How contractors get jobs?

From the very beginning, all contractors want to be your friend. They tend to assume there will be competition, and so they know the best way to be selected as your construction contractor is to have a combination of:

  • Good Rapport
  • Good Referral(s)
  • The Best Price

Contractors tend to not rely heavily on referrals because they know too many situations can go wrong during a project. Once construction is complete, the chance of a contractor walking away with a good referral diminishes because owners tend to remember the headaches or are just ready for the process to end. As a result, contractors tend to do what they need to get the job done in accordance with their work ethic and they do not rely on working for the great reference. At the same time, contractors sometimes see a good referral as a way to increase the price.

I’ve seen owners tell the contractor that they are the only bidder, only to wonder why the price is higher than they had budgeted. In order to receive the best price you must inject competition into the equation. Competition is the great equalizer that ensures contractors have incentive to keep their pencils sharp.

In the face of competition, contractors know that the best chance they have to get the job is to have the best price. However, there’s a catch and contractors know it. Not all bids are equal. Since people generally think that the contractor with the best price is guaranteed the job, contractors try to make theirs the lowest bid, sometimes with some unsavory strategies.

The perfect contractor does well in all three areas with great rapport, super referrals, and a fair and reasonable price. Most contractors tend to perform well in one or two areas, but may fall short when it comes to the third. It is up to the You, the owner, to decide which attribute is most important. But you must be careful in deciding which aspects outweigh the others.

Like the balance in the figure on the right, if the owner places significant weight on rapport and a good referral on one side, the contractor has little incentive to have the lowest price possible on the other. Or, if the contractor comes with the lowest quote for the budget, the owner may be more willing to overlook character flaws or negative reviews from the contractor’s previous clients.

In the end, the best way to make sure contractors are giving you their best price be courteous while not too friendly; be casual about referrals; mention the other anonymous bidders, and always negotiate.

Here is more about how contractors cut costs to win the contract.

© 2012, RCartright. All rights reserved.

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