Why people won’t follow instructions

If you work long enough, you’ll eventually have a moment where you’re stuck wondering why someone didn’t follow your instructions. Estimators, especially estimators working for a General Contractor (GC) struggle to get their subcontractors (subs) to follow instructions all the time. It would be easy to suppose that typical explanations such as inattention, or laziness explain this behavior but there are overlooked reasons that could be playing a role here.

“Wait,  I can explain…”

A reflection on risk

Let’s start by considering something that all estimators have in common; risk. Risk is the uncertainty of a return and/or the potential for a financial loss. If we really think about it, controlling risk is more important than simply winning work. For example; winning a risky job is worse than losing a profitable opportunity.

The GC’s contract exchanges the liability of the entire project scope for their bid amount. The GC controls the risk by contracting portions of the project scope out to subcontractors. Once the project scope is divided and attributed to the subs, the GC’s remaining risk is greatly reduced because they have the contractual means to enforce performance.

This means that the GC estimator is primarily concerned with “complete” sub proposals. Exclusions, clarifications, or limitations that leave uncertainty for the GC estimator are considered potential “holes” in their plan. It’s understandable that subs not following instructions is a common frustration for GC estimators.

Perspective on the plans

The sub estimator has a profoundly different perspective because there is very little contractual latitude when it comes to accepting liability for their scope of work. Sub estimators are keenly aware that they must bear responsibility for misunderstanding, overlooking, or underestimating the scope of work shown in the Contract Documents (CD’s).

It’s incredibly rare for design teams to accept financial responsibility for misleading, incomplete, contradictory, or incorrect information on their designs. Specifications often stipulate that any design errors or omissions must be brought to the design teams attention BEFORE the bid via a Request For Information (RFI). Many projects obligate the bidders to walk the job. Some specifications even require bidders to verify hidden conditions during the walk regardless of how impractical or impossible that really is.

“We’re all along for the ride, but Engineer’s hate field trips…”

Essentially the design team expects the CD’s to be vetted and reviewed for constructability before the bid deadline, free of charge, and they believe this is grounds to dismiss change order claims based on the inadequacy of their design at bid time.

A competent GC estimator understands that they are empowered to write RFI’s, and bid directives to communicate the questions and answers necessary to work around issues with the CD’s. Sadly, many GC estimators assume a passive role when it comes to inadequate CD’s because timelines are tight, Architects might get cranky, and it’s a lot of extra work. Some GC’s won’t write an RFI unless there’s a subcontractor “revolt” where all the subs of a given trade refuse to bid unless an issue is resolved. This attitude starves the subs of any recourse to address uncertainty in the plans, so they resort to exclusions, clarifications, limitations, or outright declining to bid.

Last minute bidding and why we’re all in a hurry

Lots of GC estimators maintain a rigorous bid schedule. There’s lots to do, and little time to get it done. Subs rarely have the luxury of working for a single GC, so they deal with exponentially more projects than the average GC. Their scope is limited, however they’re liable for every single component which makes it very stressful to keep up.

As I mentioned earlier, RFI’s are part of the bid process which inevitably leads to changes in the CD’s or scope of work. Design teams love to answer all questions a day or so before the deadline. Maybe this is because they’re hopelessly optimistic that they’ve resolved every possible issue for the bidders. In truth, it’s very common for addenda answers to actually create more problems than they solve.

Why is it so hard to know what changed?

Every year, fewer and fewer design teams bother with addendum change narratives which itemize the changes made to the CD’s. The assumption is that the Architectural standard practice of “clouding” or “bubbling” changes to the CD’s makes it clear what they’ve done. In reality, there are often changes made that aren’t bubbled. Presumably the assumption is that everyone is using digital take-off systems that can do overlays to reveal the hidden changes.

Overlays can take a lot of time to do. Minor changes shown on an overlay can induce eye-strain, making the addenda a literal headache! Often it’s less work for the Architect to simply revise the entire drawing set and transmit it digitally. This can mean overlays of pages without any changes at all. Larger projects may have several such Addenda, which can quickly overwhelm a subcontractor.

For the sub who’s always several bids deep, the most efficient way to handle this deluge of information is to do their quantity take off (QTO) at the last moment. Bidding off the final addenda set avoids all the misery of earlier overlays, but it leaves them with little time to complete their estimate.

