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Are You Thinking Cheap or Seeking Value?

A frequently asked question by a client to a builder is “What is the proposed price?”. All of us want the best deal and want to stretch the dollar as much as possible. No one wants to spend more than necessary. Money is obtained through hard work and in return the money must work hard for us. This mindset is reasonable. Regrettably, many people do not distinguish between cheap price and best value. If you understand the difference between the two, then you would choose the best value rather than the cheapest price.

A simple analogy would better exemplify the difference:

Consider a new car buyer who contacted Dealer A and Dealer B. The buyer wants a black 4-door Toyota sedan. Dealer A and B proposed $25,000 and $40,000, respectively. At face value, Dealer A’s price is CHEAPER than Dealer B. Upon detailed analyses, Dealer A is offering a basic Toyota Corolla, while Dealer B is offering a fully loaded Toyota Avalon 4WD. Both cars are black 4-door Toyota sedan per buyer’s request. But that’s where the similarity ends. A basic Toyota Corolla should only sell for $15,000. Dealer A’s price is not so cheap anymore once a proper comparison is made. Whereas, a fully loaded 4WB Toyota Avalon can sell for $47,500. Now Dealer B’s price seems to be an absolute bargain! A choice shall not be determined based on the cheapest price alone, because cheap price can be misleading. A savvy buyer would want the best value not the cheapest price.

The above example seems logical to many people reading this article. It is a no-brainer! Interestingly, the logical mindset does not transfer when most people (including our readers) selects a builder. Building a house or renovating a house is a much more complex task than shopping for a car. There are many technical matters that must be thoroughly examined. A simple cheapest price selection would not bring the best value for the client.

Comparisons must be made on an “apple-to-apple” basis.

There are four points for clients to consider in determining the value offered by builders:

  1. Builder’s scope of services

  2. Materials used for the project

  3. Builder’s background and experience

  4. Builder’s PAC (Professionalism, Availability and Communication)

Builder’s Scope of Services

True or False: Builders looking at the same design plans should arrive with the same exact conclusion on the scope of services, hence, the only thing to be compared are the builder’s prices. False. It is a misconception leading to the automatic selection of the cheapest priced proposal. Alas, the reality is most builders make some interpretations and assumptions in making the proposal, because even the best-intentioned architects and/or designers do not draw the “perfect” plans. A design usually involves various trades, including but not limited to, architect/designer, structural engineer, Title 24 engineer (in California), landscape architect/designer, interior designer, and MEP engineer. More complicated project means more trades involved in the design phase, so ambiguities, discrepancies, and even outright mistakes are bound to happen within a design.

Consequently, builders’ proposed pricings are not automatically comparable. The details of the proposals must be analyzed thoroughly. Recently, this writer encountered a design plan with discrepancy between architectural and structural plans. The architectural plans called to use the existing garage slab, which is 4” thick and to apply membrane over it. Yet in the same set of plans, the structural engineer called to remove the existing slab and to pour a new 8” slab. This is a huge discrepancy. The proper builder would ask questions to clarify the discrepancy. Yet too often, builders facing this situation, in order to give the cheapest price, would go with the work that cost less money, in this case, the architectural plan. Then in the midst of the project, if the city inspector mentions the discrepancy, the builder would charge the client with an expensive change order while correctly stating that the proposed pricing reflects the architectural plans. The issue can easily be avoided if the client had truly understood the builder’s scope of service, instead of just choosing based on cheapest price alone. This is only one small example on a small ADU project. A larger project may have more discrepancies potentially creating a larger impact on the overall budget. The devil is in the details. Clients ought to love the builder who asks many questions on the plans before submitting a proposal.

Materials Used on the Project

A savvy client should also pay attention to the materials being included within the builder’s proposed pricing. Remember the above analogy, a Corolla is very different from an Avalon, despite both cars are 4-door Toyota sedans. A ceramic tile is very different from a granite tile, despite both are tiles to be used on the countertop. Then again, a 24 x 24 marble tile is very different from a 100 x 220 seamless marble slab, although both are marbles. Size does matter. A 40-ounce carpet without padding included is quite different from a 64-ounce carpet with memory foam padding. Both are carpet, yet the pricing is markedly quite different. It is essential for the client to know every material detail of the builder’s proposal in order to obtain the best value, instead of settling with the cheapest priced proposal. Again, clients want to have builders who ask specific questions to the details. These questions show the builder’s deep commitment in giving the best value for the client.

Builder’s Background and Experience

An ancient Jewish writing mentioned that there are wise and foolish builders. The foolish builder built the house on a sand and it got washed away when the storms came. The wise builder built the house on a rock and it stood the test of time. A modern interpretation can be made that a project can be built by any builder, but the results will only be as good as the builder. It may take some time to realize that one builder’s product is better than the other. But the time of reckoning will come when a project is built by an inexperienced and corner-cutting builder. About 2 decades ago, there was a violent earthquake in Taiwan. Many buildings collapsed easily while others stood strong. As officials went over the rubles, they found out that many collapsed buildings had “hollow” walls (CMU that has not been filled with rebar and concrete). No one knew the builder cut the corner until the day of reckoning comes. It is essential to put value in a long-term perspective. A builder with proper background and experience will ensure the long-term viability and integrity of the project. It won’t come at the cheapest price, but it will definitely come with the best value.

Builder’s PAC (Professionalism, Accountability and Communication)

General Contractor is a General Con. It is quite a witty phrase, but it is quite sad as well, especially if one is a builder. Yet the saying has its merits. The building industry as a whole can definitely improve on Builder’s PAC: Professionalism, Accountability, and Communication.

Builders ought to be responsible in presenting a professional image through their word choices, dress code, tone of voice, and punctuality. Professionalism is an attitude that everyone can choose to have even in the toughest of circumstances. Builders are rugged and tough. They often work under extreme temperatures, carry heavy loads, perform tasks under time and cost pressure, and surrounded by dirt and grime. Yet, through it all, good builders must be able to show their professionalism toward their clients.

Accountability is an aspect many builders can improved on. Every builder needs to be accountable for every work performed. There is no two way about it. Builder’s accountability leads to reliability, integrity, and availability. Builder’s accountability does not lead to cheap pricing that forces the builder to cut corner and sacrifice the work quality.

Last but not least, a communicative builder leads to contented clients. Effective communication means speaking the language in clear and concise manner. Builder’s ability to translate complex building works into simple layman terms to their clients will enhance the relationships between both parties. A weekly project report could go far in connecting the builder and the client. Above all, effective communication puts the client at ease by answering all of their questions and addressing all of their concerns. Builder’s PAC is priceless in sharpening the builder’s image and adds an incalculable value to the clients.

By now, the reader should be well aware of the difference between cheap price and best value. Take heed to avoid potential issues with the builder. Select builder who is able to thoroughly explain the content of a proposal, including but not limited to, scope of services and material selections. Encourage the builder to ask as many questions as possible to get better clarity of the project because it is a good sign that the builder is detail oriented. Check the previous project results of the builder and check the background of the principal and/or project manager. Some builder does not graduate high school while others have master’s degree in construction. Communicate freely with the builder to assess the builder’s PAC. By following the prescriptions above, a client would increase the chance of getting the BEST VALUE from a builder. Good luck!


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