NEVER HIRE THE CHEAP GUY
TOP 5 REASONS TO NOT HIRE THE LOWEST BIDDER
I’m going to address the elephant in the room here first, the simple fact that I am writing this post is a conflict of interest. I have a construction company and I am rarely the least expensive contractor, roofing, foundation repair guy, vinyl siding guy, the whatever guy. Believe it or not, it’s not because I’m greedy, to run a successful business that can hang around for more than a few years you must be profitable. When I talk to other people in the industry, I always admin that my specialty is business and construction and all of the other trades are a secondary trait. So please, allow me to delve into this rabbit hole and shed some insight and hopefully I am able to help you decide which contractor you should hire for your next project whether it’s a full house remodel, a new roof, roof repair, vinyl siding install, custom deck, or a foundation repair.
The Administrative Side
We all know that running a business comes with costs, many times these guys that are running in and under-cutting at these incredibly low prices do not have these administrative costs associated with a professional, well rate & reviewed, roofing company or whatever type of contractor / construction company you’re looking to hire. These costs can pop up quick and they don’t go away. We’re talking about things like the following that are typically not in play when you’re dealing with a low bidding construction company. It’s not to say they’re not reputable guys, they just might not be fully established to be able to afford these items yet.
General Liability Insurance: This is the insurance that stops your contractor from having to sue you if they fall off of your roof or if something on the job goes wrong, let’s say they’re cutting a tree down and it takes out your neighbors house on accident. You’d be liable in that situation and you could certainly be sued but if your contractor is insured then everyone is covered.
Errors & Omissions Insurance: This insurance covers your contractor from failures of omissions, this is a risk management type of insurance to handle non-physical liability items. For example if a mold remediation contractor failed to disclose something during the process and later down the line it stopped you from being able to sell your house properly or it caused delay in your home being sold, then this insurance would cover them.
Worker’s Compensation Insurance: We all know what this insurance is for, if a guy falls down on the job and snaps his elbow in half he won’t be able to work. This insurance makes sure his medical bills are taken care of and that he’s able to receive some income during recovery. This is by far the most expensive insurance, in New York the cost of this insurance for a roofing contractor is $35 for every $100 in labor. Which means a $20 /hr roofing companies employee actually costs the roofing company $27 /hr (it’s actually higher).
Social Security: Social security also requires the company to pay in along with the employee. These costs can increase the overall expense of one hourly employee by 40%.
Taxes: Self employment tax rate or other types of taxes roofing companies pay can easily be 24% or higher on their profits. That means if we make $1,000 on a job, we’re really only making $750.
Other Expenses: A construction company like ours has a lot of other expenses as well; Equipment acquisition, tools, clothing & uniforms, branding, logo creation, website development, depreciation of vehicles, maintenance, lease & rent, utilities for office space, training, etc.
That being said, to properly succeed as a business, these items need to be covered and the company has to still make a profit large enough to be worth the amount of work the owner is putting into the company. I wake up early every day, and work late every night. 12+ hours a day, no weekends off. Successful company owners work tirelessly to ensure the success of their business and to make sure everyone that relies on their business is in a safe and secure job.
Quality of Work & Materials
I’m not saying that all contractors will skimp and cut corners when they’re price is low but it certainly makes it difficult to provide an excellent end product when you do not have enough money in the budget to do things the right way labor is expensive whether they’re using on the books guys or paying them cash under the table, it still adds up and no one will work for free. This means jobs need to be done quickly and in-expensively. You may not notice it but the types of things that are cut during the rush to finish on time are the things that will give you the biggest headache down the road.
Let’s use a new shingle roof install as our example here. You can mess up the shingles and miss nails, etc but the roof might not leak for a long time. The big thing you’re going to seen skimped on is flashing. Flashing at end walls & dormers, pipe boots, chimneys, etc. These are the time consuming portions of a roof replacement and they can be expensive when considering material costs as well. Ice & Water shield is a product that is required by code in NY State that goes along the bottom row of your roof under the shingle layer. This stuff is EXPENSIVE! If you’ve ever had an ice dam on the end of your roof and then when it began to melt, you got water inside your walls, ruined drywall, bubbling latex paint, and even mold. The reason is because you did not have this product installed and it is CONSTANTLY skimped on because it is so expensive.
There are in-expensive guys that don’t cut corners but you’ll be able to tell those guys apart. Use your best judgement and don’t just go with the guy that has the lowest bid because there truly is a big difference between “What is the project going to cost me?” and “How much money is the project?”. If you pick the wrong guy, you’re looking at more time wasted, and potentially much more money if it has to be re-done.
Marketing & Branding
There is serious power in a brand, both on our end as the company with a powerful brand but when you, the consumer is looking for a company. The reason is because when you have a properly branded company there is a massive amount of accountability. We have a ton of time and effort invested into our company, the name, and our reputation. Not to mention everyone knows who we are and it’s incredibly unlikely a well branded company is going to walk off the job, do bad work and not fix it, or worse. There’s too much on the line. I referred a home owner to another contractor because the scope of the job wasn’t something that we typically get involved in and they messed the job up, we weren’t legally liable for the repair but we fixed the job because our name is important and we did not want to have anyone associate a negative mental image with our company and our brand.
Money & Finance
Our company is always expanding and what that means when it comes to the money is that we are always re-investing our revenue back into the business to make ourselves better, better equipment, new trucks, ladders, tools, training, pay raises for our contractors, creating an environment where everyone involved in our company has a vested interested in ensuring our company is perceived in the best way possible. This is not a trait or strategy unique to our company, most of the well known companies implore this methodology of expansion and bettering their company.
Our guys are incredibly loyal, they all love the company and love where they are within the company. This means that the guys we send out to customer homes are going to take excellent care of the home owner and provide an excellent finished product. When you’re not charging enough for your jobs, you can’t pay your guys as well and your guys don’t have as many of the benefits that they deserve, they simply don’t care about the company and they see the company as a pay check. They have no accountability and companies like this have a high employee turn-over rate and you’ll see this when different guys show up throughout the project and try to figure out what the last guy who quit was doing.
Feasibility & Warranty
Here’s an easy one, if you realize half way through the job that you did not charge enough and that you’re losing money. You’re going to be a frantic finisher, corners will be cut, and even cutting corners you might walk away breaking even or at a loss. From there it is a downward spiral, if you rushed the completion of the job and you now have the home owner calling you for warranty work, you’re probably not going to go back. This is why you as a customer need to make sure that the company you’re hiring is financially stable and that they are charging enough for the job. There are tons of construction workers, guys that are excellent at what they do and always do a good job but those are construction workers. In our company at least, doing the work is the EASY part, running the company is the difficult part. Business is not easy and companies that are just starting up like to offer “FREE ESTIMATES” and “WE’LL BEAT ANY PRICE!”
If you see those words, run in the other direction. A good contractor is always busy and they don’t beat any price, they don’t care what the other guy is charging. A good construction company knows what their numbers are, they know how much they need to charge to break even, they know how long their warranty period is, and they know how much money they need to charge to hit the company profitability goals needed to succeed as a company. Some bigger guys still offer free estimates, our free estimates are done via email and over the phone, we charge a consultation fee to stop out and provide an estimate if necessary which we wrap into the project invoice if we are hired.
A construction company and those that work in the company are specialist, many guys have 10+ years of hard earned experience and they should be paid for it, it’s a skilled trade and our customers understand and respect the knowledge we bring. Overall, like I’ve said before; use your best judgement and make sure you’re not under-paying your contractor.