Bid day on a competitive hard-bid project can be an exciting experience capped off with a victory or it can be a stressful struggle to just grind out a proposal before the deadline. Much of what makes the difference is how the subcontractors are bidding. Well organized, competitive, timely, and concise proposals that cover all the needed scope are a firm building block to a well structured bid.
Luck favors the prepared.
It’s easy to fall into the belief that inviting the same crowd of subcontractors will naturally result in a competitive and complete bid. Many estimators take it on faith that their subcontractor list is comprehensive until they get caught short on bid day. It may seem basic but failing to actually define what subcontractor handles which scope is a common reason for lost bids
Not all wire is installed by an Electrician. Not all glass is a Glazier’s job, nor is all pipe a Plumbers job. Not all subcontractors will have a consensus view about what is and what isn’t in their scope of work. Some carpet firms will install vinyl tile but not Ceramic. Other firms will only install ceramic or wood flooring. Knowing who does what is a huge advantage to ensuring that all scope items get bid.
Above and beyond this, it’s important to communicate to the subcontractors how you’d like them to bid. A combination proposal for Carpet and vinyl tile may be lower than the sum of competing carpet and vinyl bids. It may be tempting to simply accept that combination proposal.
What if there was breakout pricing that showed that the carpet portion was slightly higher than low bid but the vinyl portion was significantly cheaper? That might be an indicator that the bidder made a mistake. If upon checking with that bidder its determined their vinyl portion is correct, then greater savings could be realized by hiring them for only the vinyl portion.
High Speed Low Drag
As the deadline approaches, the pressure mounts, and there’s less time to make decisions. EVERYONE is in a hurry and mistakes are costly. Consider highway signs for a moment. They are very easy to read even at high speeds. They convey enough information to be useful without overloading the driver with data. Bid templates should be similar – easy to read with many factors automated to reduce errors. Macro’s in spreadsheets can be immensely helpful.
Bid directives should be brief and to the point. They should be compartmentalized according to TRADE not just CSI division. Make it easy for your subcontractors to get what they need. Be especially clear about items that are not furnished by subcontractors. Plan’s often have a responsibility matrix where “GC” is listed without any further clarification. Find out BEFORE the bid if vendors are bidding to the GC or to their subcontractors.
As bids come in – they must be scoped. WRITE DIRECTLY ON THE BID list out questions, or items that should be included. Then write the answers next to them. All verbal inclusions should note the time and date of the conversation. Any verbal answers should have a follow-up written confirmation. I encourage the use of E-mail to generate time stamped communications. Be advised that sending an email with all the questions and answers seeking confirmation before the deadline is one means to prove “good faith” effort to allow them time to revise an answer before the bid.
If the estimate was developed properly – it can output a list of scope inclusions in a checklist format for the subcontractors to confirm, decline, or modify dollar amounts accordingly. These are handy to provide proof that the bidder is complete even if their bid is written poorly.
Whether you’re using checklists, or verbal notes transcribed on the proposal show your work. All amounts need to be properly summed. A highlighted rectangle at the upper left corner with the total base bid amount written inside is fast and easy to read. Alternates should be highlighted in a different color. Writing the CSI division (per the estimate template) assures that the team leader is entering data in the correct areas. If a subcontractor proposal has two or more divisions of work then make as many copies. The bid binder should group bidders by scope of work with the apparent low bidder at the top of each section.
Prioritize, then Divide and Conquer
Depending on the complexity of the project, its common practice for the estimator and staff to set up a “war room” where all members of the team work the phones getting proposals scoped and ready to enter into the bid. Often the team divides the scope of work by CSI divisions and everyone talks over one another in a rising cacophony as bids make their way to the team leader who enters them into the template.
This overlooks a terrifically important point – not all scopes of work pose the same degree of risk to the GC. If a scope of work is worth 4% of the project budget and there are three bidders within 5% of one another – there’s very little reason to strenuously review the proposals trying to find something explaining the difference. Painting contractors come to mind here.
