Two estimates for the same job can be thousands of dollars apart, and the lower one is not always the cheaper job. The difference is usually in what each estimate leaves out. This guide covers what a complete estimate lists, how to compare two of them line by line, and what to ask before you sign.
What a complete estimate lists
- The scope of work, written clearly enough that another contractor could price the same job from it.
- Materials, with brands or grades where they matter, not just "standard" or "builder grade."
- Labor, either as its own line or clearly included in each item.
- Permits, and whose name they will be pulled in.
- Site prep, demolition and hauling away debris.
- Allowances, each with a dollar amount, for anything you have not chosen yet.
- A payment schedule tied to finished stages of the work.
- A start date, an expected duration, and how changes will be priced.
Fixed prices and allowances
An allowance is a placeholder amount for something you have not picked yet, like tile or light fixtures. Allowances are normal, but a low one makes an estimate look cheaper than the job will turn out. If one bid carries $1,500 for tile and another carries $4,000, the two bids are not comparable yet. Ask every contractor to use the same allowance amounts so you are comparing the same job.
Where two bids usually differ
When estimates are far apart, the gap is usually work one contractor priced and the other did not: site prep, disposal, permits, or repairs that only show up once walls or floors are opened. Ask every bidder to price the same list, and ask how they handle surprises. The answer you want is that they stop, show you the problem and price it in writing before going further.
Who does the work
Many contractors hand part of a job to subcontractors. That is normal, but it changes who controls the schedule. Ask which parts their own crew does and which go to someone else. Some builders keep most of the work in house. Example Home Builders, for instance, runs its own crews for site work and framing, so the early stages of a build stay on one schedule.
Licensing and insurance
Each state sets its own licensing rules, and many require a licensed contractor once a job passes a set dollar amount. Look up the contractor on your state's licensing board website and check that the license is active and covers the type of work. Ask for proof of liability insurance as well.
Questions to ask before you sign
- What is your license number?
- Who is pulling the permit, and in whose name?
- Which lines in this estimate are fixed prices and which are allowances?
- Which parts does your own crew do?
- How will you handle and price a problem you find once work starts?
Get the answers in writing and attach them to the contract.