GC estimators looking for less drama on bid-day should itemize the changes made in each addenda according to their bidders scopes. Maintaining a running list of changes and supplementing with instruction/ direction where necessary limits the amount of scrambling a bidder has to do to deliver a complete proposal.   GC estimators who strive to lower their subs risk get better pricing. The GC with the best sub-pricing can be simultaneously cheaper, AND more profitable than their competition. I know of a few GC estimators who’ve rejected an Architects addendum until they provided a change narrative and bubbled drawings. Setting a precedent with the design team at the start of the project kept the addenda from becoming unmanageable.

Email mountain

The ease with which information can be transmitted via email can lead to inboxes that are inundated with messages. Bid letting software allows an estimator to mass-communicate with all the invited subs to share every document, file, and change. Many bid-letting programs automatically send out reminders to bid, often to multiple contacts at each subcontractor. On the receiving end this can mean upwards of a half-dozen emails per project, per client, and per contact. Projects with short deadlines can go from invitation to bid, to addenda, to bid day reminder within 24 hours. Many of these systems don’t communicate the basics about the project in any of the emails. Subs have to log in and navigate to files they must download in order to find out what they’re being asked to do.

Sure, the information is available, but it’s parceled out into several “Go find what I sent you” exercises that waste the subs time. If GC’s want their instructions followed, they should put themselves on the receiving end of their systems to see what’s going out to their bidders.

“Our servers improve your fitness by exercising your patience”

Cloud based file sharing has become incredibly popular because all the documents are constantly available to everyone. Some teams are careful to separate different editions of the CD’s to maintain documentation of the changes. Other teams make no real effort to retain older CD’s which means the documents can and do change between the invitation to bid and the deadline. This can create a real hazard to the bidders who may not receive any notification of the changes. I’ve worked for unscrupulous GC’s who replaced the CD’s after the contract was written in an attempt to avoid paying for change orders. All the supposed benefits of shared files pale in comparison to the risk of being unable to prove what was and wasn’t on the CD’s at bid time.

I encourage every estimator to download and save the most current CD’s on bid-day into a time-stamped file.   Keep that file for your records, because it may not be there later on.

Smarter than you think

So far, I’ve focused on information and risk management reasons why a bidder won’t follow instructions. The GC estimator should provide leadership to clarify, consolidate, and communicate what needs to be done. There is a lot of trade-specific knowledge required to understand and bid the scope of the skilled trades. A lot of GC estimators aren’t sure what to do when they’re presented with a complex issue, so many default to asking for alternate or breakout pricing. Alternates can double or triple the amount of work to bid a project. Not only is it more work, alternates might be misunderstood, misapplied, or used against the bidders interest. Arming the client with information that leads to wrong decisions is bad business.

If the GC estimator don’t understand the issue, it’s unlikely that they will clearly communicate the alternates to their client. Some GC estimators in this position will simply add up all the alternates just to “be sure” they’re covered. Subs see these GC estimators losing bids because they don’t exercise good judgment with the information presented. In some cases the sub is truly trying to help the rookie or fraidy-cat GC estimator win, by ignoring their alternate request.

Don’t kick the hornets’ nest

Material specifications don’t happen by accident. Design teams are paid to select, define, and enforce the material specifications for their projects. This becomes a very contentious issue when a specified material is overpriced. Corruption thrives wherever transparency, competition, and accountability are lacking. Some material vendors and distributors have extensive relationships with design teams who protect them from competition by sole specifying their product. Lots of GC’s will request alternates for Value Engineering or Alternate equal pricing to replace overpriced material. If the difference is significant, they present it to the client.

Subs may refuse to provide this pricing for several reasons. First off, the design team has a vested interest in their specified vendor. It’s therefore unlikely that they will happily accept an alternate product that would expose their budgetary irresponsibility.   Second, the more extensive the corruption, the more control the malefactors have in the system. Releasing material pricing just before the deadline is a favored tactic because it precludes bidders from seeking another option before the deadline. The subs may simply not have time to find an alternate solution. Finally, the sub understands that solving the GC’s budget issue isn’t a guarantee that the sub will be awarded a contract. Many GC estimators see no problem using one sub’s alternate in conjunction with another subs proposal. They figure their low sub will be able to find the same deal on the alternate material later on. So the sub who kicked the hornets’ nest gets noncompetitive pricing on all their material bids, while their competitor lands a contract.

 Chris has plenty of time to consider how his hard work left him in the cold.

A lot less than nothing

It bears mentioning that lots of GC estimators entertain endless post-bid client requests to value engineer the job. Some clients instruct their design team to incorporate all the best ideas, then put the job back out to bid. I call it “Design by bid” and it’s an incredibly expensive way to give your competition a job.

