Whether looking to build your dream home in the Bay Area or undergoing a major home renovation, most homeowners don’t have a lot of experience in the design and construction industry. To make sure you end up with the results you dreamed of, you will need the right contractor on board. Some of the major options include choosing between a design build contractor and a bid build contractor.
Design build contractors do everything in house for turnkey construction. They will help you design your plans and build them. To hire a bid build contractor, you will need to have your plans ready for the contractor to provide you a bid before they can start to build the project.
We’ll explain some more of the differences between the two contractors and delivery types, as well as how you can choose which one might be right for your project.
Different Types of Residential Contractors
Building or renovating your dream home involves a lot of work. Understanding how to pull permits, how many materials to order or scheduling work can be confusing. Large construction projects often require permits and registered contractors, in order to be built to code.
While many homeowners can do a lot of the work themselves, there are many aspects of residential construction that need a professional. To determine what type of contractor you need, you need to understand the type of work that you’re having performed. Here are a few scenarios:
- You’re doing a lot of DIY but need a contractor for specialty systems such as electrical or plumbing.
- You already have in mind the layout or materials that you want to use, but you don’t have the time or expertise to do it yourself.
- You’ve worked with an architect or purchased the set of plans and just need someone to build it.
For items one and three, you might consider hiring a bid build contractor. For item number two you might consider a design build contractor.
A bid build contractor will take a set of plans or a specific task to give you an estimate of what it will cost, the bid, and then build it.
A design build contractor has the expertise to help you finalize the design of your project, coaching you along in the process, and then build it.
Construction Key Members and Workflow
No matter the type of contractor and construction process you go with, there will be similar key members in every process. Who hires the key members and when the key members get involved may vary in each process.
Some of the key members may include:
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- Owners/Decision Makers: The home owner and decision maker may be the same person, however, the owner may designate another decision maker to act in their stead.
- Architect/Design Professionals: This professional is responsible for the design of the building and producing the drawings that are used to get the building permit. In design build, this person works for the contractor. In bid build, this person is a separate entity hired by the owner/decision maker.
- General Contractor/Design Build Contractor: The general contractor oversees all aspects of construction. In design build, they also oversee the design professional.
- Subcontractors: The general contractor may hire subcontractors, such as electrical and mechanical contractors and oversee their work.
Traditional bid build delivery requires the owner to hire a design professional. The design professional produces the drawings. They may assist the owner in hiring the general contractor. The general contractor provides a bid. Once contracted, they’ll hire the subcontractors or have in house builders.
In design build, the owner first hires a contractor . The contractor’s design professional will then help produce architectural and engineering plans, which can then be submitted to the city or county for approval. Generally a design build contractor will have in-house teams of designers, engineers, architects and builders, providing everything you need under one roof.
What is a Design Build Contractor?
A Design Build Contractor takes your full home project from start to finish, including the beginning designs all the way to final construction. This way, you work with only one company through the whole process.
A home builder that does design build construction typically has an expert on staff that can help with the design of the project. If you have your own vision for the project and want to work with someone to help execute that Vision, design build may be the way to go. This is a great option for people who have a mind for architecture or interior design or want to be intimately involved in the design process.
There are many advantages to going with a design build contractor. The largest benefits include managing the cost, budget and constructability of the project. In bid build projects there is sometimes a miscommunication between the design, what it costs, and what it takes to build it. For example, an architect or designer might have a beautiful high end design for your home that you fall in love with. However, the contractor might give you a cost estimate that is more than your budget. Or the contractor might say that the construction isn’t feasible for some reason and that it might take longer than anticipated. This could mean a costly redesign with additional design and permit fees.
However, the design builder can provide input along the way, helping to make sure that the design stays in budget and schedule.
What do Bid Build Contractors Do?
Bid build contractors provide a more traditional project delivery method. In order to hire a bid build contractor, you typically would need to have a well developed design for them to provide a cost estimate. While you can seek bids earlier, the less complete the design is, the more variation you can have in the final cost.
Bid build is good for projects where you already have a plan for the work that needs to be completed. For example, hiring a contractor to replace your water heater is an example of a bid build contractor. Replacing a roof is another example.
Bear in mind, when the work is left open ended, such as adding an addition to your home, a bid build contractor would need to know answers like: How many square feet is your addition? What type of materials do you plan on using? What kind of architectural style do you want?
One benefit of pursuing a traditional bid build delivery method is that the design can be completed before the contractor gets involved. Therefore, the design has a priority and can often be more creative.
Should I Choose a Design Build or Bid Build Contractor?
If you’re just starting a major home renovation or new construction project, you may wonder if you should pursue design build or bid build construction.
