So you have a set of plans for your new house and you have no idea what to do next…

Whether you have purchased pre-drawn (or “stock”) house plans online or you have worked with a design professional you are, first of all, going to want to simply sit down, roll out those plans, and read them thoroughly for yourself. Now, you may not understand all the technical details but you will certainly gain a general enough familiarity with the design by doing this. You will also learn some construction language which will make you feel more confident when speaking with your contractor throughout the building process. Our goal here is to put you at ease and give you the confidence to take on a house build. New House projects are taken on every day by people just like you. You’ve got this. Here at Small House Works, we have over 30 years combined experience in the Construction Industry so trust us when we say, the next steps we’re about to talk about are arguably the most crucial in the entire process.  

We’re talking about getting a construction cost you feel comfortable with and finding a contractor you feel comfortable with.

Let’s get into it…

The following is a general step by step guide to help you get started:

Obtain at least 3-4 competitive bids from Contractors

The bid should include:

• At the very least a minimum itemized breakdown of the project costs i.e. excavation work, concrete work, rough carpentry (framing), finish carpentry (mill work, etc), plumbing, electrical, mechanical, tile work, sheet rock/tape & spackle, insulation, roofing, siding, doors & windows and hardware, floor finishes, and so on. Since you will be comparing the bids you receive it’s important that the Contractors are itemizing exactly the same way. To ensure you receive bids you can easily compare we recommend using a simple “Bid Form”. Basically, a Bid Form is an itemized list of all the major components of a construction project. The Bid Form requests that the Contractor bidding on the job provide a cost breakdown for each of the components.
• Obtain at least 5 references from past projects of similar scope. It’s important that the Contractor you hire has good working knowledge in Residential Construction.
• The contractors should receive the construction documents (plans) from Owner electronically (pdf). Serious Contractors should not have a problem with printing/paying for a set of documents for their own use during the bidding process.
• Contractors bidding on the project should be made aware by the Owner that a Construction & Payment Schedule will be required upon signing the Contract. An approximate indication of how long the project will take to be completed should be included in the Contractors Bid.

Here is a Sample General Bid Form  Download Sample

  You may alter or amend it to suit your needs.   It can be a lot more detailed and complicated if your project requires it to be, for example, a line item for a cost per linear foot of copper piping or a cost per cubic yard of concrete.  

• Obtain at least 5 references from past projects of similar scope. It’s important that the Contractor you hire has good working knowledge in Residential Construction.
• The contractors should receive the construction documents (plans) from Owner electronically (pdf). Serious Contractors should not have a problem with printing/paying for a set of documents for their own use during the bidding process.
• Contractors bidding on the project should be made aware by the Owner that a Construction & Payment Schedule will be required upon signing the Contract. An approximate indication of how long the project will take to be completed should be included in the Contractors Bid.
• For each payment installment, a notarized “Partial Release of Lien” Form is to be submitted to the Owner by the Contractor and all Sub Contractors related to the indicated payment. The Partial Release of Lien Form is directly related to the Payment Schedule and the Owner should always have this in-hand before handing over a check payment. The Partial Release of Lien Form offers protection in the event a Contractor or Sub Contractor claims he or she has not been paid. This form is supplied by the Owner & should be included in the contract documents.

Here is a Sample Partial Release of Lien which, like the Bid Document, you may alter or amend to suit your needs. 

REVIEWING THE SUBMITTED BIDS

• Ask questions! Address differences in contractor bids, compare apples to apples, be cautious of numbers that appear very low or very high. Large differences between bids or in individual line items should set off an alarm.   Who knows, it may just be a simple typo that needs correcting.  Do not be afraid to ask.
• Remember,  you are in the driver’s seat &  it’s your money… so negotiate to get the costs where you need them to be while maintaining the integrity of the design.  

THE SIGNING OF THE CONTRACT

• By now, you’ve crunched all the numbers, asked all the questions, and chosen the best fitting Contractor for your house build. You should be happy with the quote you received and have a good rapport with the Contractor.
• Make sure your selected Contractor is properly licensed and insured. Average Contractor Liability Insurance for Residential Projects is $1,000,000. This is a good time for you as the Homeowner to also consider additional insurance for coverage during the construction process i.e. damage, theft, liability. Speak to your Insurance provider about your options.
• The Contract documents package should consist of a finalized contract supplied by the Contractor with reference to the Bid Form & a List of Drawings from the Construction Documents, a finalized Construction Schedule & Payment Schedule from the Contractor, Insurance documents from the Contractor, & the Partial Release of Lien Document supplied by the Owner. All documents should be referred to in the contract that you will be signing. These individual documents associated with the Contract are generally titled referred to in the Contract as “Exhibit A”, “Exhibit B” and so on.
• The initial payment to the Contractor will be due upon signing of the contract. This amount is typically 10-15% of the project & it should be indicated in His/Her Contract. This payment is known as “Mobilization”. The payment will allow the Contractor to place orders for some initial supplies and materials needed to get the project going (Mobilized). The first notarized Partial Release of Lien should be supplied to the Owner from the Contractor at this time.

We hope you can see from this post that these initial steps are crucial! Hiring the right Contractor & taking your time to do this part of the process correctly can help alleviate a lot of the stress of the unknown you are about to embark on.

It’s very important that you feel comfortable going into your house build.

Has this information helped answer questions you have about the bidding process? We would love to hear what you have to say.

Are you looking for a House Plan to jump-start the process?

Why not consider one of our pre-drawn/stock house plans?

Just check out our “Designs” page here on our website.

Coming up next in this Blog Series…..

We’ll get into some alternate ways to manage the building of your new house.  From how to act as your own General Contractor to taking on the job of Construction Manager (and potentially saving a ton of money in the process!) Are you up for the task?