Bidding 101

What’s in the bid?

Time and costs

Three solid pieces of advice, before you dive in:

a. The ball is only in your court once! That is before you sign the contract. Meaning that when you are bidding, and the contractors may be eager and hungry -they may be more flexible in their pricing than once they are on your job and know they have the advantage in negotiating leverage.images

b. If there appears to be no flexibility on price, ask for an inclusion of scope (i.e. would you be willing to add crown molding to the Living Room?) . Or if your schedule allows, ask if undertaking the project at another time of the year would permit a better price or speedier schedule..

c. Do not play games. Do not play one bidder against the other if the first bidder has no actual chance to win the project and is simply being used as a pawn to leverage the other bidder lower. Why?  First it’s not ethical, secondly, it’s a small world out there- many bidders will have a common supplier of subcontractor. And when word gets out- one can end up with neither bidder interested in your job and hurt feelings all-around.

How does this process work?

The bidding process for construction projects usually involves sending drawings , specifications and bidding instructions to several builders (usually general contractors) who in turn will submit bids- A forecast of what the costs and time will be for the project presented.

The builders conventionally will have a team of subcontractors (i.e. like electricians) and vendors (i.e. a lumber yard) and that will also review the project and supply related trade or material prices

Getting prices for your construction project is critically important. One wants to make sure the project is feasible and affordable.  To achieve this we’ll often send (bid) our drawings out to several contractors to get competitive pricing.

These contractors are either in our trusted “go-to” list or we’ll need to vet them to make sure they are qualified. We assign the bidders a reasonable time to visit the site, ask questions, and get their paperwork in order. Extensions to a bid deadline are not acceptable unless all bidders are given the same timeframe.

How do contractors submit their bid?

We’ll generally send these select builders drawings and a “bid form”.  The bid form is really a chart with categories are listed on rows like “electrical”, “plumbing”, “tile” etc. where an affiliated cost is put in another column. This is done to help us compare “apples to apples” and compare the bids fairly. We analyze the bids on behalf of our clients- to make sure they are getting a good value , but we are also, in a holistic way, making sure that the contractor has provided a bid that is not artificially low or perhaps missed something (and then tries to make up for it later) .  This applies to both time and costs.  Here’s a simplified bid form for a residential addition :

Microsoft Word - SSA-bid-form

Strategy and Vibe

One of the important things to understand is that bidding for construction work involves looking after the interests of several parties.  While our clients come first,  we also have to be mindful of the interests of the contractor and his subs , as the contractor will in turn serve our clients.  We aim to strike a balance where our clients get great service and the contractor makes a reasonable profit-so they are incentivized to give our clients great service.  It’s also critical during the bidding process that information flows freely and accurately to all bidders and they receive the same information at the same time, in the same format, in the spirit of fairness and transparency.

Oops & By the the Way could you just…

The clients often, during the bidding process, will have additional ideas or tasks that are not initially covered in the drawings and want to make sure that those items are included in the scope of the bid.  So, we will often issue was called an “addendum”.   Often times when we’re getting a job we are not certain that the budget that was initially forecast will be met when the bids come back.  To address that uncertainty, we use something called “add alternates” or “deduct alternates”.  These are tasks that may or may not be withdrawn from the scope of the project and allow us to focus the bid to meet the budget much like including or excluding dessert at the end of your meal to meet your cost objectives for the meal.

Negotiating with contractors   3:09

Time is a critical factor in the estimate since time is related to money and other out-of-pocket expenses the client may endure (like renting a house while their home is being renovated, or a store that is being remodeled in time for the holiday season). So in our bidding we ask the contractor to forecast the amount of time the project will take and will hold them accountable to the time table.

Bids received, now what?

Once the bids come in, its critical to “level” them to fully understand what’s in, and what’s out -so we avoid the “apples to oranges” comparison. This takes lots of questioning, and probing to assure our clients are getting what is specified, not what the contractor may be planning to substitute or some baked in “delay” strategy that furthers a projected deadline.

construction schedule cartoon

There is analysis, negotiating, and some courtship needed to hit that bidding sweetspot. Please give us a call we have a few other strategies to reveal before you sign any contract-  Steve 914 980 5532