How Long Do Contractors Have to Honor Quoted Prices?
In any type of construction work, contractors quote the work that they will do. This gives the buyer a chance to review and compare it with other contractors. There is, however, a potential problem with the quotes that you receive. If you wait too long, those quotes will not be honored by the contractor.
Quotes are only honored for a set amount of time. Waiting too long to sign the contract and start the process means that you may need to have the project reassessed for a new quote. When this happens, it causes a lot of frustration from the buyer and can lead to some harsh words for the contractor. However, it is a valid way of doing business that has strong reasons behind it. In this editorial, a Denver contractor lawyer discusses the quote process and how long you should expect a quote to be honored.
Related: Approaches to Cost Estimation
It Depends on the Quote
The simple answer to this question is that it depends on the quote. There is no regulation saying how long quotes have to be honored. In essence, they are just estimates of how much it will cost to do a project and that the contractor is only obligated to meet that price expectation when a contract is signed.
Most quotes have a line on them stating how long the quote is good for. Companies control how long those quotes last, and it can vary widely between companies. If the quote does not have an expiration date, then it is best to assume that it will expire shortly. Some people have tried to take companies to court over how they handle quotes. This is why it is a good idea to work with one of our Denver construction lawyers to protect yourself from frivolous lawsuits.
While there is not a set standard for how long quotes last, standard practice across the industry can give you an idea. Most quotes are only good for one month. This can change based on who offered the quote and what that company’s policies are. If it has been more than one month since a quote was issued, verify that it is still valid with the company before moving forward. In some cases, it may be honored. Otherwise, it is a simple process to re-quote a project. If a client has an issue with this process, work with a Denver construction litigation lawyer to make sure that it won’t turn into a bigger legal issue.
Why Quotes Change
While it may cause a lot of frustration with buyers, quotes need to change after a certain amount of time. This is because the cost of completing a project changes over time. The cost of materials, for example, can fluctuate within a month. If a contractor honors an old quote, then he could be losing money on the project if the cost of doing the project has increased substantially. Making the quotes expire ensures that contractors are not losing money because a potential buyer returned later with an old quote that does not reflect the current cost of a project.
Quotes vs. Estimates
A quote and an estimate are not the same things, and this makes many buyers frustrated when they get them confused. A quote is an educated guess at what it will cost to finish a project. An estimate is a proposal to complete a project. Put simply, a quote is what you think the project costs, while an estimate is what you are willing to do the work for.
It’s easy to get them confused since they both give you a price for a job. However, it’s important to know and remember the difference. If you give a customer an estimate, then you may be held to that estimate, even if the cost of the project has increased since you gave the customer an estimate. Work with a Denver construction lawyer to make sure you are using the right methods to protect yourself.
Related: Types of Construction Cost Estimates
Re-Quote Before Doing Work
Getting caught in a situation where a customer expects you to do work at one price but you need to do it at another can be a hassle. One way of avoiding this is to re-quote before doing work. It will give you a second chance to make sure that what you quoted before was accurate and that you can still do the work. Things may have changed since you reviewed the project, and prices for materials are not the only factors that change.
Repair projects are a great example of this. If the customer waited a long time before doing a repair, the amount of effort and materials that it will take might have increased. Even if you could still honor the quote, the project may be so different that the quote is not valid. Implement a quote review process for every project to protect yourself. Set this expectation with the customer early so that it is not a surprise when it comes up later.
When to Quote & When to Estimate
There is a distinct difference between quoting a project and estimating a project, so it is important to know when to use either method. If you are reviewing a project to help a potential client understand the costs of that project, it is better to quote. The quote will be close to what it should cost while leaving room for negotiations. If you intend to get the job and do the work, then you should estimate a project. It will give the customer a much closer idea of what it will cost when everything is factored in. Your company will have additional expenses that will be added to the estimate.
Dealing with quotes can be a bit of a difficult process for construction companies. There are many expectations as to how they should work, but many potential customers do not understand the value of quotes. If you have questions about how to quote projects, contact a Denver contractor lawyer from Cotney Attorneys & Consultants.
If you would like to speak with a Denver contractor lawyer, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.