Bid Packages for Speculative Homes?

Question

All,

Does anyone who is building a spec house create a "bid package" and send it out to the local contractors for bids? Anyone GC themselves and split it up (site work goes to one group, framing to another, etc) and have multiple bid packages?

Is it worth it vs. just calling a bunch of contractors and having them come out and take a look?

Scott Choppin · Answer

Hi @Benjamin K.

I would be happy to help guide you at a higher level, and then get into more detail if needed.

The way to approach this process is as follows (Edit: I see you have previous experience from your later post, use below as you need and if has value for you).

For now, we'll assume that your zoning is in place and works for your design.

1. Hire an architect to create your full set of CD's (Construction Drawings), with the component plan sections as follows: Architectural, Mechanical, Electrical, Plumbing, Structural, and (sometimes) Civil Engineering.

2. Inside your plan in the notes in various sections, or in a separate specifications book ("spec book"), you would (or your architect) list the various materials, paint, carpet, countertops, flooring, appliances, etc that you want the contractors to bid. You don't have to do a separate book. On smaller projects, normally the specs are integrated into the plans. Sometimes, when a developer knows what they want they don't have any specs, just the drawings to build, they supply the materials specs to the contractors separately, or sometime not at all when a contractor has worked with you a lot, they know how to bid it already.

3. Submit your plans and specs to general contractors to give you a bid, and tell them to bid "per plan and specs" so that when you receive bids, you are requiring them to bid the same package of plans/specs as everyone else.

If you don't have construction experience I would stay with using GC's. It will have a higher cost, but will allow you to observe an expert in action, see how they choose and manage subcontractors, and how the process moves along. Just make sure you pick the right GC, use your trusted network for referrals, choose a GC that has done your type of project before, check references including active build projects, and go see active build sites (look for clean, well managed site conditions). Do a few of those, and you can they start to think about managing the process directly using subs. My 34 years of experience is this: use a GC, free up your time to pursue more capital and more deals to work on. That's where the real value in the real estate development process is, not in the physical build out. You can hire folks to do that while you work on deals.

Hope that helps. I am an offer of help.

Thanks.

Josh Cuthbertson · Answer

Take a look at what? The land? How can any reasonable contractor give you a price without any plans? Plans would be the bid package. You have a plan set done already, right?

If you've never built anything before I wouldn't chance doing an owner build. The amount of questions that will come in to you will completely overwhelm your schedule. Not to mention scheduling subs be on site at the correct times is literally a full time job.

Account Closed · Answer

if you hope to make any money you need to GC it yourself. Start with a good carpenter that has a framing crew and also does trim work. He can give you some leads to good subs. Maybe slide him a little cash on the side for his leads and advice. Subs always tend to overpriced a job if all they have to look at is prints. The best prices come from seeing it in person. There is generally always a local market price for certain jobs like drywall, concrete finishing, roofing, block and brick laying. Many plumbers price based upon number of fixtures.  Electricians can usually give you a pretty accurate price based upon sqft and bedrooms and baths.  I would concentrate more on finding the market price for this work rather than trying to nail down a specific sub. If you know the going rates then you know when the sub is giving you a fair price.

Benjamin K. · Answer

Thank you! I love the website idea - I think we'll do that as well.

Karen Margrave · Answer

^^ @Benjamin K. I forgot to mention you.

Karen Margrave · Answer

We are spec builders and licensed GC's. On the last few jobs I added a page to our company website called Subcontractors. Under that I had subheadings for each job where subs could access a printable PDF version of the Architectural or Structural building plans in order to bid.

As for finish work I know exactly what I will be using and shop that myself, hiring people to do installation (tile, flooring, plumbing fixtures, lights, etc)

Southern California is such a large area, with subs and suppliers spread out over miles; and having an easy way to bid our stuff makes it more convenient for everyone.

On finding subs, we usually get the names from other subs that have worked with them and then we contact them to talk to them about bidding. Then before any contracts are signed we check references, licenses, bonds, etc.

In case you look on my website, I have hidden the subcontractor page as the jobs we are on are finishing up and we have all our subs. I'll activate the page on the next deal.

Benjamin K. · Answer

Sorry, probably should have left the "having them come out and take a look" part off of my message. Most trades would obviously need to see the site and house plans, however, some trades such as for site work, and finish work may want to come out and actually take a look in addition to seeing the plans.

I was more referring to sending a bid package containing specific scope, house plans, scheduling, etc to a list of contractors, asking them to "bid" on the cost for the project vs. calling a contractor, giving them the information and requesting a price.

I've done GC on interior jobs before with no issues, but, generally I do the second option - calling several contractors, get several quotes/bids for a job and make a decision. I've heard competitive bidding can lower prices.

Bid Packages for Speculative Homes?

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