Tag Archives: RFI

Asking the right questions

Incomplete information is an intrinsic part of the estimators craft.  Decisions on how to handle the risk created by this uncertainty can make or break your  chances of winning a job.  Lacking perfect information, we can still make better decisions by improving our understanding of the problem.  I’ve written before about the Request For Information (RFI) process and how to go about getting plan and specification questions answered.  In this article I’m hoping to expand the scope of our inquiry beyond the questions landing on an Architect’s desk.

Asking the right questions

We try not to question what goes on at the Architects desk…

Who does what?

General Contractors (GC’s) solicit subcontractor (sub) proposals for portions of the project scope according to local traditions, and individual company preferences.  Sometimes there are unfamiliar or unusual products that could plausibly align with multiple trades.  These products are often part of an aesthetically significant element of the overall design.  This means that the oddball thing, needs to be installed with care.  As a GC estimator, this situation presents more questions than answers.  If a product could be installed by several different trades, it probably affects those trades as well.  So even if an affected trade doesn’t furnish or install the item in question, they’ll need to accommodate it in some way.  This trade overlap typically creates a lot of bid-day confusion as everyone is free to interpret the work differently.

Find the rep

Conscientious estimators might start phoning all the subs they can think to ask about the oddball item.  After the inevitable delays, phone-tag, and contradictory information, they might arrive at a consensus.  A better approach is to look up the manufacturer of the item and identify any local resources.  Finding a local representative (rep) for the product is a vital lead because they are often involved in the Architects design process to such an extent that they know exactly what you need.  The material rep can tell you who they’ll quote to and what trades they typically install their products.  Some material reps will freely quote to a GC, while others will only quote to trade-specific subcontractors.  In some cases the material rep will provide a list of  recommended installers.  Once you know who the material rep will work with, you can confidently direct your subs accordingly.  Take care to provide the contact information for the reps’ quote department since that’s who they actually need to reach.  Firms that don’t normally deal with competitive bidding can be bureaucratic and slow about preparing quotes.  Protect your deadline by getting the wheels in motion early on.

Be advised that out-of-state design teams will often work with their own local reps.  I’ve encountered such projects where my area didn’t have an assigned sales representative!   Writing an RFI to the design team asking for their sales rep’s contact information may be the only way to sort things out.

Mushrooms

Be advised that items that appear on Architectural sheets but also apply to an engineering consultant’s work like Civil, Structural, Mechanical, Electrical, or Plumbing should be checked to ensure they’re properly defined on the engineered sheets as well.  Some Architects treat their engineering consultants like mushrooms; kept in the dark, and buried in fertilizer!

Incredibly expensive and hard-to-get items that are dear to the Architect’s heart are often carefully notated just once in an obscure place on the plans.  It’s absolutely the GC estimators job to seek out these “one note traps” and see to it that the affected subs are notified of the sneaky scope items.

Asking the right questions

Be advised that catching a problem may present it’s own challenges…

When does the project start?

The timing of a project can have a huge influence on the bid-day price.  Seasonal rushes or material shortages can raise prices for work that would have cost much less if it started a few weeks later.  During especially busy times, a project opportunity may fail to attract much competition simply because the timing conflicts with previous obligations.

On the surface, it may seem like this information is provided in the Request For Proposal (RFP).  While it’s true that the RFP will typically include an estimated start date for the project, it’s a rare client that actually starts when they say they will.  Of all the information that’s provided to an estimator, the anticipated start date is invariably the least accurate.  In order to improve on this uncertainty, we need to understand what’s driving it.

Architects are often under great pressure to finalize a set of drawings that have been in development for a long time.  Clients rarely understand the magnitude of work required to translate a design scheme into a workable construction set.

Some clients are under pressure to solidify their financing which can depend heavily on providing evidence of competitive pricing, i.e. bidding.  If their loans fall through with one bank, the client will need to repeat the process with another bank which consumes additional time.

It’s important to understand that even though the client and their Architect are under pressure to get the plans out to bid, both parties understand that they’ll have additional time to correct problems before construction. Neither party is entirely sure how long it will take to correct the problems.

