How to read a gas furnace bid from contractors

Furnace, Heating Solutions Updated: May 18, 2023

Know what to look for when choosing a new furnace and installer

The process of reading contractor bids and choosing the best one goes much smoother when you know which details to look for. While it’s strongly recommended to seek bids from multiple contractors, this process can be even more confusing when the various bids don’t include the same information. Consider the following when you’re ready to hire your heating installer for your furnace project.

Inclusions/exclusion

Inclusions are what the contractor is committing to complete for the quoted amount. Exclusions typically describe work related to the primary services that the contractor is not agreeing to perform. This may include removing or recycling existing equipment, replacing an existing air handler, removing a previously used exhaust flue and modifying electrical components. It’s important to ask your contractor if they believe you’ll need any of these services to complete the project.

While contractors may clearly call out services or products that are not included, it’s also safe to assume that when something is not mentioned at all, it probably means it’s not included. It’s a good idea to make sure all details are listed in the bid and request add-ons in writing for better tracking. This includes expectations around site cleanup at the end of the day/project, permit costs, warranty coverage (labor vs. parts) and rebate/incentive support. If you see something showing on Contractor A’s bid, but not included with Contractor B, this is a good opportunity to ask why.

Comparing equipment across manufacturers

As you collect bids from multiple contractors, you will likely have to decide between different equipment manufacturers. Each contractor likely sells multiple brands of equipment to their customers. Understanding the difference between each of the popular gas furnace manufacturers can be very difficult. Manufacturers and their associated dealers (contractors) are very good at selling their specific equipment (that’s their job!). Beyond referring to third-party consumer report-style websites, you can look for these other distinguishing factors:

Length of warranty: Look for warranty length as well as labor (the cost of having a contractor perform a repair) vs. parts. Some warranties will also limit coverage to specific components.
Price vs. value: Some brands offer more bells and whistles, however, that typically comes at a cost. Examples of these upgrades include reduced noise during operation, enhanced temperature and humidity controls, an advanced air filtration system and a wider range of heating output (improving performance and reducing operational cost). Don’t hesitate to ask the contractor what those features will mean specifically for you and your home, to decide if the value is equivalent to the cost.
Efficiency ratings: Gas furnaces are rated by AFUE (Annual Fuel Utilization Efficiency) for heating efficiency. This measures how efficient the furnace is in converting the energy from gas to heat over the course of a typical year. For example, a 95% AFUE gas furnace converts roughly 95% of fuel directly to heat over the course of an average year while the remaining 5% of gas is passed through the exhaust. This can be a valuable distinguishing factor when comparing brands and models.
Incentive and tax credit eligibility: Your bid may include the Energy Trust of Oregon incentive amount with available tax credits for each unique system being proposed. If you don’t see any mention of incentives and/or tax credits make sure to double check with your contractor.

Installation costs

Installation costs can vary significantly, both by contractor and across different conditions of the installation location. As referenced in the section above, be sure to thoroughly review the estimates provided by the contractors bidding your project and compare what is and is not in the description of services. While reviewing the add-on services or products offered by your contractor, consider that some of these options could have a significant impact on your overall satisfaction of your new system.

There are optional services and features that could make or break the performance of your gas furnace. Examples include the option of adding a central air conditioner at the same time (or down the road), duct sealing/insulation/repair, enhanced air filtration systems, energy or heat recovery ventilation and enhanced heating controls (thermostat).

Operating costs

The costs associated with a new furnace are not limited to the initial installation costs. The amount of money spent to power the furnace, better known as the operating cost, is just as important. Although operating costs are typically not included in the bidding documents, it can be discussed during the sales process. While there isn’t a way to predict the exact cost of operating your new furnace, there are five key factors that influence this cost.

System settings/customer behavior: Thermostats often have settings that prioritize either comfort or efficiency. Comfort-focused settings may speed up the process of heating a home, which reduces the efficiency of the system. Customers also play a key role in how they adjust the thermostat settings during the heating seasons. Remember to set your thermostat to lower temperatures at night and when you’re away from the home for a longer stretch of time. Smart thermostats can help the user choose an energy-efficient mode of operation, but it’s important to consult the furnace installer before switching to a smart thermostat. Some heating systems need to be paired with a very specific thermostat in order to operate properly.
- Read more about smart thermostats and find incentives.
Thermal and air leakage of a home: Often the focus starts and stops with the core components of the gas furnace when planning for a new system. However, the readiness of the home itself should also be considered, preferably before a specific gas furnace model/size is chosen. Energy Trust recommends you consult a professional to verify the amount of insulation in your attic, exterior walls and floor. Also, consider upgrading your windows if you currently have single-pane and/or aluminum-frame windows.
- Read more about insulation options and find incentives. Learn about high-efficiency windows and available incentives.
Routine maintenance: Gas furnaces rely on clean filters, clean heat exchangers, unobstructed supply, and return vents to function properly. Be sure to follow the manufacturer and installer maintenance instructions and have your unit serviced annually by an HVAC contractor.
Cost of gas: As the price of gas fluctuates, so will the cost to operate your furnace. You can find the overall amount of gas used at your home, as well as the cost/term on your monthly statement, to see if an unusually high bill is due to an increase in usage or rising fuel costs. A mysterious spike in gas costs could also be the result of a furnace malfunction.
System performance ratings: As mentioned above, your contractor will likely present the AFUE efficiency rating on the proposal. Systems with higher AFUE ratings are designed to be more energy efficient.

Contingency and unforeseen conditions

A contingency fee is often a specified percentage of the overall project cost listed as a separate line item in the bid and reserved for unforeseen circumstances. For example, if you hire a contractor to complete a job that is priced at $10,000, and they have a 10% contingency fee added to the bid, your maximum project cost is $11,000. If the contractor is able to complete the project without running into unforeseen circumstances, there will likely be contract language requiring the contractor to reduce the final project cost by that $1,000 amount.

For example, “unforeseen circumstance” typically involves site-specific conditions that were not evident when the original project scope was priced out and must be dealt with to continue the work. Examples could include mold hiding behind a wall, damaged electrical wiring obscured by insulation, or termite damage to structural wood framing. It is important to discuss with your contractor how they will communicate with you before either completing the extra work and tacking on additional costs to your invoice, or potentially dipping into a contingency fee.

Comparing services

Remember, you’re not just purchasing a piece of equipment, you’re also hiring a company to perform the installation. Look out for services included and not included, which can impact the overall performance of your heating system. Some key services include:

Heat loss calculation: This is a very important part of designing a gas furnace system that is right for your specific home. Contractors should complete an analysis of your home including wall/floor/window measurements, insulation levels and other energy-related components. A heat loss calculation will ensure the contractor is choosing a properly sized system. An oversized system will likely cycle on and off, significantly reducing energy efficiency and putting extra strain on various parts. An undersized system will struggle to maintain the desired temperature and may leave the home occupants with insufficient heat on colder days.
Confirming condition of ducts: When a contractor is proposing a new heating system that transfers air through ducts, it’s important to know that they have reviewed the condition of the existing ductwork. This assessment should occur before they provide a bid for their services. Even if they’re not prepared to make improvements to the duct system, you’ll want to have confidence that your new heating system is able to deliver air sufficiently throughout your home. This is especially important if your ducts travel through an attic or crawlspace, as both energy loss and air quality can be significantly impacted by duct leaks and insufficient insulation. Don’t hesitate to ask your contractor if they performed an assessment of the ducts in your home before moving forward with the installation.