Let's talk trade quotes.
A good rule of thumb is to obtain 3 quotes, which may mean contacting 6+ contractors (because many ignore your request!). If it's a bigger job (eg: over $10k) you ought to get 4 or even 5….in writing.
Of course you'll be comparing the price, but what else do you need to do before accepting and handing over any money?
1. Do due diligence
Are they legitimate professionals?
For any registered trade (currently few trades, but including plumbers, electricians and builders), it is essential you check their license and registration, which is also an assurance that they have relevant insurance. This info is available on the VBA website or Energy Safe (for electrical contractors). Plus, check their ABN (and possibly ASIC register if it's a company) on ABN Lookup.
Due diligence may also include checking their website for testimonials, social media profiles, reviews on Google or hipages (and other similar sites). The only issue is sometimes they don’t have any of this, especially sole traders. It’s not an immediate red flag though. Instead you could ask to speak with former clients.
Sometimes it can feel awkward to chase this info from them,but any tradie worth their salt (and with nothing to hide) will provide their info. In fact, several of the details should be on their quote document.
2. Compare the scope of work
Has each contractor quoted the exact same thing?
Check materials and finishes as well as actual labour. If there are a lot of 'TBA' items (often referred to as Provisional Sum items), ask for more details and if you cannot get further info, be wary! You might find they use the cheapest possible option.
Obviously having the quote in writing is pretty important. Even if it’s just via email, knowing exactly what you’re paying for protects both the client and the contractor from later disputes.
A free, simple Scope of Work template is available here for your use.
3. Check their availability
Will they be able to fit you in when you need?
If it's part of a bigger project, a delay for a trade to show up may be very costly, not to mention inconvenient. How much notice do they need?
Similarly, are they local/fairly close by. A sparky that has to drive across town to disconnect your power probably won't make time to do that on his way to another job, and you'll be left waiting around. Someone local is likely happy to stop by ad hoc to resolve an issue.
Contractors that have heaps of jobs on the go will be a) hard to get hold of and b) constantly no-showing or deprioritising your job. If they’re busy they’re probably great at what they do. But not much help to you if you ‘re on a deadline and they are unable to make it happen in time.
4. Warranties & Insurance
Is the workmanship guaranteed, and are you protected if things go wrong?
I rarely accept a cash job (a 'cashie') when I contract a tradesperson (depending on the job), because you are taking a huge
risk. If the trade isn’t a regulated one or the job is less than $10k, you have no protections excepting consumer guarantees under Australian Consumer Law.
If something goes wrong, you may have to try your luck at VCAT or through the courts.
It’s also worthwhile checking what insurances they hold. You are allowed to ask for a copy of the Certificate of Currency that outlines their cover and validity dates. But be wary of exclusions, make sure they’recovered for the work they’re doing, and check things like Strata rules that may state they require Public Liability insurance.
It is worth noting that tradespeople do not need to have professional indemnity and most will not. This is usually reserved for architects, structural engineers etc.
5. Terms
Is it stacked in the contractor’s favour?
Check what you’re agreeing to. I once had to help a woman whose leak detection company refused to provide the written report she believed she’d paid for. The unfair terms in their quote documentation basically locked her in to only using them to remediate the problems they discovered….and at an inflated price of course!
When will you need to pay? What’s the deposit (more than 10% is a red flag!) and is it non-refundable? What payment methods do they offer, and are there fees?
If you cancel the contract (for example if they take too long to fulfil it), are there penalties?
Importantly, what happens if you’re not happy with the job? Defects are covered, in theory, but unmet expectations will involve lots of heartache. Plus, if there is a serious issue, they may elect to partially refund you and you may be left having to deal with getting it fixed yourself.
A lot of these matters are assumed. As the inexperienced party, be sure you understand the terms of the deal, and what their responsibilities are.
6. Cost
What is the total amount you are up for?
Builders have access to annually published labour, plant and material rates which can be used to help them estimate jobs. Wish we all had such info to hand! But alas.
In lieu of this info, the conventional wisdom is to go with the middle quote. It seems reasonable that if they're in a similar range and are quoting the exact same thing, this might make sense. Everybody cautions against going with the cheapest quote (and for good reason), but what we rarely talk about is the highest quotes. Why can one contractor be sooooo much more expensive? Well, maybe they're better/higher quality workmanship or maybe...
- they don't want your job and so they overquote - this is very common!
- they assume you have no idea and they're trying it on
- they're in high demand (regardless of their personal expertise) and are asking top dollar to ride the wave while it lasts -right now trades are super busy and skilled labour shortages are putting pressure on businesses
- they have a lot of staff, a nice office, great marketing etc, and their overheads are higher than some local sole trader running his small business on word of mouth
- The GST is inclusive on some quotes excluding GST on others
or....because they can!
I believe that transparency and being upfront with clients is important. A contractor that is cagey about how the cost was determined probably has something to hide. A lot of contractors believe it’s not your business how much the labour is charged at, or what profit margin they add to supplied materials.
On the other hand, if you’re quoted an hourly rate, there is a risk the job will go for many more hours than you expect – perhaps because you wrongly assumed, perhaps because there was a ‘reno surprise’, or perhaps because they’re inefficient or unskilled and therefore take too long! At the very least, if you select an hourly rate quote, get an estimate of the time to complete the job.
And after all that, sometimes you need to go with your gut!
Maybe the cheapest quote is the better option for you. Maybe the person without the website and socials is a master tradesperson and gets all their work via word of mouth. Maybe the person who offered reasonable terms gave you a skeezy feeling you can’t quite put your finger on. Or maybe it’s a really simple little job you can’t do yourself, and a quick cashie will be low risk.
The Golden Rule
Sometimes you just need to pay what something costs if youwant the job done, and done right. But,if you get a quote either much higher or much lower than the others, either:
- ask more questions
- do more research, or
- get an extra one or two quotes so you have a broader base for comparison.
And keep good records!
For a comprehensive guide to renovating, download the Reno e-Guide here.