Rafter: A group of turkeys

It’s been my experience that clients tend to pair with like-minded design teams.  If the design team managed their time effectively and delivered complete plans by their deadline, the client that hired them will typically have their financial house in order as well.  Conversely, if there are dozens of Addenda overhauling huge aspects of the plan between the RFP and the deadline, the chances are good that the client won’t have funding to build by their anticipated start date.

Savvy estimators should go to the job walk and listen attentively to the Architect and the client.  These people have sunk a lot of time into the project, and they may be easily persuaded to talk about the various challenges they surmounted in the process.  Conversations that start with inquiry about an aesthetic challenge often ramble into how prior design schemes exceeded the clients budget and what they did to correct it.  Estimators should be listening for indicators of how timelines, budgets, and delivery dates align between client and Architect.   You should be especially concerned about any heroic project overhauls that were completed just before the RFP was issued.  Rushing leads to errors whether it was caused by an indecisive client, or an under-performing design team.

Asking the right questions

Last minute heroics; When substandard work picks up speed.

There’s an underlying lack of sincerity behind any group of professionals who are rushing to get the plans out to bid, rather than delivering plans fit to begin construction.   Shoddy plans for projects that “start immediately” are common among clients who don’t have the money to build.

Incomplete information

Estimators are always looking to find an angle to land the job.  Incomplete plans are part of the challenge, which is why estimators are obliged to write a Request For Information (RFI) to get an on-the-record question and answer from the design team.  It’s imperative to understand that the way you ask the question will influence the answer you receive.   Design teams may perceive questions relating to incomplete plans as an indictment of their work.  Engineering consultants are especially given to avoiding accountability via paragraphs of incomprehensible verbiage.  These answers easily create more problems than solutions.

If the issue is obviously resolved into only a few options, the question should be phrased to communicate that the intent is largely clear, and that you think they want to do X, Y, or Z.  Whenever possible, phrase the question to elicit a clear yes or no response.  Estimators can capitalize on this practice by offering insights into why one choice may be superior to another.  Design teams may be unaware of when one option is substantially more expensive than another.

Why is it so expensive?

Estimators will encounter a lot of opportunities to wonder why something is so expensive.  You might think it’s a simple question that people would be willing to answer, but it often leads to miscommunication.  To understand the complexity of this situation, we  need a bit of context.  First off, estimators know that absolutely every number they provide will be remembered and potentially used against them even if it’s a rough approximation.

Sometimes estimators get focused on efforts to root out the overpriced item(s) to get the costs down without considering whether the remaining work is worthwhile to the bidder.  Small scopes of work are often disproportionately expensive because they still require mobilization, management, and operational overhead.

Even when the overpriced item is fairly obvious, there can be concealed relationships that simultaneously drive up the price, and block transparency.  Material reps may be working hand in glove with the design team to prevent competition and enhance profitability. Even if a sub wanted to help a GC to offer a less expensive product, they’d risk supply-chain retaliation on their other work.

Asking the right question

“Baxter expected retaliation, but the waiting was the worst part “

Corruption plays a role wherever there’s a lack of competition, transparency, and accountability.  Honest estimators should carefully consider how they sound lest their inquiries be misinterpreted as an invitation to bid shopping.

The key to getting an honest answer is transparent reciprocity.  For example, let’s say all the millwork proposals are much higher than anticipated on bid day.  The bids have been reviewed and you’re confident that all the bidders have included the correct scope of work.  You know who’s low and by what amount.  Now you want to know what’s driving the price increase for all the millwork bidders.

If you called the apparent low bidder and asked “Can you tell me why your bid is $X amount more than expected?”. The sub may assume that you believe they’ve made a mistake that made them high.  They might also  misinterpret the inquiry as a solicitation for bid shopping.

Transparency

In contrast, if you had said “I’ve reviewed your bid and everything looks spot on, but my estimate was quite a bit off.  Did you notice anything unusual that’s driving the cost of your work?”

By telling the bidder that their proposal appears correct, you’re establishing that they’ve provided a valid price for the scope of work.   Transparency builds trust.

By asking what’s driving the cost, you are addressing causes, not symptoms.  This is important because a high price may be driven by project factors beyond a simple list of parts or assemblies.

Continuing with our example, let’s say the sub explains that this project requires almost twice the amount of laminate compared to a typical project.

