The Design/Bid Approach for Custom Homes and Renovations Can Lead to Problems

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One of the ways to go about designing and building a custom home or a home renovation is the design/bid method. The design/bid approach is one in which homeowners and their architect develop plans based on what the homeowner is looking for and wishes to invest. Then the plans are put out for competitive bid to 2, 3, 4 or more builders.

On the surface, design/bid seems to be a logical way to get the best value for your custom home building or home renovation investment. But it is not the best way to get the best value or best “actual cost”  for the project and it can lead to all kinds of unintended problems.

Why the Design/Bid Process Fails in General

  • No two builders are the same
  • No two homes built even from the same plans by different builders are the same
  • Homeowners will have a different home building experience from each builder
  • Builders know that despite what homeowners say, a lower bid will be more likely to get the project
  • Competitive bidding discourages the best builders to bid
  • Plans and specs for custom homes generally have room for builders to make certain decisions which will vary from builder to builder
  • Competitive bidding encourages some builders to use shortcuts,  lower quality materials, less skilled managers, lower quality craftsmen and other things that are not good for the home or homeowner
  • The bid price, even if that is what is ultimately charged, is not the entire cost of the project
  • Builders that bid low have creative ways of increasing the final costs
  • Projects with problems, delays, or quality disputes always increase the real cost of the project
  • Home building horror stories often start with a great price

Additional Reasons Why Design/Bid is Bad for High Performance, Green Homes and for BPC Homes

  • The “cost” as reflected in a bid only represents the home’s cost to be built. It does not reflect the cost of building and the cost of owning the home which is the real cost of the home. It is an incomplete to view “costs” with a green home. For example:
    • BPC homes are engineered and built to reduce the cost of home ownership by dramatically lowering energy costs, maintenance costs, increasing the life of systems in the home and by the use of more durable, lower maintenance materials.
    • The cost savings gained by owning a BPC home provide can be significant.
    • The cost of the home and home ownership and the value that BPC offers clients must consider the bigger picture.
    • Bidding based on the cost of constructing plans doesn’t allow for a proper look at costs.
  • The benefits BPC Green Builders offers architects and homeowners cannot be fully realized if BPC is brought into a project after the plans are finished.
  • While there are other green builders in the area, no other area builder we know build homes that deliver the same savings, green, health and comfort benefits BPC is known for or the value we provide.
  • BPC regularly bring cost saving innovations and increased home value to the market before other builders. We have built the first of many types of green homes and healthy homes in the area.
  • BPC has an excellent track record of meeting or exceeding the green building standards our client’s desire. This means better than expected efficiency (and savings). It means your clients won’t be disappointed that the benefits promised are not delivered.
  • Bidding, to be helpful for a homeowner must be between builders that can and will deliver the same home, the same benefits, the same ownership savings and the same building experience. BPC Green Builders’ benefits, process, track record and the value we provide our clients is unique. When project plans are put out to bid, BPC is never bidding against builders that can deliver what we do.

We’re not saying that using BPC will be more expensive or cheaper than using another builder. Nor are we saying that if you use competitive bidding going with the highest bid will assure you have a successful project, delivered on time and on budget.  We are saying that basing your decision about which builder to use based largely on competitive bids is counter intuitively a bad way to go. And it is even worse when it comes to homes with the benefits BPC builds.  It’s best to pick a builder with a track record of building great homes, who has satisfied clients, one you can trust to do a good job, a fair price and a provide you a good building experience.

A home remodeling industry expert once said:

“Most home renovation horror stories start with a great price.”

 Check out Design/Build and Teaming Approaches.

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