GC estimators looking for a solution here should consider writing RFI’s requesting alternate specifications for sole-specified overpriced materials. In some cases, it’s smarter to ask for performance specifications because it’s difficult for a design team to go on the record refusing to accept an equally performing product.

Most design teams stipulate that alternate materials must be submitted for approval before the bid. Since it’s virtually impossible to know precisely how overpriced the material will be before the deadline, it’s hard to tell when this will be worth doing. Experience in a given market will expose the relationships underpinning the corruption, so long as you’re paying attention.

Defensible decisions beats conditional clarifications

Contradictory, misleading, and confusing requirements are part of an estimators life. Controlling risk often comes down to judgment calls on the information you’ve got at hand. It’s a weird quirk of estimating that people tend to overlook justifiable confusion during the bid because they’re sitting on the post-bid answers. “Of course they wanted X instead of Y, here’s all the supporting reasons that make it obvious…” Nobody cares that there may be just as many compelling reasons to support a preference for Y, because now the client’s telling you what they want.

This mindset carries into reading proposals at every level. The presumption is that your proposal is presenting a complete scope of work for a bid amount. Clarifications, especially complex conditional clarifications are seen as fine print or worse; weasel wording. Anything that savors of sneaky dealing works against the estimator. From a practical standpoint, it’s better to articulate your scope of work in terms of defensible decisions. The more simple and defensible your decision-making is, the more your client trusts your motivations.

Let’s say there’s an obvious conflict in a design that could potentially go three different ways. If a sub sent over a base bid with two alternates to cover all the options, they’re taking a risk that the GC won’t know how to scope their bid against their competitors who didn’t price any alternates on their proposals. These alternates make the GC estimator responsible for the outcome of their decision-making. Lacking knowledge, experience, integrity, or time, the GC estimator may make the wrong decision. These moments can have real costs in terms of bids, relationships, and reputations.

The imaginary alternate

Some projects have a long list of alternates that are scarcely defined in the CD’s. I’ve seen projects that had four elevation drawings of a single occupant restroom, yet an alternate for an additional building was defined entirely by three sentences in the specifications! I call these “imaginary alternates” because they exist only in the client/architects imagination. Experienced estimators know that any price you provide can be used against you. Imaginary alternates offer no tangible defense for decision-making. The only defensible decision, is to not price them. Estimators should respond to imaginary alternates with “To Be Determined”, or “Price Pending Design”.

The bid template

Just about every rookie GC estimator who has scoped a stack of sub proposals gets tired of how difficult it is to simply compare one against the other. The myriad ways that bidders word their way around promising to “have everything” can be very frustrating. Their grand solution is a bid template which not only orders the information, but neatly prevents the subs from excluding anything inconvenient to the GC. The GC estimators plight is understandable, but misguided because they’re ignoring the autonomy of the subs. It’s the subs autonomy that makes them an effective risk diversification strategy for the GC. Attracting market-leading subs not only lowers the GC’s prices, and raises their potential profit, but it also reduces the risk of subcontractor failure. GC’s with a myopic focus on bid templates convey higher risk to the subs. We’re estimators because there is uncertainty. If we can’t address the uncertainty via clarifications or exclusions, the risk becomes unmanageable without raising the price. Bid templates are an excellent way to efficiently lose bids and repel market leaders.

A better alternative

A bid checklist is a subcontractor level list of applicable scope items with columns to confirm, add, or subtract funds to correspond with the GC estimators plan. Not only does the form automatically tabulate the “apples to apples” amount between bidders, it provides all the bidders with the same criteria, and equal time to respond. Getting the subs “on the record” in terms of unclear scope inclusions is invaluable for when Project Managers are writing contracts. Perhaps best of all, the checklist allows the subs to protect their interests and control their risk by supplementing rather than replacing their proposals. If done correctly, it’s possible to use the GC estimators actual estimate to output bid checklist forms, thereby saving considerable time for everyone. It’s easy to overlook just how much time a GC estimator spends trying to call the subs individually. Bid checklists can be mass-emailed to all bidders. The answers return in black-and-white terms that simplify decision-making.

Clear, well-reasoned instructions backed by good faith efforts to make the project successful make all the difference.  Bidders want to be on the winning team, and will happily do their part to the extent they believe it will benefit them.  This means that ignored instructions communicate something counter-productive to the bidders.  Estimators who build on this feedback may find ways to re-focus their efforts and get the results that matter.  If our purpose as estimators is to win profitable work, we should evaluate our processes with clarity of purpose and keep only what works.

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© Anton Takken 2016 all rights reserved