Here are some advantages and disadvantages of both methods:
| Design Build | Bid Build | |
| Cost | The overall cost can be lower, but the cost is more fluid. You hire a contractor based on qualifications to try to hit your target budget. | The overall cost can be higher, but you have more certainty. You can shop for designers and contractors separately to get competing bids. |
| Schedule | Typically takes a shorter amount of time, as the contractor is already on board and can start pulling permits, grading, or other site work before the design is complete. | Typically takes longer, as the design needs to be substantially complete before bidding the project to contractors. The contractor can only start work once the plans are approved by the city and a permit can be pulled. |
| Flexibility | The design can be flexible even through construction, however the contractor should make you aware of the last day when you can make your decision without delaying the schedule. | Changes to the design after the contractor has been hired will result in substantial change orders by the contractor and your designer. |
| Design | The design typically caters to constructability and costs, however, results in fewer issues in construction | Design is a priority and allows the homeowners to be more creative, which could result in a higher costs for the project. |
How to Get Residential Plans
One aspect of bid built design includes having your design completed before hiring your contractor. Where can you even find a designer to put together drawings for your project?
The easiest way to find a design for your home is to purchase a set of pre designed plans. Because so many homes have been built throughout the decades, many home builders have perfected their home designs to be replicated.
These plans could be considered “cookie cutter” style homes. However, this option is much more budget friendly than hiring an architect. The plans that you buy should be complete enough for you to submit them to your local city or jurisdiction for permit approval. You may have to make minor modifications based on any local building or zoning codes.
If you want a custom designed home, you’ll need to hire a residential architect. When hiring an architect, ask them for comparative projects and cost estimates for the soft cost (design fees) as well as the hard costs (material costs). They should be able to provide you with historical cost information for their previous projects to help you understand what you’re getting into.
Make sure that the architect designs the style that you prefer. You may really like the quality of work of a particular architect, but forcing them to design in a different style than what they’re used to could result in issues in your project.
How Much Does Residential Construction Cost?
The cost of your project will vary wildly depending on the style of home you are building. A “cookie cutter” or entry level home will cost the least, while a complex, custom home with high end materials will cost much more.
The San Francisco/Bay Area, soft costs for design will be about 15% of your total budget, while permits and fees will be another 5%. If you have secured financing for a $500,000 new construction or renovation, then you should estimate your soft costs around $75,000 and permits and fees around $25,000.
There are many rules of thumb for how much a home construction should cost per square foot. SFgate.com says that entry level homes could cost as little as $250-300/sf, not including land. For these low cost projects, you typically could expect to purchase a predesigned set of plans to save on the soft costs. For an entry level, custom designed home in the Bay Area, you could expect around $600/sf.
Mid level homes may cost around $700/sf. High end projects with lots of high quality materials could cost upwards of $800/sf. If you are building a 2,000 sf home, the total cost could be upwards of $1,600,000. Of that, you can expect the soft costs to be $240,000 or more. Keep these costs in mind when reaching out for proposals from architects or design build contractors.
Maintaining Your Budget with Design Build vs Bid Build
With a design build delivery method, you can provide the contractor with your target budget. Ask them to make maintaining the total cost under this amount a part of the project goals.
Throughout the design of the project, the contractor can advise you on how much your design decisions may cost. For example, they can advise if you should choose a material that costs less per square foot, or tell you if increasing a height or width of a large, open space might require you to purchase expensive steel beams versus wooden beams.
With Bid Build methods, your design professional may have a rough idea for how much the project may cost. However, unless they have a cost estimator on staff, they may not have information on how much the current market might be impacting contractor labor or material costs. When bidding the projects, the bids could come in much higher than you anticipated.
Some contractors may not provide materials as a part of their build. They may help you understand what materials and how much to order, but ultimately, you would be responsible for placing the order. This gives you the flexibility to choose the right colors and quality for you.
Keys to Successful Construction – Regardless of Method
Regardless of the delivery method or contracting style you use, you should end up with the quality of project that you intended. A successful project will come in on time, on budget, and leave you satisfied. Here are some tips for a successful project:
- Minimize changes: Owner changes are the number one cause of schedule delays and change orders. While it’s common to have some changes on your project and it’s ok to change your mind, keep in mind that excessive changes can hurt your checkbook and frustrate your design and construction team.
- Make decisions on time: Many decisions need to be made by a certain date to keep the schedule on time. This is often referred to as the “most critical path.” If you cannot make a decision by this date, the whole schedule ends up shifting. Make sure you keep this schedule in mind. Unfortunately, this may mean making last minute or less than desirable decisions to maintain the schedule.
- Resolve conflicts efficiently: There will be times when the design, cost, or schedule will conflict with each other. The design professional and contractor may conflict with each other, even if they both work for the same design build entity. As the owner, you may need to make a decision as to what is the priority for you to help the project move along.
- Overestimate your costs and schedule: Always leave yourself some contingency, or rainy day funds, for both your budget and schedule. If the project goes over budget or over schedule, you could have to stop work to secure more funding, having to eliminate scope, or incur additional costs to meet the schedule.
Both design build and bid build delivery methods are effective construction techniques. Make sure you choose the right contractor or design professional for your project. Be sure to seek several proposals, bids, or quotes, and conduct interviews. Make sure you ask them specific questions about your key points.
A traditional bid build contractor is effective if you use a predesigned set of plans, have a specific project in mind, or have a particular architect you want to work with. Design build is great for shorter construction schedules, if you want to be closely involved with the design process, and want to meet a specific project budget. With the right team, you’ll be able to provide direction to your team to make your dream home a reality.
