Worked example · Houston, Texas
Three bids, forty thousand dollars apart, for the same house.
How we read a renovation estimate, what the spread actually means, and the line items where the money quietly leaves.
A worked example, not a client file. The house, the bids and the numbers are illustrative and chosen because they are typical of the corridor.
A 1960s ranch inside the Beltway. Twenty-two hundred square feet, original kitchen, one bathroom down to the studs already, a roof with maybe three years left. The plan is a full cosmetic renovation plus a bathroom addition, then a sale.
Three general contractors walk it. The bids come back at $118,000, $142,000 and $157,000. Most people take the middle one because the low one feels risky and the high one feels greedy. That is not reading a bid. That is picking one.
The spread is information, not noise
A forty-thousand-dollar spread on the same scope means the three contractors are not pricing the same job. Before comparing a single number, we make them comparable.
- 01Normalise the scopeOne schedule of work, line by line, in the same order for all three. Anything a bidder excluded gets added back at someone else's price so every total covers the same house.
- 02Separate allowances from quotesAn allowance is a guess with a number on it. Tile at $4/sq ft, appliances at $6,000, fixtures at $2,400 — those are placeholders, and they are where a low bid gets its low.
- 03Price the exclusionsPermits, dumpsters, portable toilet, temporary power, final clean. Cheap individually, four to seven thousand together, and routinely left off.
- 04Test the schedule against the carryTwelve weeks and twenty weeks are different deals. At a typical hard-money rate the extra two months can cost more than the gap between two of the bids.
- 05Check the contingency is realOn a sixty-year-old house, ten per cent is optimistic. We budget fifteen and hope to hand it back.
- 06Read the payment scheduleFront-loaded draws transfer risk to you. We want draws that trail completed work, with a retainage that survives to the punch list.
A low bid is not a cheaper house. It is usually the same house with fewer things written down.
Where the money actually leaves
Once the three are on one basis, the $118,000 bid became $139,000 — allowances at realistic numbers, permits added, and a twenty-week schedule instead of twelve. The $157,000 bid became $151,000, because it already included the things the others left out. The real spread was twelve thousand, not forty.
That is a decision you can make. Forty thousand is not — it is three documents describing three different projects.
What we do on a renovation, in practice
- Walk the scope and write it once, so every bidder prices the same thing.
- Solicit and level the bids, including the exclusions nobody mentions.
- Select the contractor on schedule certainty and crew availability, not price alone.
- Hold the draw schedule, inspect before releasing, keep retainage.
- Weekly reporting: where we are, what is next, what it costs.
- Change orders priced and approved before the work, not discovered on the invoice.
The same discipline scales
Nothing above is specific to a cosmetic renovation. A ground-up build has the same structure with more line items and a longer schedule: normalise the scope, separate allowance from quote, price the exclusions, test the programme against the carry, and hold the draws against completed work.
If you have bids on your desk and cannot tell whether they describe the same job, send them. Levelling three bids is a couple of hours of work and it is the cheapest hours in the project.