Conversely, a scope of work may be work 20% of the budget and the bidders may range by upwards of 30%. These are the bids to be worried about because they greatly influence the total AND they represent significant risk by virtue of the spread between bidders.
Therefore the estimate BEFORE subcontractor bids should be used to prioritize the trades. The team leader must verify that each staff member is observing these priorities because it’s easy to become absorbed in resolving some issue in front of you rather than setting it aside when something more important comes along.
The Team leader should also establish a timeline for the bid including times where key subcontractor bids are complete and ready for inclusion to the estimate. The Team leader is responsible for tracking that these deliverables are met and notifying the appropriate staff when they’re falling behind.
At all times the team leader should be prioritizing, and directing the staff accordingly. There’s never time to allow a staff member to become overwhelmed. If incoming bids are higher than previously scoped and entered bids – they should be set aside and ignored. Do not waste resources scoping high bids.
Estimators with long-standing relationships with their subcontractors may reach a point where they can rely on a trusted subcontractors proposal to be complete and competitive. This allows the team leader to quickly enter them to the proposal and elect to review competing bids only when there’s sufficient time and reason to believe they’re lower.
Rise above the fray
The “war room” method has a few advantages. Chief among them is that the team leader has unfettered access to the staff to direct the course of their actions. It’s an exciting environment that can foster a sense of teamwork and accomplishment.
Depending on the people and technology involved – it can also be a deafening, stifling, and intensely frustrating way to spend a day. Incessant chatter, ringing phones, people shouting, paper’s rustling, and a team leader barking above it all. Much of a company’s corporate culture will be on display during such a bid – consider how it appears. Fix what’s broken right away – it may be costing you wins.
Fixing the suck
There are a few things that can be done to make it a success. Starting with the outside and working in, there’s the subcontractors. Incomplete, poorly written, or downright irritating proposals generate immense amounts of work for estimating staff. Regular bidders should get feedback about their proposals. Don’t be afraid to suggest changes to make it easier to interpret their bid. Some subcontractors dump six pages of figures on a form and expect your estimators to sum it up.
“You do like math don’t you?”
Let them know this is unbecoming and unprofessional. Buried exclusions are likewise unappreciated in the context of a subcontractor that has an established relationship with your firm.
Subcontractors that habitually ignore phone calls or emails scoping their bids should hear from you later on. Get to the root of the issue – make it clear you’re trying to hire them they need to act accordingly. Be advised they might be ducking your calls if you or your staff habitually waste their time.
Estimators stock in trade comes down to judgment. Everyone participating in a bid must exercise judgment to the degree they’ve been granted authority. Not everyone will be as obedient, detailed, or committed as you’d like them to be. Limiting authority and increasing oversight are the common course correctives used to train a new (or uncertain) employee.
Without moderation, and steady growth – a dictatorship emerges. Staff that fear the team leader will seek to sandbag their positions – they will obsess over low risk issues to the exclusion of approving any bids but those that are high. During the bid these folks spend the majority of their time inventing reasons to be unsure of a bid. In practice and in effect – they are working against the company.
At the opposite end of the spectrum, an estimator would commandeer whatever employee’s they can find. Giving complete authority to unqualified individuals is an oncoming disaster.
In hindsight, maybe Buster wasn’t the best choice to head up the Henderson bid…
It won’t occur to someone new to the bid environment that it’s OK for there to be some uncertainty. Estimators are there to exercise judgment to reduce risk. It’s called an Estimate for a reason – it’s not reasonable to expect perfection.
Staying with the staff, the next issue is of communication. The bid day environment is stressful and everyone must race against the clock. To the subcontractor, your bid may be only one of many they’ve submitted that day. Interrupting their day is not your birthright, it’s not appropriate to alert them to some unknown condition and expect immediate and comprehensive coverage. Scoping bids involves a certain amount of estimating what the correct answer to your question will be. Successful estimators will approach a scoping phone call with kind professionalism. Suggesting a value for something obviously missing from the scope gives the subcontractor an idea of what you’re getting at and reduces the likelihood that they’ll “have to call you back”. The staff needs to get results – that’s best achieved through short, meaningful exchanges about legitimate questions. Making them read a 90 item list of general inclusions on every bid leads to a lot of “I left a message on his voice mail” situations.