Reciprocity

Now that you’re aware of what’s driving the cost, you’d naturally want to see what could be done about it.  This is where reciprocity comes in because you’re asking them for help beyond the original agreement.  Estimates are “free” because the invitation to bid (ITB) promises to fairly award a contract to the lowest complete bidder, and to provide bid results to all others.  Bidders provide free bids in exchange for either a contract award, or information on how to win the next time.

Asking for free consultation work isn’t part of the original deal, so you’ve got to propose a new deal.  This is best achieved by promising to keep their solutions confidential and exclusive.

For example: “If you have any ideas on how we could reduce the costs to win the job, we would keep them confidential with the expectation that we would be dealing exclusively with you on this scope of work.”

Confident they can trust you, the sub explains that the reason for the price hike is due a casework dimension that’s a 1/4″ larger than the middle of one full sheet of laminate. By making the casework 1/4″ smaller in one dimension, a single sheet of laminate would cover twice as much casework, reducing the amount required for the job by half.

Now let’s take a moment to consider how different the answers might have been if we’d demanded a breakout of the expensive items.  The millworker might simply provide a line item cost for the offending laminate.  The GC might have misinterpreted the information to mean that this project used especially expensive laminate.  The GC would then request pricing using a cheaper laminate, only to find it didn’t make much difference to the price.

The millwork sub has to be cautious about what they’re saying because they don’t know how the information will be used, and they certainly don’t want the GC to help their competitors by sharing good ideas.   Plus, the GC’s fixation on simple material swapping ignores the greater leadership role necessary to bring good ideas to fruition.  Convincing a design team to reduce a casework dimension by a 1/4″ to save some money on millwork may be an arduous process.  Lots of thought goes into a design, even if it’s not immediately apparent.  It’s only when the challenges are revealed that you really appreciate how difficult it can be.  Expensive millwork might have been the cheapest solution to a complex problem.

Experienced estimators learn that it’s a rare situation where a value engineering (VE) idea is fully implemented by a design team.  This means that the final project savings will be less than whatever you thought on bid day.  Here again, the savvy estimator will share this insight with their sub when discussing how to present the idea most effectively.  It’s often better to under-promise, and over-deliver when it comes to ideas that require design-team involvement.

Asking the right questions

“Design teams are notoriously difficult to impress”

When will a decision be made?

I’ve lost count of how many times I’ve heard a contractor ask the client or architect when they’ll make a final decision on contract award.  It’s a natural question because an unresolved bid leaves you unable to fully commit your resources to other opportunities.   Clients may not fully appreciate how many of your bids are affected as they take weeks to consider the proposals from a handful of bidders.  As mentioned above, an awful lot of clients are finalizing their funding with banking officials who don’t care a whit about the hundreds (if not thousands)  of companies that are waiting for a decision to come down.

Clients may not realize that each GC that bid to them received  subcontractor bids from several  companies for each trade.  A typical commercial construction bid may attract several hundred subcontractor proposals for each GC that’s bidding.  There will be some subs who bid to more than one GC, but it’s entirely possible for a single bid opportunity to involve thousands of firms in a local market.  Even if there was only two GC’s bidding to the client, the vast majority of the subcontractors will walk away empty-handed.  It’s bad enough losing a bid, but passing up other opportunities to honor your commitment to the client can be a costly choice.  The longer the delay, the more opportunities will be lost.

Timetable

Every proposal should have an expiration date to protect the companies interests.  Clients will often stipulate how many days the proposal must be viable in the RFP.  For example, government projects may require an extensive approval process involving boards that only meet on a monthly basis.  This process can be extensive, so oftentimes the client will conduct an “open bid reading”, where the accepted proposals are opened and read aloud to anyone in attendance.  The “apparent low” bidder is noted, and the apparent high bidders are largely free to consider the opportunity lost.

Baring a client’s stipulation, most firms allow a maximum of thirty days before their proposal expires because the vendors, suppliers, distributors, and material representatives will only honor their quotes for thirty days.

