Trade overlap and “Ghost Trades”

Watching buildings emerge from the ground everything appears to have a synchronized and obvious way for all the elements to fit together.  The tradesman on site just flow from one task to another.  Sadly, this is not the natural way of things at the bid stage.  A review of the subcontractor exclusions across trades will quickly reveal several items that nobody included.

The natural question here is “Why?”.  The answer can be simple.  The subcontractors are competing so they avoid including anything that might be in someone else’s scope of work.  The answer could also be complex, for example they may know that a specialty contractor is required but they don’t want the responsibility of subcontracting them just to give the GC a “complete” bid.

Trade overlap and "Ghost Trades"

For example, nobody likes to work with Betsy the roof inspector…

Trade overlap occurs wherever assemblies from separate trades will meet.  In the case of equipment the specifications should define how the assemblies will be furnished and installed.  For example a responsibility matrix for the mechanical equipment might show that the rooftop equipment will arrive with a fusible disconnect for the electrician to connect to.  It may also indicate that the fire alarm contractor is to furnish a duct detector which the HVAC contractor is to install.

Whenever the plans fail to properly identify which trade does what, it falls upon the GC to provide direction accordingly.  There will however be times that local tradition or simple subcontractor opinion will play a role in what they will include in their bid.  For example let’s imagine that a ground up building will consist of structural steel on to which metal studs are attached to  frame the exterior walls.  Depending on the assembly, it may prove necessary to weld the light gauge studs to the structural steel.  This can be common at parapet walls over a window opening.  Some drywall contractors will seek to exclude light gauge welding from their scope of work, claiming the structural erector already has welders on site.

If the local tradition is for structural erectors to weld light gauge studs to structural steel, they may well provide pricing to do so.  Be cautious with this option since the structural erector will likely need separate mobilizations to return to the site for the light gauge welding.

Remember that every bid you complete adds to your collective legacy.  Working with the subcontractors over and over again, you can (and should) develop understandings of how you’d like things to be bid.  Traditions can be hard to change so ask for alternates to “do it your way”.  Over time, you might change the tradition!

Sub-Tier Subs

There are some specialty installers that come into play when specific materials or methods are required.  Often they are sub-tier subs or “Ghost trades” since they don’t appear on any of the GC’s subcontracts.  Examples include: Mechanical controls, Fire alarm, Energy Management Systems, Directional boring, Core drilling, Concrete saw cutting, Ground penetrating radar, X-Ray, Concrete honing, Independent testing agencies, Commissioning agents, Racking systems, Emissions controls systems, Emergency Radio systems, Radio amplification systems,  De-watering equipment suppliers, traffic control, erosion control, storm water management, Standby systems, Truck mounted HVAC, Generators, Craning, Rigging, Utility locates, etc.

Depending on the situation, the subcontractors may be obligated to use a single sub-tier sub for some scope item.  Basic economic laws remain,  a restricted supply drives a greater demand.  Sometimes these “Ghost trades” are immensely overpriced simply for lack of competition.

Trade overlap and "Ghost Trades"

These guy’s don’t come cheap, but who else are you gonna call?

Go ghost hunting.

The  vast majority of these “ghost trades” will involve scopes of work pertaining to engineering consultants.  Often the plans will show a desired system without any particular mention of a restricted specification.  In the case of a remodel, it’s often critical to use vendors who are licensed or franchised by the manufacturer of an installed system.  In the case of Fire Alarm it’s not uncommon for an installer to program a “lock” on the system precluding any other company from remodeling the system.  On ground up projects, the specifications will define acceptable manufacturers.  As a GC it’s perfectly reasonable to reach out to these vendors directly.  If they won’t bid directly to you, give them a contact list of your subs to ensure that everyone you’ve invited will receive the needed quotes.

As simple as it sounds, taking a picture of the control panels for all systems during a job walk reduces the likelihood of a mistake.  Many firms will put their business card or sticker on the case, this can be a valuable lead.

Don’t play favorites.

Sometimes a design team will require  sub-tier-subs without properly specifying the system.  If they wrote “or approved equal” after the name of a sole-specified vendor, insist that the design team provide a full specification to allow competition.  Often this is an indicator that the vendor assisted the design team and they are rewarding them by sole specification, they conceal this preferential treatment by feigning to allow alternate vendors.

Trade overlap and "Ghost Trades"

That dude’s shady.

Get involved

Good subcontractor communication leads to better feedback.  If you establish yourself as a GC who will run down the details, the subs have less risk in working with you hence lower bids.  Getting to know the norms and traditions of sub-tier-subs in your market is invaluable to ensuring that you face  a minimum of bid-day surprises.  Be advised that it can be immensely frustrating to encounter a situation where everyone is excluding some scope of work.  Attempting to force a bidder to cover some portion of work they must subcontract out is not fair.  It’s your job to find the hidden details and broadcast them to your bid team NOT to collect bids and stop your feet when they’re omitting something.

Sub tier vendors can be so specialized that subcontractors may not know they exist despite decades of experience.  Whenever possible, consult with experienced Project Manager’s as there’s a chance they have heard of the situation once before.  Staying on top of current means and methods is a critical job skill everyone in construction management should maintain.

 

 

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© Anton Takken 2014 all rights reserved

About Anton Takken

I chose to focus on estimating for a few reasons. Chief among them was that it's a position that's hard to fill in most companies. Job security and advancement is easier as a result. Unique to this job is a higher vantage point over the company and its place in the market. Bids are generally over in a few weeks which keeps things from getting boring. The reasons few of my colleagues pursue estimating comes down to a few misconceptions. The first is that it's the builders version of accounting - perceived as a lonely and quiet life among the charts and plans. The second is that it's not engaged in the construction process. Lots of the appeal of the construction industry is the sense that individual effort brought a plan into reality. The teamwork and camaraderie present among tradesman seems conspicuously absent at the estimators desk. Finally, I think the last reason is that it's daunting to be responsible for setting the price of something that's never been done. The good news for folks in estimating is that it's much more social than advertised. An estimator's phone is constantly ringing. Taking the opportunity to build relationships with the bidders creates a positive atmosphere and encourages everyone to do their best. It can be too much of a good thing which is why it's common to arrive at their voicemail when you're calling with a question. A strong rapport with the bidders can be invaluable. Subcontractors have much more exposure to what's going on in the market and they're often eager to share their knowledge. Learning from these experts is a priceless opportunity that's often overlooked. More on this in a bit. I decided to start this blog because I noticed that estimating has applications in many arenas. Over the last few years I've helped estimate in fields ranging from software development to blacksmithing! The more I thought about it, the more I realized that it's not about knowing what everything costs, it's about knowing how to figure that out. I believe the very first step to knowledge is to seek it, the second is to retain it, and the third is to pass it on. I hope to share some insights into how estimating is done and hopefully have some fun doing it. My experience is mostly commercial construction, but I'll try to make everything as generally applicable as I can. There are many aspects of business that all markets share yet it's remarkable that one of the most consistent is the failure to recognize that estimating is the very first step to a successful project. So if you're frustrated that work isn't profitable, or exasperated that there's never enough time to get the job done, this blog will be worth your time. Feel free to email me at: estimatorsplaybook@gmail.com View all posts by Anton Takken

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