As a happy coincidence, folks who are kind and professional on subcontractor calls, are often easier to work around in the war room. Knowledge leads to confidence. Make sure the staff scoping the bids have actually reviewed the plans. Competence is a big asset – answering “I don’t know” generates delays that rob precious time.
There are a myriad of programs and products geared towards businesses. Recent trends are towards cloud or server-based programs that seek to give editing powers to multiple users simultaneously. This has some appeal and some concerns. The noise and confusion of a war room might be mitigated by having the team work from separate offices – tied by a single file. In concept there’s much to recommend such a setup. Test the system thoroughly in as authentic fashion as can be imagined. Lagging connection speeds, entry errors, and service interruptions can prove ruinous to getting the estimate completed by the deadline. Reliability is critical followed by speed. It’s remarkably easy to develop an estimate template that is clunky and awkward to use. Many firms seek to build an estimate to output “scoping charts” where scope items are listed vertically with space for subcontractors arranged vertically. In use, the staff run down the scoping items comparing against the proposal. For excluded items, they carry the estimates plug number until they have a firm answer from the bidder. At the bottom row there is a tally.
This is a terrifically common technique – because it provides both questions AND answers necessary to fill in any gaps in received proposals. It’s also very low-tech, relying upon pencil and paper addition. Project Manager’s love it because it creates a one page display of all bidders in a category – telling them how and why the bids stack up the way they do.
Low Tech, High Reliability
Having used scoping charts, I can say they’re typically cramped, poorly formatted, and in the case of complex scopes of work – terrifically frustrating to use. Most of the space goes to inclusions that were merely checked off – leaving very little room to write in values. Plug numbers get replaced as subcontractors answer questions meaning erasing and re-writing. Even with good penmanship these charts end up messy and difficult to read.
My main complaint with them is that on any given subcontractor scope of work, there will be only so many items that have an actionable impact on the bid amount. Spreading these items out in a lengthy and difficult to follow chart obscures patterns. Pulling these scope items together in a concise list is very useful because sometimes competing bidders omit the same items.
Running scoping charts on a computerized spreadsheet will require each staff member to have their own computer – but it allows for a quick sort command to compile scope items in the order of most likely to impact the bid amount. As the deadline approaches – this allows partial scoping of incoming bids to quickly identify if an apparent low is really worth further investigation.
Additionally, having the spreadsheet sum all the columns gives a measure of security that a high-speed math error doesn’t blow your bid. Placing a running total for each bidder in a locked row at the top of the screen provides a rapid answer to “what if” scenarios on scope items. At all times it’s critical to remember that a functional system will tell you when to STOP chasing a bidder for answers.
Access to email and a reliable high-speed printer is crucial as well since incoming bids are generally emailed rather than faxed.
Most offices use land-line phone systems typically with some combination of receptionist and automated answering systems. Staff in the war room need ready access to their voice mail – they also need enough phone lines to be on calls simultaneously. Hands free talksets are immensely helpful and often overlooked options to allow the staff freedom to flip plan pages, write down figures, and type. Speakerphone should not be used at all. Subcontractors receiving the conference call can rarely understand all parties speaking and it makes them anxious which won’t help the situation.
Pictured: A superior option to speakerphone.
Cell phones with hands free talksets are common place and represent a viable solution in the war room. Subcontractors can call the individual who’s asking questions rather than transferring through an irritating automated system. Fewer phones on the table allows more room for computers which are more worthy of their weight. As an added plus, the cell phones can be set to vibrate thus reducing the ambient noise of the war room substantially. Staff running to the printer don’t miss calls, it’s just a better way to conduct business.
