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.
On this page12 sections
Compare the actual products and installation scope
Apples to apples means more than matching labels such as framing, windows and roofing. Two builders can use the same label for very different work. Ask for the exact specification or a clearly stated allowance. The more specific the proposal, the easier it is to know what you are buying.
Use the architect's schedules and engineered specifications as the starting point. A cheaper lumber substitution is not an equal bid if it changes the specified species, grade or performance. Have the designer approve proposed substitutions before you compare them.
| Scope | What to specify | What can be missing |
|---|---|---|
| Framing | Lumber species and grade, engineered members, sheathing, connectors and treatment where required. Match the structural plans. | Steel fabrication and erection, crane time, shop drawings, temporary bracing or engineering for a proposed substitution. |
| Windows and exterior doors | Manufacturer, series, model or SKU, dimensions, operation, frame finish, glazing and energy values. Match each opening on the window schedule. | Delivery, installation, sill pans, flashing, trim, hardware and a different product hidden behind an 'or equal' allowance. |
| Excavation and earthwork | Excavation limits, assumed soil conditions and quantities. Identify imported fill, exported soil, hauling, disposal and compaction. | Truck trips, disposal fees, shoring, rock, groundwater, unsuitable soil, dewatering and restoration. Ask which are included, allowed for or excluded. |
| Roofing | Roofing system and product, underlayment or membrane specification, insulation scope and roof-edge details. | Deck preparation, flashings, coping, drains, scuppers, overflow drainage and work at penetrations or parapets. |
| Waterproofing | The specified assembly for foundations, decks over rooms, showers and other wet areas. Identify who installs each layer. | Surface preparation, drainage layers, protection, transitions, testing and responsibility where two trades meet. |
| City corrections and inspections | Who responds to review comments, arranges inspections and coordinates the architect or engineer. | Reinspection fees, corrective labor, revised drawings and delay costs. Do not assume 'permits included' answers who pays. |
| General conditions and closeout | Site supervision, temporary utilities, toilets, dumpsters, protection, cleanup, punch-list work and warranty handover. | Monthly charges that continue if the project runs long, owner-supplied work and final landscaping or street restoration. |
- For custom windows without a simple SKU, use the approved quote and complete opening schedule as the identifier.
- For earthwork, ask for assumed quantities and agreed unit rates for changes. Identify how quantities will be measured.
- For waterproofing, ask for the complete assembly and critical details. A product name alone does not describe a watertight installation.
- Keep finish and equipment selections consistent across bids. A generous allowance and a bare-minimum allowance are not equal scope.
Design choices that can drive these costs → · Look more closely at site-work costs →
City corrections and mistakes: agree who pays before they happen
A city correction describes something that needs to be resolved. It does not, by itself, decide who should pay. Separate an owner-requested change from a design omission, work that does not match the approved plans, an unforeseen condition or a disputed interpretation.
Ask the builder to explain how the proposed contract handles each situation. Do not accept a blanket assumption that every city comment is an owner-paid change order. Equally, do not assume the builder has priced unlimited redesign or every hidden site condition.
Record who investigates the cause, who coordinates the fix and how responsibility is resolved. Include the cost of drawings, labor, materials, reinspection and any schedule effect. Have a construction attorney review how those responsibilities are allocated in the actual agreement.
| Situation | Question to settle |
|---|---|
| The owner changes a selection or layout | How are added cost, credits, markup, design work and time approved? |
| Installed work differs from the agreed scope or approved plans | What correction obligation applies, and who bears removal, replacement and reinspection costs? |
| The drawings contain an omission or coordination conflict | Who documents the issue, gets the designer's response and resolves the cost allocation? |
| The city requests a change or clarification | Was this work already included? What is the reason for the comment and the relevant contract provision? |
| Excavation reveals an unexpected condition | Which assumptions and notice requirements apply? Who verifies the condition before extra work proceeds? |
Please explain how your contract handles city review comments, failed inspections, design omissions and construction mistakes. Identify what your price includes, when a change order is permitted, and how corrective work, reinspection fees and delays are allocated. Please show the relevant contract language.
Compare the builder as well as the bid
Once the scope is comparable, assess who will actually deliver it. Relevant experience, day-to-day supervision, communication and how the team handles mistakes can matter as much as the price.
A polished proposal does not tell you whether this builder is a good fit for an owner-led custom home. Interview the people who will run the job, visit permitted sites with permission, and speak with customers at different stages.
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.