Thirty days may not sound like much, but consider that it’s 1/12th or 8.3% of a year.  Many markets have seasonal rushes which define most of the revenue for the entire year.  The bidding for over 90% of a firm’s  annual revenue may occur in the span of 90 days.  This means that dithering clients can create a disastrous situation where they finally tell you that you lost, right after they’ve cost you every opportunity to win replacement work!

Commitment and reciprocity

The key to getting faster response from a client is to ask for a decision based on commitment and reciprocity.  Clients want their project to be successful and they’re particularly concerned about hiring a contractor who is committed to the job.  Explaining to the client that you have committed resources to make their project successful, leads them to understand why they owe you reciprocity in terms of a decision.  If you’re not “in the hunt” (low bidder)  the client can easily let you (and your bidders) get on to other opportunities.  If you’re their low bidder, you may be re-assured of where the process is headed.  Clients may be so hung up on the formality of their contract that they forget that most of the bidders just need to know they lost.

As with almost everything in management, time that’s passed, is opportunity lost.  If you’re not timely and serious about getting answers from a dithering client, there’s little chance of the project becoming successful.  Making the right decision on bid day can determine whether you win or you lose.  The next time you’re looking to answer a common problem, make sure you’re asking the right question.

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© Anton Takken 2016 all rights reserved

 


Reliable Estimating Part 2 Building momentum!

The plans are on the street, now what?

Once the Invitation to bid (ITB) is drafted, and sent to every subcontractor on your bid list, you’re free to pursue the other work that piled up. The more your internal systems are built to output an accurate ITB and an optimal bid-list, the more these tasks will depend on a thorough review of the Construction Documents (CD’s). By having an ITB template that requires answers to the most common bidder questions, you’ll be able to focus your review of the Request For Proposal (RFP) and Construction Documents (CDs). Be advised that defining which trades you need to invite isn’t necessarily a quick process.

Reliable Estimating Part 2 Building momentum!

“Sure you’re doing six things at once, but could you go a bit faster?”

A specialty trade or a really small scope of work may be required via a single note in the drawings. It may be a better choice to get the ITB out to the obvious trades, than to hold everything until you’ve scoured the plans for a buried specialty vendor.

An absolutely pivotal concept of reliable estimating is knowing that time is more valuable earlier than later.

You get more out of the early minute than the final hour.

Learning you need to fix a “hole” in your estimate one hour to deadline means you’ve got 60 minutes to get a viable bid together. Until that problem is solved, the idea of winning takes a back seat to the risk of submitting an incomplete bid!   In comparison, an estimator who found just 20 minutes three weeks earlier could have addressed all the issues completely.

I’ve been in the war room in the final hour when we discovered that nobody had invited an entire trade of subcontractors! Until we found a sub with a complete bid, we had only our historical pricing to go on. If we bid and won using our historical pricing, we took a risk that subcontractor proposals would be substantially higher than what we carried. Given the great value of that scope of work, our exposure threatened the success of entire job.   We were in such a hurry with the bid letting software that a single trade was left out.

Reliable Estimating Part 2 Building momentum!

Even with the satellite, Dave couldn’t make the connection…

Nobody found time to verify the invite list in the intervening weeks. Don’t let it happen to you.

Series of sweeps

It’s really simplistic to assume that estimating is a function of counting, pricing, and totaling. The efforts that make the difference between winning and losing are rarely attributed to punctilious spreadsheets. Broadly speaking, a GC estimator needs to conduct a series of sequential sweeps through the CD’s looking for four basic criteria.

Sub sweep

Getting the ITB on the street required the first sweep of the CD’s to determine who needs to be invited, and what information they’ll need to get started.

Scope sweep

This is where the estimator gets a handle on what’s supposed to happen in the project. Estimators must pay particular attention to where scopes of work overlap between design consultants. Architects are famous for not telling their engineering consultants about an alternate request, and engineering consultants are famous for not sharing requirements that should be included in another consultants documents. For example, an electrically operated smoke damper which is shown on the mechanical plans, but not on the electrical. Estimators must review plans looking for where trades will overlap on scope. If the plans aren’t clear on who does what, it’s the estimators job to provide direction to all concerned. Leaving this to chance on bid-day ends up with double-ups or holes. The scope sweep should enable the estimator to roughly define how much work there is for each trade. Any trade with an especially small scope of work should be noted for a mandatory follow-up with a trusted sub. The same goes for sub-tier subs like Fire Alarm, Pavement striping, HVAC Controls, Coring/Drilling, Imaging, etc. I call these “ghost trades” because they’re never clearly visible, but they’ll haunt your bid if you ignore them!

