing an accurate bid. If you were to hire that builder in this scenario, you’d almost certainly end up spending much, much more than the bid says you will.

Why is a fixed-price contract better than a cost-plus contract?

We go into much more detail in our document, “Why We Use a Fixed Price Contract”, but the short answer is “cost certainty”. A fixed-price contract has every potential cost already accounted for, and the final price should only increase (except in relatively rare situations involving unknowable site conditions or pre-existing structural issues) due to scope changes or for selection items that were not finalized at the time the contract was signed. ofixes the cost for about two-thirds of the hard construction costs, with the remaining third being allowances. The fixed costs include “sticks and bricks” (framing, wiring, plumbing lines, concrete, etc.) and other things that the architect has specified early enough for which we are able to get exact pricing from our vendors. The third of the costs that fall in the allowance category are largely for client-selected items like light fixtures, tile, plumbing fixtures, and appliances. These costs are typically deemed allowances because it’s rare that all of these selections are made prior to going to contract. In addition, these items are more susceptible to be changed as either product availability or the owners’ tastes/wants/needs change throughout the project. We will also sometimes assign other items to allowances that have high price instability and/or are impossible to accurately quantify ahead of time (lumber, for instance, has been in this category for the last few years).

How much do you charge?

The construction industry in the Austin area is a relatively small world, so the variability of labor pricing between different subcontractors and material suppliers is low. That is to say that—at least within our niche as a high-end custom homebuilder—actual construction costs are very similar from builder to builder. What this means is that apples to apples, the difference in pricing between most builders in our niche should be pretty similar, with the main variability in pricing due to differences in overhead and level of service. There are a handful of firms in Austin anchoring the high end of the pricing spectrum, but we aren’t one of ‘em. We have generally found that we end up being the “middle guy” far more often than not.

How long will the pre-construction phase take?

This is a question that hinges mainly on the design team and the permitting authority, but in our experience the time it takes to get from an initial schematic design to the signing of a contract to build is around 8 to 14 months. This can go faster if your architect turns around plan updates quickly, if decisions are made very quickly, or if you are working from a non-custom set of plans….but when you factor in the time it takes to fully develop the architectural drawings, get structural engineering completed, get building permits (especially in City of Austin), and let us fully bid out your project, it’s very difficult to trim much time from the low end of this range.

Once the contract is signed, when can you start?

The first question we usually get from our clients after they sign the contract is when our team can start the project. We are excited to start, and we know you are as well. There is a sizable amount of planning and organization so that we can successfully execute your project. Assuming the building permits have been issued (including demo permit, if applicable), a good rule of thumb is within 2 to 4 weeks from signing the contract to build.

How long is my project going to take?

“How long will the project take?” is probably the second-most common question we get behind “How much will the project cost?” The answer to that varies depending on the size and complexity of the project. Typically, a large-scale remodel or a new home takes a minimum of 16 months from breaking ground to completion, but lots with challenging topography or poor soils can push that minimum to more like 18 months. Over the last few years, however, supply chain disruptions and local labor shortages have added time—and a certain amount of unpredictability—to completion dates. Delayed closing dates hurt both of us financially, so we are committed to completing your project as quickly as we can while maintaining the high standard of work that you deserve and that we demand from ourselves. An old adage in construction that we have found to be nearly as immutable as gravity is this: Of the three major goals in construction—low cost, high quality, and fast pace—you unfortunately only get to pick only two!