In the development world, the first step in creating something is usually to field bids. After all, before you can progress with a project, you need to know how much it’s going to cost and how long it’s going to take. This involves taking a scope of work to multiple parties and submitting bid requests.
The problem many customers run into is a simple one: inconsistency. You might submit a bid request to five different developers and get back a wide range of figures. How do you know which ones are too high? Too low? Why are the materials costs so high for Company X, while the labor costs are higher for Company Y? Why is the labor rate for Company Z so much higher than everyone else?
There’s no limit to the number of questions you might encounter when diving into bids. To get the answers you’re looking for—and to make a decision you’re confident in—you first need to make sure you’re comparing apples-to-apples bids.
Apples-to-apples vs. apples-to-oranges
Chances are, you’re already familiar with the phrase “apples-to-apples.” It’s a colloquialism used to mean “like-kind” or “based on the same.” But what, exactly, does it mean in the context of developer bids—and by contrast, what is an “apples-to-oranges” bid?
In simplest terms, an apples-to-apples bid comparison is a side-by-side comparison of two project bids that represent the same scope, products, specifications, materials and quality of work. These bids will include the same line items across the board, allowing you to review cost differences for those line items across each separate bid.
Comparing apples-to-oranges bids, on the other hand, usually involves trying to decipher top-level costs or a bottom-line estimate. For example, Bid A might not include soft costs where other bids do. Similarly, Bid B might just have a single line item for labor, while other bids break it out into specific sub-costs. In these situations, it’s difficult to line up costs because they’re not presented the same.
What to look for in bid breakdowns
While every bid you solicit might look slightly different, they should all contain the same costing information, broken out in roughly the same way. In comparing apples-to-apples bids, you’ll want to make sure the depth of information and the clarification of costs are similar across each, as well. Here’s what to look for:
- Top-level cost segments (labor vs. materials), with sub costs thoroughly broken out
- Soft costs and peripheral costs, outlined based on expected demand and rates
- Payment and deposit terms based on the rates and fees of the developer
- Contingency rates or rate scales, to accommodate variability in budget or timeline
Alongside cost information, you’ll also want to do an apples-to-apples comparison of other important factors such as experience, insurance, project familiarity, etc. Again, the more similar the details of the bid, the easier it is to do a one-to-one comparison between bids.
How to assess apples-to-apples bids
Ultimately, the goal in collecting apples-to-apples bids is to be able to draw a line between specific costs across bids and understand why they differ.
Say, for example, you have three bids that outline surveying costs: $600, $1,200 and $2,000. In digging into the bids, you might find that the $600 is only for topographic surveying; meanwhile, the $1,200 bid includes ALTA/ASCM, topographic and construction surveying. You might also discover that the $2,000 bid includes all necessary surveying and reporting, done twice as fast as the other bids.
It’s also possible to break down differentiating bids at the cost level. For instance, Bid A might have labor costs at $150/hr., while Bid B might list them at $250/hr. This opens the door for further evaluation. You might find out that Bid B encompasses union journeyman, whereas Bid A focuses on general contractors. Depending on the demands of the project, this can sway your decision one way or the other.
In contextualizing these costs, you can make a decision about what, exactly, you need, want or expect from each developer. Likewise, it allows you to see which factors developers consider when budgeting, and where they might be more conservative or forward with their cost modeling. In short: you get a clear picture of what to expect depending on the bid you choose.
The key to accepting a bid with confidence
Accepting a bid with confidence comes down to evaluating all bids on a level playing field. If you have the certainty and surety that comes with a clear understanding of how various developers approach costs, you can choose the one that’s right for the project. It might not be the lowest bid or the most experienced company—rather, it’ll be the one you feel is best-equipped to provide value. Contact Sandbox today to learn more about apples-to-apples bids, and how you can greenlight your next project based on a bid that’s well-understood and distinguished from others like it.