Most people choose a building contractor once in their life and based on whatever is at hand: a friend's recommendation, three emails with a single figure each and an impression from the first meeting. Yet it is usually the largest contract a family ever signs. This article is a practical procedure: how to run a small tender for a family house, how to read the quotes, how to check the firm and what the contract should contain before anyone signs it. Why quotes for the same house differ in the first place is covered in the article on the construction budget and bill of quantities.
Why are two lump sums not two quotes for the same house?
A lump sum without a common basis is an answer to a question each firm asked itself. One reads the drawings and includes scaffolding, another assumes the roofer will leave his on site. One prices the insulation from the design, another from what it usually installs. The result is three figures for three slightly different houses that share only a floor plan.
A common bill of quantities changes this fundamentally. The quantities are fixed and each firm fills in only the unit rates. The difference between the quotes then lies in prices, not in ideas about scope, and it can be pointed to on a specific line. The precondition is an implementation project from which the bill can be derived. Permit documentation is not enough, as it lacks build-ups, details and specifications.
How do you run a tender for a house contractor?
A private client does not have to follow public procurement rules. A contractor tender for a family house is therefore more modest, but if it is to work it needs the same core: everyone receives the same thing and answers the same question.
- The same package of documents. The implementation project, the bill of quantities in an editable format, a draft contract, the required start and completion dates and a list of what you will arrange yourself, for example the kitchen or the utility connections.
- A considered shortlist. Invite only firms you would genuinely trust with the build. Decide beforehand whether you want a general contractor for the whole house or separate firms by stage.
- One deadline for everyone. The period must be long enough for a firm to get prices from its subcontractors. A rushed quote is a quote with a surcharge for uncertainty.
- Questions in writing, answers to all. When one firm finds an error in the bill or an unclear detail, send the question and the answer (without the firm's name) to everyone. Otherwise each one prices a slightly different project.
- A site visit. Access to the site, space for storing materials, a slope or nearby neighbouring buildings all affect the price. A firm that has not seen the plot is making it up.
- Alternatives only alongside the base bid. If a firm proposes a cheaper solution, let it price that separately. The base bid must follow the design, otherwise you lose comparability.
When evaluating, first check whether a firm has changed quantities or item descriptions in the bill. If it has, ask it to explain, and if it corrected an error in the documents, apply that correction to all the quotes.
How do you read a quote line by line?
The total on the cover sheet is the last thing to look at. Read the quote in this order: what is priced at a unit rate, what only as a lump sum, what is excluded, what is estimated and what is suspiciously cheap.
Unit rates and "complete" items
An item with a quantity and a unit rate can be checked at invoicing and when pricing changes. An item marked "complete" or "set" cannot be checked. For small things that does not matter, for the entire electrical installation or the roof it does.
What the price leaves out
The items most often left out are the ancillary costs: site setup, scaffolding and its hire for the whole duration of the build, removal and disposal of waste, temporary water and electricity connections for the site and their consumption, and protection of finished work. VAT is a chapter of its own. A private individual cannot reclaim it, so the real price for you is the figure including VAT.
Estimated items and suspiciously low prices
An estimated (provisional) item marks a place where the firm does not know how much work there will be, for example in earthworks or damp remediation. That is fine if it is named and if it is agreed how it will be settled against actual quantities. The problem arises when one firm prices it low to make the total look better. Likewise, an item well below the others is not necessarily a discount. It can be a mistake, a misunderstood specification or an intention to recover the difference elsewhere.
| Part of the quote | What to compare | What to watch for |
|---|---|---|
| Site setup and scaffolding | Whether they are separate items and for what period | Scaffolding priced for a shorter time than the build will actually take |
| Earthworks and foundations | Unit rates for excavation, haulage and backfill | Removal of spoil missing or only "at cost" without a rate |
| Block masonry and concrete elements | Price per unit of measure including mortar, reinforcement and formwork | The same price for different block thickness or type |
| Windows, roof, insulation | The specific product and its parameters | "Or equivalent" without defining what counts as equivalent |
| Services and building systems | Scope up to sanitary fittings and the heat source | Pipework and wiring without connection, testing and inspection reports |
| Ancillary costs | Waste, temporary utilities, protection of work, VAT | A silent assumption that the client will provide them |
| Terms of the quote | Validity of the offer, dates, instalments | Short validity and a loose clause for adjusting material prices |
The second table is for the conversation with the firm. None of these signals rules a quote out on its own, but each deserves an answer on paper.
