Hiring A Contractor: Is The "3 Bid" Rule Applicable In Today's Marketplace?

Re-posted Courtesy Of SLS - Thanks to SLS Construction in Alabama for allowing us to re-post this great blog!
Our thanks also to Leah Thayer and the d5R for bringing up such a hot topic: The Three Bid "Rule"- Breakable?

The BBB along with quite a few other organizations advise you to get three bids for any project you want done. Why? Well you do want the best price right, and isn’t that all that matters? If you do believe that price is all that matters, ask yourself; Is it truly the best price if the job isn’t done right the first time?
While the letter quoted below is mainly geared towards my friends roofing customers, it has some really good advice for anyone selecting a remodeling contractor. Thanks goes out to Ed Fako of Right Way Roofing Company for the letter below and of course being nice enough to allow us to re-post it.
Also Known As:
"What’s wrong with just getting 3 bids on my roofing project? And, Could someone please help me to not get screwed by the contractor I choose?"
 Dear Mr. and Mrs. Homeowner,
  I would like to address the vulnerability you are subjecting yourselves to by going out and requesting 3 bids for your project. Maybe the advise should be to make sure that you get the best qualified contractor to do the job right in the first place, instead of worrying about problems down the road. The 3-bid suggestion is just there so you can hopefully get lucky and find one who fits that category...
  I know what you have been told; “Go out and get at least 3 bids”, and throw away the contractors bid at the bottom and the contractors bid at the top and select the one in the middle. After all, isn’t that what almost every single, “How to Choose a Contractor Guide” suggests you do. Isn’t this the only way to ensure you do not get the low ball fly-by-nighter or the contractor who has to charge too much to justify his overhead or just wants to make too much profit from your job?
  When you decided you had a need for this particular project, did you say to yourself?
“Gee, I want to make sure I get somebody who does not provide me with the full scope of work we need to validate the manufacturers full length warranty, (even if we do not really know what specifications those are yet), and I also want to make sure they do not have enough experience for this type of project?

Of course you didn’t! That would be foolish and absurd!

  Well then, that obviously eliminates anybody who would not spend the proper amount of time with you to be able to assess your projects complete requirements, while attempting to remain within your financial means to afford this enhancement to your home.
  From years upon years of experience, we have discovered that the majority of bid work usually omits many of the necessary items that should have been included in the first place. We have chosen a different path. We decided that it would be better to explain the proper price for the job being done correctly at the beginning, rather than have to make excuses for the lack of quality for years to come.
  Do you really think that there are so many corrupt or deceitful contractors out there? Actually, no there are not. The unfortunate consequence of requiring multiple contractors to be bidding on the same project without pre-determined specifications to be met, is that most contractors feel compelled to find ways to cut corners to be able to “Win” the job. There is a necessity to “Make the Sale”, no matter what the consequences. Get the job at all costs, or should I say for all lack of costs, which also means lack of proper value.

  Well now, what will happen next, once the job starts. Here are two possible scenarios;

A) The contractor will do all of the minimal work specified in the contract, hoping that no one alerts you to the fact that additional specifications should have been included in the first place. If you never find out that some specs were omitted, Great Job. Everybody is happy. That is until things do not work as they were intended.
   Even though, Roofing is Not Brain Surgery”; There are many Wrong ways to roof a house. But…There is only…One “Right Way” to do it and that is “By Following All of the Manufacturers Specifications”. Remember; Over 90 % of All Shingle Roofs Done – DO NOT Qualify for the Manufacturers Long Term Warranty!!! ( This is; According to studies by GAF Roofing Corp., Air Vent Inc., & Alcoa ). Did you really expect that brand new 30 or 50 year roof you put on to look good and remain functional after 10-12 years? Oh, you did! Were you educated about the manufacturers specs? How do you know if all of the manufacturers’ specifications or industry guidelines were followed?
  But, if the building inspector approves it, doesn’t that mean it was done correctly? Yes and No! The building inspector is only there to ensure that the “Minimum” specifications were followed. That means that they pass things all the time, where some contractors only do the least amount of work to just barely be on the legal side of the ordinances. Is this what you want, a “barely passed minimum standards job”?

B) On the other hand, what if you realize that the project is not advancing towards your vision you started out with? Aha, you inform the contractor that more work needs to be included in the project scope. Great!!! The contractor replies, but first, Mr. and Mrs. Homeowner, please sign these additional work change order forms. That work you now realize that you needed to have included, was not in our initial bid! We thought we were doing you a favor, by keeping the costs down for you, isn’t that what you wanted?

  So, what is a homeowner to do? The best that you can do is to find a contractor who is proposing to do the job 100 % the Right Way, right off the bat. Make sure that you spend time with each contractor to interview them on how they will approach the project. Make sure that you have an open line of communication with that contractor. Make sure that the written proposal is extensively detailed so that there is no confusion as to what you are receiving for your investment. Make sure that you know what the obligations and responsibilities are of both you and the contractor. Make sure that they supplied you with multiple references of similar jobs they have done in your neighborhood. Make sure that you are protected, by receiving copies of their workers compensation and general liability insurance certificates. Make sure that they have been a licensed contractor, going by the same company name for at least 5-10 years. Verify anything that they are telling you if they do not provide the back up documentation as part of their proposal package. If you have doubts about any suggestions they have made, then have them back up their reasoning with industry related technical reports or articles.

After you have done all of this, which contractor do you now believe is going to give you the Right Job for the Right Price?

More than likely, the only one out of the original 3 bidders, who even had a shot at producing the right results, was the supposedly highest priced contractor. Now, can you see that the highest bid, probably is not really the highest cost to you, but the only one to have provided the proper value to the specifications to ensure your warranty is validated by doing it the Right Way, per the Manufacturers Specifications?

The bottom line is that only the right “Qualified” bidder should even be considered in the 1st place.
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