Builder selection and contract planning
How to compare builder bids and control change orders
The lowest number is not necessarily the lowest cost for the house you intend to build. A useful comparison explains what each builder priced, what remains undecided, how changes are charged and who owns the next approval or inspection task.
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Give every bidder the same package
Send one dated drawing set, specifications, consultant reports, site information and written scope. List what is not yet designed or selected. Ask each bidder to identify the documents and revisions used. If the team answers a material question or changes a selection, send the same clarification to every bidder.
Use a common response format: base price, included allowances, alternates, exclusions, schedule assumptions, contract model and unresolved questions. Ask for the limits of site work and owner-supplied items. An early feasibility budget is useful, but it should not be presented as a fully coordinated construction price.
Compare the people as well as the proposal. Ask who will supervise day to day, how many other projects they will manage, how often you receive an updated budget, and what happens when the superintendent or key subcontractor changes. Ask references about communication during a difficult change, not only whether the finished house looked good.
WA L&I: Hire Smart step by step ↗ · Prepare a consistent project brief →
Check the business you will actually contract with
Use WA L&I's Verify tool to check the exact business name and registration, bond and insurance information. Check workers' compensation status where the contractor has employees, and the relevant trade credentials. Match the contracting entity on the proposal, contract and payment instructions. L&I also provides information about violations and lawsuits against a bond.
Registration is not a recommendation of workmanship or a guarantee that your losses would be covered. Discuss project-specific insurance, any requested performance security and coverage gaps with the appropriate adviser. For a large custom-home agreement, have a construction attorney review the contract before you sign.
WA L&I: verify a contractor, tradesperson or business ↗ · WA L&I: Hire Smart step by step ↗
Normalize the bids before ranking them
Keep alternates outside the base comparison until you decide whether they belong in the common scope. Record whether a number is a firm proposal, a budget estimate or a subcontractor placeholder. If one bidder includes premium windows and another assumes a basic package, request an equal-scope adjustment rather than guessing the difference yourself.
| Compare | Question that reveals a gap |
|---|---|
| Document basis | Are all bidders pricing the same plans, engineering and specification revisions? |
| Base inclusions | What finished work and installation are expressly included? |
| Allowances | What selection, quantity and installation assumptions sit behind each allowance? |
| Exclusions | Which required items must the owner purchase elsewhere? |
| Site boundaries | Who covers excavation, utilities, protection, street work and restoration? |
| Fees and markups | Where do supervision, overhead, profit, tax and subcontractor markups appear? |
| Schedule | What must happen before the start, and what owner decisions control delivery? |
| Closeout | Who obtains finals, resolves the punch list and hands over records and warranties? |
Understand allowances, unit prices and the contract model
An allowance is an amount carried for an item that is not fully resolved. Ask whether it includes material only or also installation, freight, waste, tax and markup. Agree how the final cost replaces the allowance and how an underrun is credited. A low allowance can make a bid look attractive without reducing the cost of the intended selection.
For uncertain quantities, ask whether a unit price is appropriate. Define the unit, how it is measured, what the rate includes and who verifies the quantity. A soil-export rate, for example, means little without agreement about measurement, hauling, disposal and conditions outside the assumed scope. Have the relevant professionals and bidders develop the terms.
A fixed-price label still requires clear exclusions and change provisions. Under cost-plus, ask which costs are reimbursable, how the fee is calculated and what supporting records you receive. A guaranteed maximum price also needs careful review of allowances, contingencies, exclusions and permitted adjustments. The actual contract controls, not the label on the proposal.
Please identify the drawing/specification revision priced, base inclusions, exclusions and every allowance. For each allowance, state quantity, quality level, installation, tax and markup assumptions, plus how overages and credits are calculated. Please identify any unpriced scope and the conditions that could change the price or schedule.
A worked example: the lower quote can be the higher comparison
In this example, A's first-page price is $80,000 lower, but its comparable total is $10,000 higher. Only the allowance shortfall is added; the original allowance is already inside the base. Both calculations assume the adjustments include the same tax and markup treatment and that no other required scope is missing.
