Here we are at the grand daddy of them all.

It’s been quite the journey, and yet there are still so many experiences from my Project Management background that I would like to educate people about. Perhaps, I’ll expand on more Project Management related topics such as creating a detailed budget and schedule for your project using Excel in future blogs. Rest assured that I have plenty of content to follow, and will continue focusing on architecture, project management, and real estate investing.

If you haven’t already read the previous blogs, I highly suggest you go back and start from the beginning of my step by step process and work your way up to this point. I’ll recap what was covered in those blogs below.

1. What Does a General Contractor Do?

2. Know These Construction Contract Terms

3. How to Find a General Contractor Near Me?

4. Ways to Qualify a General Contractor?

If you’ve already qualified the General Contractors on your list and started your bid process, congratulations; you’re almost there!

A word of caution… Never under any circumstance should you be satisfied with a single bid/quotation on a project. You’re leaving some much room on the table, and this is not the way to establish competitive pricing.

By getting a single bid/quotation, known as single or sole sourcing, you will have no way of knowing whether you received a fair price or were taken to the cleaners. Establish a competitive market in order to get the best possible pricing.

Ensure you’re getting a minimum of 3 bids. I recommend inviting at least 5 General Contractors, this way you have a buffer if anyone is unable to send you a bid/quotation.

The General Contractors you invited to submit a bid/quotation will have completed their site walkthrough, reviewed all construction documents, and sent you a formal bid/quotation with a lump sum price.

Below, I’ll breakdown what I personally look at when reviewing and comparing contractors bid/quotations. View these as general guidelines and not as absolutes. This exercise is meant for educational purposes only.

In a real-life situation I recommend approaching a third party professional to be your subject matter expert if you do not have experience reviewing and comparing contractor bids/quotations. In Ways to Qualify a General Contractor, I also recommended approaching a consultant, such as Infinite Design Services, to assist you during the bidding process if you don’t have the time or the confidence to follow through.

1. Price

   • Have they itemized the pricing under specific work tasks (ie: drywall, flooring, electrical, etc.)?

   • Does it clearly state that the subtotal is a lump sum price (excl. HST)?

   • Are there any exclusions listed that relate to the scope of work, materials/finishes/fixtures, equipment or other responsibilities that would affect to the price?

   • Does it clearly state that they will be purchasing all materials/finishes/fixtures from the suppliers?

2. Scope of work

   • Do they clearly breakdown all of the scope of work and building materials being supplied?

   • Are there any exclusions that state a specific work task is not included?

   • Are there any exclusions that state a material or finish is not included?

   • Is there any mention of materials, finishes, fixtures, etc. being substituted with alternate products?

   • Do they confirm they’ll be purchasing all materials

3. Schedule

   • Have they noted how soon they can start the project if awarded?

   • Is there any mention of the number of weeks it will take to finish the project?

   • If so, does that differ from the start and finish dates on the project schedule included in the construction documents?

4. Payment Terms

   • Are their payment terms mentioned? Is it less than 30 days? More than 30 days?

   • Have they listed their payment schedule? Does it align with project milestones?

   • Are progress payments based on performance (completing milestones) or are the listed by calendar date?

   • Do they mention if an initial deposit is required? What is it? 10 or 20 percent is normal.

   • What do progress payments look like after the initial deposit is paid?

   • Have they separated 5-10% of the payment schedule for deficiencies and project close outs?

   • Do they stipulate how they’ll handle change orders? What markup percentage will be added to any change orders on the project?

5. Project Team and Working Hours

   • Did they include a list of team members who will be assigned to the project?

   • Did they include a CV/Resume with each of those team members’ project experience? Must haves for ICI construction and residential developments.

   • Have they stated their working hours? Are they normal working hours?

6. Subcontractors

   • Do they state they’re self-performing any of the work or are they exclusively using subcontractors?

   • Have they listed each of the subcontractors being used? Do the subcontractors have WSIB clearance and General Liability Insurance?

7. Workplace Health and Safety

   • Do you have a copy of their WSIB Clearance certificate? Is it current? When does it expire?

   • Do you have a copy of their General Liability Insurance? Is it current? When does it expire?

   • Are the any exclusions related to site cleanup? Who’s responsible?

8. Inspections and Warranty

   • Have they confirmed they will be assuming the responsibility of coordinating all inspections (Building, ESA, Fire Marshall, etc.)?

   • Are there any conditions limiting their warranty obligations?

