If you’re planning to build or renovate your home, it’s beneficial to understand some key terms before hiring a contractor. Whether replacing your windows or updating your home with new siding, every project will require an estimate, quote or bid before work can commence. Understanding the differences among these terms will help you confidently compare prices and find the right contractor for your renovation.
What is an Estimate?
A written or verbal estimate is a rough idea of what the contractor thinks the job may cost. We recommend obtaining a minimum of three estimates to help determine the overall cost and extent of work required. Keep in mind the final cost will often be within 10-15% of the estimate.
What is a Quote?
Once you have narrowed down a contractor to move forward with, obtain a written quote. A quote is more exact than an estimate and is legally binding, and it should include a detailed breakdown of labor and material costs and an anticipated completion date. After accepting a quote and signing the contract, the contractor must complete the work at the agreed-upon price unless the contractor has stated that cost increases may occur if the project scope changes.
What is a Bid?
Bids are more common in the construction industry. If hiring an architect to design a home or building, you can solicit bids from contractors to execute the design. A contractor will prepare a bid in the hopes of being awarded your project. The bid will contain more information than an estimate or quote and include an offer to take on the project. The outlined cost will cover the total cost of the building structure and the money required for subcontractors.