Depending on the Invitation to Bid (ITB), there may be extensive requirements for all that must be contained in the bid packet. Bonds, Insurance Certificates, Licensing information, Schedule, MBE/WBE Subcontractor lists, etc. Be sure to have absolutely everything that can be done in advance completed the day before the bid – in duplicate. Attach sticky notes to pages that must be completed at the last moment to make it easier for the bid runner to find them. Include several working pens along with clear directions all the way to the bid delivery location. Some clients office out of complex building campuses – it’s not acceptable to assume it will be obvious to your bid runner.
The bid runner needs to be on their way early enough to ensure that they may overcome any delays. The runner should study their mobile phone’s signal and notify the team if they must maintain some distance from the delivery point to retain a signal. The team should adjust their timetable accordingly if the bid runner will need extra time to make the delivery from a known-good reception area. Many firms choose a junior employee to serve as bid runner figuring it’s a simple task. Be sure that whoever is chosen, they are confident and calm and motivated. Round the bid amount to make it easier to write down. Read out the bid as single digit integers, for example $58,402.00 would be read as “five, eight, four, two, zero, two dollars”. It’s much slower to hear and interpret “fifty-eight thousand, four hundred and two dollars” even though it’s exactly the same number of words.
As the bid runner to read it back to you – be patient and DO NOT INTERRUPT. Stay calm and get it conveyed properly.
On rare occasion, there will be an error made by a subcontractor that causes them to withdraw their bid. It’s possible that this call could come in just after giving the bid runner the final number. Depending on the magnitude of the mistake, it may be necessary to abort the bid. For that reason the bid runner should be instructed to abort the bid if their phone rings between the final number and delivering the bid. The estimating team should be very conscious of this and should not call the bid runner looking for bid results even after considerable delay.
If the bid opening is public, the bid runner should be taking notes extensively. Each bid should be recorded to include GC name, base bid, alternate prices, and so forth. Items like failing to comply with ITB requirements should be noted as well. Giving the Bid runner something to fill in will help immensely with ensuring that all data is recorded.
If the bid opening is private, the bid runner should do their best to record the GC’s submitting proposals.
Post bid actions
The estimate was a costly venture for your firm. It’s imperative that the experience leads to increase the odds of success in the future. Assembling the bids into a binder provides a low-tech, high intensity database for future reference. Winning a job is the start of a process towards Project Management handoff. Getting the relevant data compiled and organized may involve considerable sorting, and follow through. All subcontractor bids with adds or deducts should have revised proposals submitted including the adds or deducts. Every number should have a “chain of custody” to prevent loose ends.
If the bid reading was closed – promptly follow-up with the client for bid results. Long delays in responding to bid result questions are potentially indicative of a problem. Highly bureaucratic clients may be willing to give “unofficial” answers in advance of formal procedures. A client should not take longer to respond than you had to bid. Some clients will put projects out to bid repeatedly hoping to snag lower numbers. The less ethical client will outright bid shop. Be prepared to hear that you didn’t win, be professional. It does no good to your firm’s image to speak ill of your competitors. Try to get as much information on the bid results as the client will provide.
Everyone loses a bid from time to time. Take the opportunity to be a benchmark of excellence in your field and share bid results voluntarily. The scope charts mentioned earlier can be easily formatted to omit subcontractor names should there be privacy concerns. Publishing not only the bid amounts but the add/deducts for scope items tells the bidders what they are doing relative to the market. By freely giving bid results you assure that your phone will not incessantly ring with requests for bid results. The good will established is profoundly helpful to attracting new bidders.
Bid results should be tracked to create a database to allow decision-making on ITBs. Take some time to refine templates, or estimating “tools” that need improvement. Follow up with subcontractors to get some feedback on who won and why.
Finally, a team coming together and doing their best in the war room should leave with a sense of camaraderie and commitment to excellence. Teams facing a loss need to know that the firm will survive, and find a way to win next time. Mindlessly grinding out bids is a poisonous notion that all but guarantees failure. Teams need to feel like what they are doing is vital, realistic, and likely to succeed. All of which is dependent of sound estimating leadership. Get above the frenzied math and structured reasoning. Make sure that you’re plotting a course in the right direction. Good leadership occurs when everyone thinks the tasks fell into place on their own.