Questioning the "Three-Bid Rule"
by James Robyn, Aquamagazine.com blog
This is what clients have been told to do for years by consumer advocacy groups as the best way to get what they want for the lowest price.
I recently read an article by a custom homebuilder who posited the old Three-Bid Rule should no longer apply in the home building industry. His article was so well written that it struck a chord with me; it's been one of my pet peeves for many years. In the pool business we are frequently requested to "turn in a bid" on a project, and it is always an exercise in futility. The clients who are simply looking for three bids are working on the least amount of information and the most amount of misinformation — to their peril — and the stories of problems, surprises, dissatisfaction and disappointment are ubiquitous.
The point is probably illustrated more easily in the custom home building industry because most people are more familiar with the details and possible cost differences in home construction. For example, in requesting a quote on a new custom home, no thinking person would ask a custom builder, "Give me a bid on a 3-bedroom home with 2-1/2 baths and a 2-car garage with an automatic door opener."
Yet I cannot tell you how many times I've had people ask me to give them a bid on "a 20-by-40-foot pool with a heater, a Polaris and an automatic pool cover."
At least in the custom home building industry an architect will produce a set of plans that will define the project in a meaningful way. Dimensions, materials and many other requirements are called for, but it is what is not illustrated or specified on the plans that can constitute significant cost drivers.
The idea behind the Three-Bid Rule is that it assumes everything other than the cost of the competing builders is equal. However, not every builder assesses and calculates the scope of work, drawings, specifications and callouts in the same exact way.