| Red flag in the quote | What to ask |
|---|---|
| A large advance payment before work starts | What exactly it is for and whether it is covered by ordered materials, such as made-to-measure windows |
| "Complete" items without quantities | Which quantities and unit rates the figure was built from |
| One item far below the others | What exactly it includes and whether the firm reads the specification the same way |
| Altered quantities or descriptions in the bill | Why they changed and whether there is an error in the documents |
| "To be specified" on a significant item | When, on what basis and with what price cap |
| A schedule much shorter than the others | How many people and which subcontractors the firm is counting on |
| No mention of insurance | What liability and construction insurance the firm holds and what it covers |
How do you check a firm before signing?
References only make sense if they can be verified. Ask for contact details of owners of houses completed a few years ago and, if possible, go and see the house. Ask about things a photo does not show: did they keep to the schedule, how did they handle extra work, how did they respond to defect claims after move-in, and would the owners choose them again?
Check the formal data in the public registers and lists of state institutions, not on private portals:
- The commercial register and the trade register: who owns and represents the firm, how long it has existed and whether it holds an authorisation for the construction activities it offers.
- Debtor lists published by the financial administration, the Social Insurance Agency and the health insurers. Arrears on taxes and contributions are an early sign of cash-flow problems.
- The insolvency register: whether a petition for bankruptcy or restructuring has been filed against the firm.
- Insurance: a copy of the liability insurance policy and a clear agreement on who takes out construction insurance for the duration of the build.
Also ask who will be the site manager, which work the firm does with its own people and which it subcontracts. A firm that subcontracts everything is more of a coordinator than a builder, and the price should reflect that.
What must the contract you send with the bill contain?
A draft contract for work belongs in the tender documents, not in the meeting with the winner. The firm then prices the terms as well as the work, and the winner cannot later renegotiate what its competitors accepted without objection. The contract should cover in particular:
- Price type. A fixed price for a described scope, unit rates applied to actual quantities, or a combination of both. Who carries the risk under each type is covered in the article on why builds go over budget.
- A schedule tied to payments. Instalments after completed and accepted stages, not by calendar date. If a stage is late, the payment moves with it.
- Retention. Part of the price you hold back until defects from the handover are remedied or for an agreed period. Both the amount and the release conditions are a matter of agreement, so they must be written down.
- Warranty and defects. The statutory warranty period depends on the code under which the contract is concluded, and the contract can agree a longer one. Add when it starts to run and how quickly the firm must respond to a claim.
- Procedure for extra work. No extra work without a written price and approval before it is carried out, pricing at the unit rates from the quote, and deduction of omitted work that the new work replaces.
Why does the cheapest bid often end up the most expensive?
The lowest figure on the cover sheet does not tell you how much you will pay. It tells you the price at which the firm is willing to sign. The gap between them opens up in four ways.
The first is incompleteness. Whatever the firm did not include it adds later as extra work, and by then it has no competition. The second is unbalanced pricing: cheap rates for work that comes late, high rates for work invoiced early. The firm collects more at the start than it has built, and if it walks away midway, the money for the rest is missing. The third is pressure for substitutions. A firm on a tight price will propose "equivalent" cheaper products during the build, because otherwise it loses money on the job. The fourth is the most serious: a firm building below cost can become insolvent. The house is left unfinished, with disputed warranties and a new firm charging a premium for completing someone else's work.
So do not discard the cheapest bid automatically, but read it most carefully and ask where the difference came from. If the firm can explain it with specific items, for example its own equipment or spare capacity, it may be a fair offer.
Where does the architect help in choosing a firm?
The architect who designed the house knows what in the design is essential and what is interchangeable. The architect can prepare the tender documents and the bill of quantities, answer bidders' questions during pricing, put together a comparison sheet that sets all the quotes side by side item by item, and point out exclusions and suspicious prices. The decision stays with you; the architect gives you a basis on which a decision can be made.
During construction, author supervision then reviews proposed material substitutions and design changes, which are exactly the places where an overly cheap bid tries to win its money back. How these services fit into the project stages and the fee is covered in the overview of how much an architect costs.