Top 5 Costly Mistakes Owners and Developers Make When Competitively Bidding A Construction Project By: Wendy Chambers, LEED AP, Owner Halo Construction, June 2018
As an Estimator for commercial construction projects for almost 20 years, I have seen my share of bidding documents. Competitive bidding, conceptual, design build; are all different types of bids requested. Competitive bidding is when general contractors (GCs) are asked to bid against other general contractors. Typically, this will get the best pricing through healthy competition. However, sometimes the objective of obtaining the lowest possible bid is lost during the bidding process. Here are a few costly mistakes Owners, Architects, Developers and Property Managers make when competitively bidding out their projects:
1. No Construction Drawings When GCs have to bid without construction documents, it opens the project up to interpretation and forces the GC to make assumptions and/or clarifications to their bid. If you have 3-4 bidders on the project, they might all assume something different. Thus, creating the "you can't compare apples to oranges" scenario and in turn, Owners cannot be confident that they are getting the best price and value.
2. Self-Performing Work or Providing Materials and Equipment Sometimes this can be cost effective for projects that buy in bulk or have a connection with a specific trade. Most often times, it works the opposite. GCs and subcontractors typically have mobilization and supervisions costs. These costs do not usually get discounted just because the Owner is providing services, materials or equipment. This condition also deters subcontractors from bidding, as they are either not interested in bidding a job where they lose their mark-up on goods provided by others or they do not want to be accountable for Owner provided services and equipment. Losing subcontractor coverage hurts the overall bid as the most competitive pricing is not being obtained.
3. Too Many Changes During Bidding Phase From an estimating standpoint, it is like trying to hit a moving target. If there are too many changes or indecisiveness during the bidding phase, this typically is an indication of how the rest of the project is going to trend. Many GC's will add extra costs to an estimate for expected changes on a project.
4. Using The Same GC For Every Project As big as the construction industry is in this area... it is still very small. We all know who is building what and who gets the work every time. And the "favorites" know this too. Awarding to many different GC's will create healthy competition and keep your "go-to" guys/gals honest. Thus, keeping your costs down. And you just might find another great GC or subcontractor in the mix!
5. Rushed Bids Estimating a project takes time. It starts with understanding the project documents, selecting the subcontractors and getting that information out to them. This process could take days depending on the size of the project. Then there is the estimate itself. Establishing scope, following up with subcontractors, collecting bids, plugging their numbers, final review and determining the general conditions are all part of a very delicate workflow. Rushing this process can cause mistakes, lack of participation from subcontractors and the GC adding costs to cover things they did not have time to fully understand or bid out properly.
I hope you enjoyed these helpful tips on how to get the most out of your competitive bidding. Please consider Halo Construction as one of those bidders! Call today to discuss your upcoming project!
Halo Construction is a general contractor and construction manager, serving all of Southern NJ. At Halo, we will always strive to always get you the best numbers on your project! We offer competitive and conceptual bidding as well as budgeting and value engineering as a courtesy to future clients.