Does the old saying, “you get what you pay for” ring a bell? It is true of most things in life, and definitely applies to construction projects and hiring a general contractor. In our last blog, we laid out a Checklist for Hiring a Reputable General Contractor and listed a few red flags, one of which being an extremely low bid. But what could a low bid secretly signal?

The work may be less efficient

When you sign a contract or bid, you agree to the terms and estimated pricing for your project.  A thorough general contractor will take the time in preconstruction to understand the conditions of a project and site and account for most, if not all, of the work up front to reduce any changes made during the project which would cost the project owner more money. A cheap general contractor may submit a bid that looks attractive up front, but they likely haven’t gone through the necessary investigation and diligent preconstruction process. Instead, they will submit multiple change orders during the project that may cost the project owner more in the long run than if they hired a more “expensive” General Contractor from the start. Change orders cause delays in the project and will cost the project owner more money, so it is best to do due diligence from the start and hire and General Contractor with fair, but honest pricing.

Lower quality work

A low bid could also be a sign of cheap materials and/or an inexperienced General Contractor. A contractor with ample knowledge and experience knows what materials are best in quality and has relationships with suppliers to get fair pricing. A contractor who offers lower prices up front may use lower-quality materials and/or cut corners in their work. The consequences of using lower quality materials can lead to serious structural issues that require extensive repairs in the future, ultimately costing the project owner more in the long run.

Potential for legal and safety issues

Proper insurance, licensing, and safety training are important and necessary investments for General Contractor to facilitate a successful project. If a contractor does not have the proper licensing or insurance, the project owner may be liable for any accidents or damages that occur during the project, which can lead to significant costs and legal issues. Always require proof of insurance and licensing before hiring a General Contractor and ask for their Experience Modification Rate (EMR) to demonstrate their commitment to Safety.