How to compare three contractor quotes properly

Three quotes arrive. One is £180k, one is £210k, one is £246k. Most people start by asking why the expensive one is expensive. The better question is what the cheap one has left out — because in my experience the spread between quotes is far more often a difference in scope than a difference in margin.

Comparing them properly is tedious but not difficult. It is mostly a matter of refusing to compare totals until everything underneath them describes the same building.

Normalise the scope before you look at the money

Write out a single list of everything the job includes, in your words, from your drawings and specification. Then go through each quote and mark every line as included, excluded, or unclear. You are not pricing anything at this stage — you are just finding out what each contractor thinks they are being asked to do.

This is where most of the gap disappears. One contractor has priced the drive, one has assumed you are doing it. One has allowed for the retaining wall, one has not seen it. Until this list is complete, the totals are not comparable and any decision based on them is guesswork.

Preliminaries

Prelims are the cost of running the site rather than building the building: welfare, site set-up, scaffolding, plant hire, skips, temporary power, insurance, and the site manager's time. On a domestic project they are commonly 10 to 15 per cent of the build cost.

Some quotes show prelims as a separate line. Some bury them in rates. Some genuinely have not allowed for them, which is not a saving — it is a claim waiting to happen. If one quote has an explicit prelims line and another does not, you have not found a cheaper contractor, you have found a less complete quote.

Provisional sums and PC sums

A provisional sum is an allowance for work that is not yet defined. A prime cost sum is an allowance for a product you have not yet chosen — kitchen, sanitaryware, ironmongery. Both are placeholders, and both will be adjusted to the actual cost when the work is done or the item is chosen.

They are legitimate and often unavoidable. The danger is their size. A quote carrying £40k of provisional sums is not a fixed price for that £40k, it is an estimate wearing a fixed price's clothing. Add them up across each quote and compare that number too. The contractor with the lowest total and the highest provisional sums is frequently the most expensive by completion.

Read the exclusions first

Most people read exclusions last, if at all. Read them first — they tell you more about the price than the price does. Common ones worth catching: rock or obstructions below ground, contaminated material removal, statutory service connections, VAT, planning conditions discharge, professional fees, structural warranty, and making good after the utilities.

Any exclusion is fine as long as you know it is yours and you have budgeted for it. The problem is the exclusion you did not read, which becomes a variation, which becomes an argument at the moment you have least leverage.

Payment terms and cash flow

Stage payments tied to defined milestones are normal. Large payments in advance of work are not. Look at the shape of the cash flow across the whole job and check it stays roughly in step with the value of what has been built — if you are ever significantly ahead of the work, you are financing the contractor and carrying their risk.

Check the retention, if any, and when it is released. Check what happens on delay, on both sides. And check the terms match what your lender will actually release money against, because a self-build mortgage that pays in arrears and a contractor who wants paying in advance is a gap somebody has to fund.

Programme

A shorter programme is not free. It usually means more labour on site at once, more supervision, and less tolerance for delivery delays. If one contractor is promising 26 weeks where the others say 38, ask what they are doing differently. Sometimes the answer is that they are better organised. Sometimes it is that they have not thought about it.

What to ask before you decide

• Can I see two projects of similar size and type you finished in the last two years, and speak to those clients?
• Who will actually be on site, and who supervises them?
• What is your programme, and what are the three things most likely to delay it?
• How do you price variations — agreed rates, or day work?
• What insurance do you carry, and can I see the certificate?
• Are you VAT registered, and is VAT included in this figure?

Red flags

• A single-page quote with a lump sum and no breakdown.
• Reluctance to provide references, or references you cannot contact directly.
• A large deposit requested before any work starts.
• Pressure to decide quickly on a price that expires.
• No written programme, or a programme with no detail behind the bars.

None of these individually means the contractor is bad. Collectively they mean you are being asked to take on risk you have not been shown.