Error Sweep

After two sweeps of the plans, the odds are good that you’ve already come up with some questions for the design team. The goal isn’t to pick the plans apart, so much as it is to resolve issues that are likely to impact the bid. CD’s often fall short of defining vital project information like site logistics, alternates and phasing. Getting these questions into Request For Information (RFI) format early in the process gives the design team more time to answer which may in turn allow you more time to communicate the answer to your bidders.

Strategy Sweep

There are lots of GC estimators out there whose entire strategy is to simply rely on subcontractor bids to deliver their victories. This flawed approach hinges on two fallacies. The first fallacy is that there’s something magical about their company that makes subs want to give them better prices.

Reliable Estimating Part 2 Building momentum!

You can howl, but then you’re singing along!

The second fallacy is that all subs are bidding all jobs at all times. By inviting everyone, they feel sure that the market leaders will send them a bid. This “strategy” is successful only when there’s no real competition.

Estimating is about controlling risk. If it were possible to simply add everything up and arrive at an accurate price the industry would use cashiers instead of estimators. Risk and how it’s controlled is how a plan becomes an opportunity. A lot of estimators get hung up on risk as a one-sided concept. I hear a lot of GC estimators looking to press project risk onto their subcontractors. Poorly defined scope, misleading diagrams, or counter-intuitive specifications are all treated like it’s the subcontractors problem. These GC’s fail to understand that the uncontrolled risk raises subcontractor prices, making the GC noncompetitive. It’s of pivotal importance for a GC estimator to understand that winning bids is a function of reducing risk for everyone.

Taking responsibility for sorting this out is how a GC estimator can set themselves apart from the field and thereby attract the market leaders. It’s pivotally important to understand that this is a proactive measure administered fairly to all involved parties. Bid directives are an effective means to mass-communicate a plan of action but they can be easily shared with your competitors. I recommend using bid directives to provide clear and accountable leadership that your competitors would shirk. Strategies should be treated as confidential information, and communicated accordingly.

Very few jobs will present an opportunity for a single overarching strategy to secure a victory. That being said, if you can’t find any advantage, you won’t likely land a job. Very often the greatest advantage a GC will have is due to an existing relationship with market leading subs. In that case, picking work that’s best suited to the top performers becomes the GC’s strategy for success.

Measuring time!

Finally, we’ve reached the point where most folks believe the real estimating begins; the quantity take off (QTO). I’ve written about software technology for estimating before. There have been notable advancements in how estimators tasks are completed, like computerized QTO. For example, it’s now possible to measure, count, and color the plans without the printed plans, scale, paper, calculators and pencils. While that’s a huge advancement, most of these proprietary programs lack the logical “polish” of standard business programs. These programs offer an exponential increase in the speed of QTO’s provided the estimators learn their idiosyncrasies.

Whether you’re using a digital system or manual takeoffs, there are some aspects of reliable estimating that never change.

“One pass” takeoff

After all the effort to define which Construction Specifications Institute (CSI) Masterformat divisions pertain to your project, it’s tempting to conduct the QTO in “CSI order”. Lots of estimators will begin their takeoffs with Division 2 Sitework and skim through the plans looking for anything that pertains to that division. Unfortunately there are often solitary notes pertaining to a small scope of work that’s unique from everything else shown on the page. This means that the estimator skimming for a specific CSI division will ignore that solitary note figuring that they’ll get it when they sweep for that division. When the note is on a particularly unlikely sheet, it’s often forgotten. Later, when their Project Manager comes down the hall complaining about how they missed something, that note will be very familiar.

I advocate what I call the “one pass” takeoff. I make sure that absolutely everything depicted, noted, or specified on the page be taken off before I go to the next page. If you’re doing manual takeoffs, this means you’ll have to start a CSI division sheet for each division as they present themselves. It’s a lot of shuffling to record your measurements, and the sheets tend to look less tidy from the many edits. This is still worth the effort since it not only catches the one-note traps, I’ve found it’s actually faster than repeated skimming.