This worksheet does not choose the winner. Compare the clarity of the scope, credible schedule, team, contract terms, references and remaining uncertainty. Request written confirmation of every adjustment before treating a comparison total as an offer you can accept.
| Item | Builder A | Builder B |
|---|---|---|
| Base proposal | $900,000 | $980,000 |
| Required site scope excluded from base | + $80,000 | Included |
| Upgrade included allowances to the same selections | + $40,000 | + $30,000 |
| Comparable planning total | $1,020,000 | $1,010,000 |
Agree on a change-order process before changes happen
Decide who may request and authorize a change, who prices it, and whether the architect or engineer must revise drawings. L&I recommends putting changes to scope or materials in writing. A conversation with a subcontractor should not become an unexpected approval to spend money.
Use one change log. Separate owner choices, discovered conditions, code or design coordination, and corrections to work. For each proposed change, ask why it is needed, which contract provision applies, what the alternatives are and whether the original scope already covered it. Do not automatically accept that every field problem is an owner-paid extra.
| Field | What you need before authorizing |
|---|---|
| Scope and reason | Specific change, affected drawings and why it is proposed |
| Price | Itemized labor, materials, subcontractor costs, credits, fees and tax treatment |
| Time | Effect on milestones, procurement and dependent work |
| Approvals | Design response, permit revision or other consent required |
| Authorization | Written agreement by the parties authorized under the contract |
Change [number]: Please provide the reason, detailed scope, cost breakdown including credits and markup, and schedule effect. Identify the drawing or specification changes and any permit approval needed. Please also identify how this differs from the original contracted scope. We will respond through the agreed authorization process.
WA L&I: Hire Smart step by step ↗ · Keep construction scope and permit scope aligned →
Connect payments to evidence and protect closeout
Agree in writing what supports each payment request. Depending on the contract and financing, that may include completed work, stored-material documentation, invoices, inspection status and an updated cost report. Do not confuse the lender's draw review, a city inspection and your architect's contract-administration role. Ask what each actually verifies.
L&I warns that unpaid subcontractors or suppliers can create lien exposure even when the owner paid the general contractor. Discuss payment documentation and appropriate lien releases with your attorney, lender and contractor. Coordinate the form and timing of releases with payment. A general contractor's receipt alone is not a complete lien-protection plan.
Before the final payment, reconcile approved changes, unused allowances and agreed credits. Track the punch list separately from required final inspections. Collect the issued and revised plans, final records, equipment instructions, warranties and the contact for warranty claims. Follow the contract and legal advice if work is disputed; do not invent a new withholding rule after the fact.
WA L&I: construction liens and payment protection ↗ · Bellevue inspection and closeout guide → · Kirkland inspection and closeout guide →
Put this guide to work
- Issue the same dated project packet to each bidder and request the same pricing breakdown.
- Verify the exact contracting business. Compare references, site supervision and the team's communication process.
- Normalize exclusions and allowances. Keep remaining unknowns visible and get written answers before choosing.
- Have the agreement reviewed. Establish change authorization, payment evidence, permit responsibilities and closeout documents before work starts.
Common questions
Is a fixed-price contract always safer than cost-plus?
Not automatically. Risk depends on what is defined, excluded or adjustable and how each model handles uncertainty. Compare the actual terms with a qualified adviser rather than relying on the contract label.
Should the builder's quote include every permit?
Ask for an explicit responsibility schedule. Identify who applies, pays, responds to corrections and obtains final approval for building, trade and site records. Do not infer coverage from the phrase permits included.
Can a text message approve an expensive change?
Do not assume a text is harmless or sufficient. Follow the authorization method in the contract and keep price, time and scope together. Ask your attorney about the effect of informal messages if there is a disagreement.
Written and sources reviewed . This is a bid-comparison framework, not a contract or legal advice. Contract models, payment duties and lien rights depend on the actual agreement and applicable law. Worked prices are hypothetical.