Ask the Builder: Artificial intelligence and contractor quotes

I talked with Irene on the phone a few days ago. She lives in Connecticut and used my affordable phone coaching service. She needed to make sure the bid she received to repair wood rot next to her front door was reasonable. Irene was about to have a new front door installed. At the end of the call, Irene said: “Oh my, investing in this phone call was the best thing to do. I now feel comfortable that I’m not getting ripped off!”

To help you understand Irene's problem, let's start with the email she sent me.

She wrote: “I'm getting a new front door, but before it can be installed, I'm ashamed to say that there's been water damage under the tile right when you enter the foyer through that door. Overall, the area where the tiles need to be removed/replaced, and new plywood installed, is around 30 square feet. A contractor gave me an estimate of $4,300, not including the cost of the new door. I went to ChatGPT, and it says that his number is too high. What would you say about this?”

I replied to Irene that we should talk on the phone. She placed the order for the call within an hour. I decided to produce a detailed breakdown of the costs of this job. I did many such jobs for customers, and knew that there’s no one aspect of the job that’s a big number. The trouble is, all the small numbers add up to a big one.

I discovered 40 years ago, quite by accident, how to sell more jobs to my customers. This is why I knew my phone call with Irene would put her at ease. Creating the detailed breakdown of her job would only take me a few minutes. It was a fast exercise to see if the contractor’s bid was realistic, too low, or higher than a kite.

Here’s how I discovered my secret weapon all those years ago, which helped me close more deals than all my competitors. I was asked to bid on a room addition project for a homeowner. Business was slow at the time. I had scads of time to do an accurate takeoff, obtain tight bids from my subcontractors, and time to make sure each and every cost item was covered.

I was very lucky to be the last contractor to make the presentation. Inside my briefcase was a fat folder that contained all my material takeoffs, the bids from subs, and a dot-matrix printout of a basic spreadsheet showing all of the costs, along with the total cost. Before that point, my normal practice was just to present the total job cost. There was zero transparency. No one got a look inside my magic folder.

In this case, I shared my number. The homeowners’ cheery red faces transformed to pasty white. My number shocked them. The temperature in their dining room seemed to fall 10 degrees. You could hear a pin drop. I said after an uncomfortable pause, “My number is high, isn’t it?”

The husband cleared his throat and said, “Yes, you’re the highest bidder of all three contractors.” I was desperate for the job. I could feel that they wanted me to leave. Their body language spoke volumes.

I said: “I can prove that my number is accurate, and that the other two contractors just guessed at the price. If you award the contract to one of them, I guarantee you’ll be hit with change orders, and the total cost will exceed what I just quoted you. Would you be willing to give me just 10 minutes to prove this to you?”

They exchanged glances, and the wife said, “Sure.” I opened up my briefcase, removed the folder, and spread out all my documents on the table. They were immediately shocked by the amount of detail. The transparency was like a warm ocean breeze blowing through their home. You could smell the salt air!

Within minutes, they discovered that no one aspect of the room addition was likely to cost a great deal. They could clearly see that the total of all the costs, plus a reasonable profit and overhead, added up to my quote. The transparency changed the tone of the meeting.

Thirty minutes after sitting down at their table, I had a signed contract in my hand. I adopted this full transparency approach in all my subsequent presentations. My closing rate went from 25% to 60%. From that point forward, I was booked out nine months in advance, never worrying about how I was going to pay my bills.

Here’s a quick snapshot of Irene’s front-door job. Each and every one of these tasks has to be accounted for: demolition; temporary weather enclosure, since the door must be taken out; replacement of the rotted wood; installation of the new wood floor; installation of the new flashing under the door; installation of the door; installation of the tile; grouting of the tile; installation of all the door trim; and painting/staining all the trim/walls.

All of the above are what I call hard job costs. Most homeowners are unaware of the soft job costs. These happen away from your home. Examples of soft costs include: time spent bidding; time spent looking at your job before the contract; picking up materials; going to the dump with refuse; loading and unloading the truck before each day, etc.

There are more soft costs you’re unaware of. Self-employed contractors pay double what you see taken out of your paycheck for Social Security and Medicare. (You probably don’t realize it, but your employer matches what you pay for payroll taxes. Contractors like me have to pay for both parts!)

Think of what it costs to operate that 3/4-ton truck the contractor drives. The current cost per mile is somewhere between 80 cents and $1.00 per mile. The 2025 IRS allowance, which is always low, is 70 cents per mile. A contractor might travel 30 miles each day to get to your house and then go back home. That’s $150 a week in costs just for his truck!

A contractor needs to charge you for wear and tear on his tools, insurance, workers' compensation insurance, etc. All of these costs, which are invisible to you, must be accounted for. You want your contractor to make a small profit so he stays in business when you need him again.

My quick cost estimate for Irene showed she was getting a great deal from her contractor. I estimated the total cost for the job, not including the cost of the front door, to be just under $5,000.

A contractor committed to transparency can generate an accurate quote for your job. An AI chatbot cannot.

If you need my help to make sure a bid you get is fair, I’m happy to do for you what I did for Irene. Just go here to set up our phone call: http://go.askthebuilder.com/talktotim Be sure to type go followed by a period in the URL.

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