Knowing where to stop is as important as knowing when to stop

Unless the job is fairly small, chances are good that your QTO’s will be interrupted or at least spread across several days. Estimators should understand that co-workers have no comprehension of how much focus it takes to complete some takeoffs.

Reliable Estimating Part 2 Building momentum!

I’m…gonna need a moment here…

Something as simple as the height of a concrete stem-wall may require calculations based on information scattered across several sheets. It’s therefore good practice to write (or type) notes on the plans providing the necessary information where it would actually do you some good. General items like area and perimeter measurements for each room can prove incredibly helpful since a myriad of takeoffs are based on these two pieces of information. By leaving a record of basic measurements, you’re able to pick up where you left off with minimal wind-up.

I would also recommend that your day’s work be paused at a meaningful and reliable point. Stopping mid-way through a sheet is sure to keep you up worrying about what you missed. Choose to either stop early or work late in order to leave yourself a clear conscience.

Before you begin an intense take-off, consider your schedule and the day’s obligations. It’s unwise to get a half-baked start on something complicated right before a meeting. One of the advantages of the one-pass takeoff method is that you don’t have to do the sheets in order. If you’ve got a limited amount of time before an appointment, pick a sheet you can complete. Estimators must accurately track and predict how long each element of a QTO will take. The fastest QTO’s are the ones that aren’t interrupted, however estimating is about more than take offs. Getting interrupted at an inopportune time is part of the job.

Three round review

Checking for errors is the best way to catch them but how you go about it can greatly increase your reliability. Huge data sets and tiny differences can stymie even the most dedicated review. The key to catching errors is to structure your workflow around meaningful review points. The simplest problems are most easily caught earlier in the process. Breaking the QTO down, this begins at the page level. Before moving to the next page in the plans, the estimator should review everything they took off on that sheet. The minute detail is fresh in your memory, and transposition errors are more easily spotted. The vast majority of errors are caught at this level.

The next round of review is when tallying a division as a GC, or a major component as a sub. The errors found at this level tend to be more dramatic because you’re moving the contributions of several plan sheets. A flooring subcontractor might take a moment after tallying the carpet and the tile measurements to see if the relative difference they’re seeing aligns with what they’d expect. These order of magnitude comparisons can tell you if you’re missing an individual room or an entire floor.

The third round of review is after the QTO’s have been entered into the estimate. Does the estimated cost outcome align with the division level review? By using the earlier reviews as benchmarks to compare against, the subsequent reviews become more reliable.

Reliable Estimating Part 2 Building momentum!

You could say the process leaves a mark on you…

I would strongly caution an estimator against more frequent reviews of their work because reviews without benchmarks are little more than skimming plans looking for stuff to add. After a person has looked at the same information a few hundred times, their ability to recognize new information diminishes. You have to be able to trust your work by testing it at intervals that allow you to know if you’re right or wrong.

Taking notes

An awful lot of estimating comes down to judgment when dealing with uncertainty. It’s not fair, but an estimators judgment is often criticized after the uncertainty is removed. People don’t care that you had a good reason for your decision, they only care about the outcome of your decision. It’s therefore absolutely critical to develop the habit of clarifying, stipulating, and excluding anything that requires judgment on the proposal. Effective proposals define with minute clarity what is driving the uncertainty. For that, you’ll need to take notes of where you found the problem. Keep in mind that as an estimator, your work is laying the foundation for the Project Manager’s efforts. Everyone needs to know where the tricky bits are located. Plus if you’re expected to present your estimates for review at your company, it’s good to be able to provide references for all the hard decisions you made.

Schedule slip

As mentioned earlier, interruptions at inopportune times are part of the job. I’ve had multi-million dollar estimates interrupted at the last moment over questions on a $50.00 change order! Estimating is about controlling risk even within the estimating process. Plainly speaking, an estimator must not only predict how long a QTO will take on a piecemeal basis, they must also be capable of plotting a path to recovery when they’ve been derailed. It’s at this point that many, many, “old-school” estimators just plan on spending the night. I believe that most estimators could substantially improve their quality of life by committing themselves to solving schedule problems with overtime as a means of last-resort.