I cross reference each one of the contractors quotations asking myself these very same questions.

I look for missing information, if the information provided is unclear, or if they’ve included things that do not align with my expectations or the construction documents. If anything is amiss I follow up with each contractor requesting clarifications and/or a revised quotation.

This process in Project Management is referred to as “bid leveling”.

Essentially, what I’m trying to achieve through this process is level the playing field; create an apples to apples comparison, rather than trying to comparing apples to oranges.

It should never just come down to who has the lower price. The old saying “you get what you pay for” is true.

Bid leveling is about ensuring that the contract you sign with the General Contractor has minimal gaps. The questions above are meant to do just that. For example, without proper due diligence I may find out after signing the contract that it excludes the cost of material delivery. Or that an alternate finish of lesser quality is being supplied.

Both of these examples could attribute to that contractors lower price. Compare that to the next lowest price which includes everything that was requested. That could equate to thousands of dollars in change orders because bid leveling was an afterthought.

I think I’ve stressed the importance of “bid leveling” for long enough, so once you’ve determined that you created a level playing field (apples to apples), it’s time to select and award a General Contractor the project.

How much weight you give to certain aspects (ie: price, experience, qualifications, etc.) is entirely your decision. When you are ready to award a contractor this will likely be your one and only opportunity to negotiate. It doesn’t necessarily have to be their price which they are under no obligation to reduce. It could be payment terms. It could be a request to use a different member of their team that someone referred to you.

I’m not going to go into the subtle tactics of negotiation, but if you can save yourself a bit of money, that’s great on you. If there are any terms changed from negotiating ensure these are documented and included in the contract before awarding them the work.

When you are ready to award the General Contractor there are a couple of ways to do this

. Some contractors will ask that you sign and return their quotation to get the process started. Another way is that you email them a Letter of Intent stating that they are being awarded the project at “x” dollar amount (excluding HST) based on their quotation, dated “x”, to get the process started. Others will have a formal contract (you may have your own formal contract) that needs to be reviewed and signed by both parties before they start working on anything related to the project. It depends how stringent they are.

In Know These Construction Contract Terms, I listed 20 construction contract terms and what questions to ask or actions to take. Here is a quick recap of all 20 terms mentioned.

1. Budget (Estimate)

2. Building Permit

3. Change Order

4. Construction Documents

5. Contract Type

6. Deficiencies (Punch list)

7. Holdback (Construction Lien Act)

8. Payment Schedule (Progress Draws)

9. Procurement

10. Progress Update (Communication)

11. Schedule

12. Schedule of Values

13. Scope of work

14. Specifications

15. Substantial Completion

16. Statutory Declaration (or Lien waiver)

17. Substantial Performance

18. Warranty

19. Working Hours

20. Workplace Health and Safety

One additional item not included in the above list, which requires a separate discussion with legal counsel, is the termination clause. My brief summary (not legal advice) is that this clause clarifies under what circumstances a contract can be terminated by the client (you). The contractor’s failure to perform, force majeure (ie: COVID-19), and lack of financing for the project are three different reasons that may result in the termination of a contract. To summarize, the reason must go to the root cause of the contract, and the root cause is an agreement to construct a finished space.  

Continuing on, all documentation from the bid process should be included with the contract as an appendix or schedule. Documentation means the original quote, subsequent revisions, bid leveling correspondence, construction documents, letter of intent (if you emailed one) and any other relevant information.

When it’s referenced in, and attached to, the contract that documentation forms part of the contract. 

Once the contract has been reviewed and signed by both parties it’s time for the real work to begin on site, and that’s an entirely different topic for an entirely different blog.

Depending on the magnitude of work required in your project this process of finding a General Contractor, qualifying a General Contractor, and reviewing and comparing bids/quotations from General Contractors may seem like a daunting task.

…If you don’t know what questions to ask or actions to take.

But now I have shown my own step by step process that I’ve used for several years in the commercial construction industry. With experience, this process becomes more efficient and far less stressful; eventually becoming second nature.

Remember, it all starts with having solid team of trained professionals, and a plan.

Ask questions, obtain answers, and start taking action.

Alas, we have come to the end of this riveting subject.

Hopefully, I’ve given you a new found confidence for finding, qualifying, and hiring a General Contractor on your next renovation project. You definitely have the tools!

I hope that you enjoyed this process and Infinite Design Services looks forward to working with you in the future. Look out for more quality content in the coming weeks, months, and years.

Bon voyage!