At most of our initial project meetings, we get asked the same question: “How much will it cost?” And while we understand why it’s being asked, the answer is not always so straightforward. To better understand what we mean, let’s look at an example outside of our industry that closely follows the estimating and bidding process – buying a new car.
When you begin the process to buy a new car, you go online and look at a make, model, and basic trim package, i.e. SE, LE, Sport, etc. At this point, the website will spit out a price that gets you in the proverbial ballpark. You know it’s not the final price, but at least you have an idea of where you’ll end up and generally that number can help you decide if you should keep pursuing this car or find another that better aligns with your budget. This is the equivalent of asking for a cost at an initial project meeting. Your design team should be able to share some cost per square footage pricing for recent projects similar to yours. It’s not final, but should give you a rough idea of whether or not to proceed.
Assuming the rough number looks good, the next thing you do is select your car’s options, i.e. premium stereo and nice rims (if you’re like my wife). Again, the website spits out a number, and it’s more refined – but it’s still not your actual price. In our industry the “budget bid” is equivalent to this step in the process. The design team puts together an approved schematic floor plan and scope narrative, sends that information to a contractor and asks them to prepare a “budget bid.” While a “budget bid” is NOT a final number, it is an educated guess from a construction expert and generally ends up being +/- 15 percent of the final construction cost. Like the car website, you’re getting closer, but still not there yet.
Now, if the number still looks good, you go into the dealer and start the final negotiations. This is the same as a competitive bid process. Much like buying a car, it’s not quick, but when it’s complete, you will have the final cost.
Whether you’re buying your next car or renovating your space, the estimating and bidding process works in much the same way. As more information is available and decisions are made, the cost given will increase in accuracy, helping you to hone in on a final number.
Ready to start that renovation or new build? We can help walk you through the budgeting process. Email us at firstname.lastname@example.org to learn more.