I guess it has to do with mark ups and the builder's own fees to do the job. Like you (I think I've read), I'm in south louisiana (lafayette area for me) and I got four bids. They varied wildly IMO- from around 500k to 850k. The 850 guy was a bit of an outlier (more than 100k more than the closest other guy), so we eliminated him fairly easily and chose among the other three guys. Some of the builders did almost all of the work themselves, while others subcontracted it all.

A few possibilities:

Variation in profit (and how busy the builder is) or overhead (does he have a costly operation).
Differences in estimating methodology.
Different interpretations of things you didn't specify:
Products are one part of specifications, but you're buying more than those products, you're buying those products being incorporated into the house, and you're buying a managed project with a job site and meetings and documentation and quality control and safety measures. If you say nothing besides finish selections, then you're not being very specific, and the builders are then bidding on what may be very different projects with outcomes that would all satisfy the contract. Also, you've mentioned just a number of finish items. Have you also specified every other piece of the construction work: site work, concrete, framing, insulation, water protection, sealants, plumbing systems, hvac systems, electrical systems, etc etc etc. Anything you leave to interpretation will be interpreted differently by each builder. If a builder wants the job, he has to bid on what you give him and fill in the blanks. If he's too generous to you with his assumptions, or just in general does high quality work, he may lose the job to the guy who took the cheaper approach to give you a house that has the exact floors, bricks, appliances, hardware, lights, trim, fireplace, faucets, windows, doors, shutters, bricks, countertops, backsplashes, cabinets etc. that you want.

It has more to do with the builder not actually reading the specs and specifying what he usually specifies rather than what you want. Or him not doing the research on the specs to know what they cost and assuming that they cost close to items he has previously used.

Then there's the repetition factor vs. fear of the unknown. A house that is custom designed that no one has ever built before has a much higher markup because of the potential for running into issues that he's not dealt with before. A house plan that he's built a dozen time, he knows what the issues are before he ever starts and can dial in exactly how long the build will take, and probably already even knows the sub's bids before they bid themselves.

Different builders have different overheads that they need to satisfy before they start earning a profit. A larger firm may have a higher overhead, but do enough volume to keep their margins the same as one with a lower overhead. The guy with the single crew may charge more because his guys are craftsmen and take their time, or he may charge less because he's new and doesn't have a clue as to what his overhead really is for the long term.

One thing is for sure, if you choose a builder based on price alone, it will be the worst decision you could possibly make on the largest investment of your life. Knowledge, experience, and craftsmanship won't come cheaply. Nor should they. Anyone who is doing a new home build is in the minority market. It's a luxury to be able to do that, even if your budget isn't large.

livewire - as usual, so well stated!

I was going to chime in and say that EXPECTATIONS are huge in building a custom home. One builder's bid might be sprayed foam window headers and footers and the client has the expectation of cast stone headers and footers. There is a huge cost difference. This can happen in every detail of a home...

So, be sure to really ask questions and understand what each person is giving you as the final product.

Our first builder had us at a very low number and his workmanship showed....his materials showed...it wasn't what we expected our house to be...

fired him..

second builder understands our expectations and showed us a home he just finished so we could touch, feel, see what exactly he builds. Of course, he is 25% more expensive than the first builder! However, the quality of materials and workmanship is far superior than the first builder.

Detailed specs are key. First builder had 13 seer a/c units...we wanted 19 seer. There is a cost difference, but it made the first builder's numbers lower which appealed to us. The same with interior doors. First builders spec didn't say they were hollow core! 2nd builder specified exactly that they were solid core doors.

These are all little things we didn't notice until we went down the terrible path with builder 1.

Read, read, read and ask tons of questions! Get your specs in great detail so that they reach your EXPECTATIONS!

Pam

It never "costs what it costs". Almost everything is a variable including OH&P, the subs they use and their material sources. It's a marketplace. What would be strange is if the bids were the same.

How can the same automobile cost differently from one auto dealer to another? How can groceries cost differently from one store to another?

You are taking the proper steps, i.e., having your drawings and specifications as detailed and complete as possible. That said, how can the same automobile cost differently from one auto dealer to another?

Tip: Comparison shop!

yikes, chilibean! that's a big difference! we used tolive in lafayette. i loved it there! good people.

plumbing, electrical and HVAC. that's something i didn't think about differing. pretty important too.

you all made some good points.

we chose our builder from his reputation and from touring 3 of his homes. he's more expensive, but does great work. my dad came with me to check out one of the houses while it was being framed and said that it was a good framing job - i wouldn't know how to recognize that. i liked his finished work, and can tell that he takes pride in his work, as he should.

so i think we've made a good decision, but it definitely is going to cost more. you can't get something for nothing, though.

Great points above. Sensing a trend that its mostly about Overhead and Profit which might be true sometimes but certainly not always. If I had to bid on some plans right now, it would be a higher than typical price as I currently have enough clients who will work in my preferred Cost Plus arrangement. My overhead is extremely low but I also use preferred contractors who cost more.

Building a good home is a combination of the right products, right labor, and right knowledge. There are increasingly stringent building codes which are creating an ever widening gulf between builders as I see it. Minimum building codes are pretty easy to achieve but it will cost more money. Many of the things that make a better home cost more money and its impossible to specify all the materials, labor and knowledge in a set of bid documents.

Does your detailed specs and plans include how to protect your freshly poured slab on a hot day or cold day? Type and # of anchor bolts. 3" washers? Does the Radon pipe just stub under the slab somewhere or is it tied to a sub slab drainage to daylight? Very cheap insurance that I would not install if it wasnt in the plans or specs.

Do the plans call out the type of sill sealer? I would never use an off the shelf version with what I know. How about sheathing fastener schedule? Its pretty cheap to use the newer APA recommendations but might have my carpenters skip it on a bid job.

Just how detailed is that wall section of yours? Ive never had one to bid on that I would feel comfortable following to a tee in the field.

How about sloping window pans for the rough sill? What type of flashing tapes? I find its best to mix brands depending on application but wouldnt want to waste my money or time on something I wasnt getting paid for.

A 12 SEER unit could easily outperform a 16 SEER unit depending on what HVAC sub you go with or how much you babysit them. Surely you have the Manual J in the specs and blower door test goals? Its surprising the difference you might see between houses in this area in terms of comfort, energy efficiency and durability.

Do the plans spell out how to meet ASHRAE 62.2? I dont think I could build a house without meeting this minimum ventilation standard but I know I would use a drastically different way to achieve it on a bid job. It wouldnt cost me as much and would not work as well as the slightly more expensive system I would recommend for most clients.

Fixed bids are very likely to omit some important details that take place below the finished surfaces. In addition to what others have mentioned (and many more) the difference in prices will surely reflect a bit of this discrepancy between builders too.