The three bid myth?

I am asked all the time should I get three bids. It's the rule in construction right. Everyone knows that three bids is what you need. Well here is a story of a bidding process gone awry for me a few years ago. I was involved in renovating a large building. We decided to pull all the old lathe and plaster so that we could see what we were really dealing with. Then we could insulate and then install new drywall. I started getting drywall bids. The first guy I called came around and he tut-tut-tutted and said it was going to cost a lot. He came back with a bid for $32,000, He suggested I call a couple of other guys he knew who would be suited to doing the job, he seemed like a nice bloke so I did call his associates. They came in at $31,500 and $29,500 respectively. I was truly stunned. I hadn't budgeted for such high bids and surely didn't expect it to be that high. I was a little down about this and was concerned for our projects welfare. After all that was three bids how off could they be. I always got three bids, it how things work. Well it didn't occur to me until much later that this was a scam. These three bidders were in cahoots and probably pulled this stunt all the time. I ended up cold calling three other drywall companies and getting bids for $16,000, $11,000 and $9,800. Wow! Since that time I have seen this scam everywhere. I have seen it in concreting, plumbing, electrical and the worst one is fire sprinklers. I had a fire sprinkler guy stand before me and say, "I know this is the best bid you have because I know what the other guys bid." I was floored. Now I much more experienced and I can usually spot a high flying bid quickly. This is hard for a home owner who may only do one job from each category in a life time. My advice is simple:
  • Do your own home work
  • Call around and get a variety of bids
  • Don't go with the first one
  • If it doesn't feel right don't go with the third one either
  • Get 5 or 6 if necessary
  • Never pay for a bid
  • Never agree to an on-the-spot bid from a hard sell out fit
  • If you are in doubt take a break and do some more research
In the end being on guard might just save you tens of thousands of dollars.
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