Schedule recovery may involve many approaches ranging from additional workers, to less detailed takeoffs. Estimators should consider the value and the risk associated with each scope of work they’re taking off. A perfect paint takeoff can take a considerable amount of time, yet the paint scope is relatively inexpensive when compared to plumbing. Since the paint scope is relatively inexpensive, the relative risk of an imperfect takeoff is quite low unless you can’t attract more than one painting bid. Estimators should always prioritize on high value, and high risk scopes of work. As a GC estimator, knowing which direction to go between similar bids on bid-day is why you’re doing the takeoff. Continuing with the paint example, a pressed-for-time estimator might shift to a square foot cost for the paint scope followed by a list of scope inclusions that painters might miss. Providing sufficient information to scope sub bids is FAR more important than knowing the precise square footage of Paint color 1.

Lots of GC’s have a team of people working on an estimate. If you’re heading up the effort you will need to think on your feet when people call in sick, show up late, or otherwise drop the ball. Project Engineers are frequently “loaned out” to help in estimating, however they are rarely relieved of their normal responsibilities. Many will prioritize their ongoing projects at the cost of your time-sensitive estimate simply because they don’t work for the estimator. Lead estimators must provide and enforce deadlines for every task. Never give a helper sufficient time to squander your recovery. It’s better to check on them too much, than to find they’ve dug you a deeper hole.

Estimators who are working with interns, Project Engineers, etc. should make a special effort to simplify and compartmentalize the tasks they are delegating. Estimators are used to thinking in terms of length, area, and volume measurements, however these terms can quickly overwhelm someone who’s facing their first takeoff. Estimators should understand that “standard” units for takeoffs are arbitrary to a newcomer. For example carpet is measured by the square yard, yet ceramic tile is measure by the square foot. Taking the time to explain that there are nine square feet per square yard can make the difference between a useful takeoff and a mess that nobody understands.

And for goodness sake, if you’re having people do this work without a digitizer, or on-screen takeoff system, then at least give them a courtesy lesson on how to measure areas that aren’t squares or rectangles! While we’re at it, teach them to use decimal feet in lieu of inches! For some reason, this rather obvious point is overlooked in most construction education.

Addenda of mass distraction

Many architects will respond to bidder questions via an addendum before the deadline. Projects and professionalism will vary which means that GC estimators will have anywhere from over a week to only a few hours to incorporate changes made via the addendum. This practice is easily the single most stressful aspect of professional construction estimating because unclear, misleading, and outright contradictory information is often presented without sufficient time to get clarification. Estimators should note that shoddy plans, municipal or “public work” clients, and last-minute addenda are constant companions.

Reliable Estimating Part 2 Building momentum!

The architect finds last minute changes to be the most fashionable…

The absolute #1 priority is to get that information disseminated to the bidders as soon as possible. The second priority is to provide the necessary leadership and communication to ensure your bid-team isn’t derailed by the Addendum.

As a start, every Addendum should be scoured for changes to the deadline, proposal format, etc. Everything that goes to the bid-team should have the most current deadline printed where it’s easily seen. Wherever possible, notify bidders when an Addendum has little or no impact on their scope. If the Addendum ONLY affects the GC’s, don’t bother the subs with needless panic-inducing addenda.

If your Request For Information (RFI) was answered in the Addendum, you might reference whether the Architect response is consistent with your earlier bid-directives. The better your direction, the lower the risk your subs will face. Lower risk leads to lower prices, this is where the truly professional estimator earns their keep. If you do your best to get in front of issues, you may be rewarded with an addendum that confirms all of your bid-directives which means your subs are the only ones who don’t have last-minute changes.

Preparing for the blitz

Bid day is a real test of your skills, knowledge, tools, endurance, and patience. The better part of victory is preparation. Heading into bid-day you’ll need several critical elements in place. First and foremost, you’ll need your estimate “built” which is to say that your QTO has been imported or entered into your template form and prepared to accept subcontractor proposals. You should have a reasonable estimate of every trades worth, and a decent idea of what the final cost will be. Second, you’ll need your bid packet, which is all the completed forms identified in the Request For Proposal (RFP). Generally, this is the proposal itself, a CSI breakdown, a construction schedule, bond, etc. Everything should be as ready as possible for the bid-runner to deliver.

