Our Process

Getting to a Contract: Bidding versus Negotiated Contract

Construction is not an industry known for its reliability in pricing let alone transparency. Unlike most other companies, we provide detailed fixed price estimates in which we share our underlying costs. We challenge you to find a company that is more detailed or transparent in its pricing, regardless of whether you are looking to bid or have us involved earlier in the process and negotiate a contract.

Bidding

Bidding follows a traditional and straightforward approach to reaching contract pricing and we gladly bid against other general contractors. All we need are detailed plans that should include window and door specifications, an electrical plan, details about finishes, and any engineered drawings where applicable. When the plans include these details, they typically have everything else we need for accurate contract pricing.

The obvious benefit of bidding is that you’ll have comparative quotes from competing firms typically within two or three weeks. As long as the specifications are clear and complete, you’ll have the basis for a good comparison among bidders. From our experience, the main drawbacks are that design can often get ahead of pricing with bids coming in over budget and that value engineering opportunities, through plan review by the general contractor and sub-contractors are usually missed. If you or your architect has a good grasp of construction costs, bidding is a good way to go.

Negotiated Contract

If you’re early in the process, you may want to considerer a negotiated contract in which the general contractor is selected during the design phase. Together, the owner, architect, and general contractor work as a team to develop the project and since the general contractor is involved earlier on, pricing and value engineering are available each step of the way which is particularly useful to owners who are trying to balance design within an established budget. Our Negotiated Contract process typically takes months rather than weeks, has three clear steps, and is intended to keep design from getting too far ahead of budget.

Step #1 - Preliminary Pricing

This is “ballpark” or what we’ve called “should we continue the conversation” pricing. This will be based on comparing your ideas or plans to previous projects and is intended as a way to begin the conversation about costs. The point here is to cut to the quick and avoid letting design get too far ahead of budget. Preliminary pricing will not be very detailed and will typically cover a cost range.


Step #2 - Letter of Intent Pricing

It’s at this point that we really roll up our sleeves and look at the project piece by piece and develop an estimate that will outline the costs by phase. Our rule of thumb is that this round will provide you with a cost estimate typically to within 10% of the final, fully specified project. At the same time we will start a list of questions that need to be answered and selections that need to be made in order to progress to Contract Pricing. Letter of Intent pricing tightens the focus, breaks out costs in up to twenty five categories, and provides a combination of allowances and hard numbers for specified materials. It is upon acceptance of this round of pricing that we ask for a deposit and ask to sign a Letter of Intent to work together. The Letter of Intent along with the deposit will hold a place in our schedule and gives us the go ahead to work with you and your architect to develop the plans into final construction drawings.

Step #3 - Contract Pricing

This is the fixed price cost for the scope of work outlined in the final construction drawings and specifications. This price will not be exceeded unless you approve work outside of the scope of the contract. At contract signing we will apply your deposit to the first scheduled payment. If you choose not to sign the contract we will refund 50% of the Letter of Intent deposit.

The process has 3 clear steps and 3 clear points at which to proceed or not. In the best case scenario we’ve helped to value engineer the project and been included in a way that promotes a partnership that leads to the best possible project. Pinneo Construction is not in business to be a consultant, but in a worst case you will have received a great deal of value in our good faith estimates and frank and opinionated discussion that many feel make us good partners in the design intent. If you’re looking for input from a qualified general contractor or are unsure of construction costs, a Negotiated Contract is a good way to go. Bidding and negotiated contracts each have their benefits and we’re comfortable with either approach. We simply ask, that from the outset, we have a clear understanding of which path you’d like to take.