Third, you’ll need the “bid tab” or “scope sheets”. These are the scope of work as broken down in the estimate in anticipation of how the subs will bid. The scope of work is generally listed in rows, and a series of columns are made for subcontractor comparison. As the subcontractor proposal is compared against each row, the item is either checked as included, marked for follow-up, or an allowance is inserted. Once all the columns are filled for a given sub, their tally is calculated at the bottom and the subs are ranked by price lowest to highest for entry into the estimate.

I should mention that every Alternate that affects the given scope of work should be built into the scope sheet. Poorly defined Alternates can wreak havoc on bid-day. It’s important to know what to expect.

Estimators with plenty of time often export their bid-tab as a checklist which they have their subs fill out, endorse and return. This helps to prevent the “gotcha” nonsense that comes with indecipherable inclusions, exclusions, and clarifications on subcontractor forms.

Projects with special requirements for Minority Business Enterprise (MBE) participation should be tracked in real-time in the estimate. Allowing for “what-if” strategy is a crucial tool to making timely decisions. Very rarely will MBE companies be the lowest bidders, so it becomes a balancing act to meet participation goals, without undue cost.

As you head into the final hour, all of your hard work preceding the bid will be paying off. Be sure to “close the loop” with everything you’ve learned on this estimate by tying your estimate tracking to your bid results. An awful lot of an estimators daily struggle comes down to reconciling the big picture against today’s efforts.

Reliable Estimating Part 2 Building momentum!

Winning profitable work is the estimators constant goal.  Very little has more influence on your ability to win than choosing the right opportunities. Everything is an opportunity to people lacking perspective. Estimators must take it upon themselves to provide not only estimates for projects they’ve bid, but perspective on the market in which they compete. It’s vitally important to show your work in much the same way as an estimate validates the proposal amount.

Reliable estimating practices not only improve bidding, they enable decision-making.

 

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© Anton Takken 2015 all rights reserved

 


Request For Information

We estimate the cost to build a design because neither the design, nor the construction are perfectly controlled. Most buildings end up with notable differences from the bid-day plans. Since the bid-day amount is the basis of contractual award, these differences take the form of change orders. The only thing clients dislike more than change orders, are delays. As estimators, we have the ability to set a project on the right course by calling the design-teams attention to likely problems.

Before we get too far into that process, it’s important to understand the perspectives of all the key players. Effective communication comes down to how you ask a question, rather than what you’re asking about.

Request For Information

“While it may have been a good question, the response left the stronger impression”

The Client thinks you know the cost of everything all the time

Since estimates are “free”, clients tend to think of estimating as an auction where each bidder knows the projects’ value from the beginning. Clients may assume that a few days with the plans and maybe an hour walking the site is all a contractor would ever need to build a job perfectly. General Contractors (GCs) are guilty of creating this impression when they’re trying to get on the clients bid list. Like any sales job, there must be a balance between what’s promised and what can be delivered.

The Architect believes their intent is obvious, and it’s your responsibility to know what to do.

By the time a set of plans has been put out to bid, the Architect has spent a tremendous amount of time developing the design. The minute differences in paint shades may have more emotional value to the Architect than the way something’s bolted together. While Architects may spend months or years developing a set of plans, the majority of their time may have been sunk in helping their client to pick between different schemes. This means that the nuts and bolts of the final design are put together in a compressed timeline.   Clients can and do make substantive changes at the last moment, causing predictable grief for the Architect. Nobody’s going to say this before the bid, but the Architect relies on the GCs estimators to make reasonable assumptions about missing information. If your Project Manager (PM) tries to submit a change order for something the Architect feels is obviously necessary to fulfill their design intent, they’ll claim that means and methods are the GC’s responsibility. For example, it’s not ordinarily the Architects job to define the length of screw necessary to attach a substrate to a structural element.

Once the answer is known, everyone will think the solution was obvious from the beginning

Estimators face a completely different set of challenges. Bids must be competitive, thorough, defensible, and profitable. A proposal distills all of the scope of work to a few variables like cost, and duration. This has the effect of making every proposal appear uniform, while concealing the impact of unanswered questions.  Many estimators have won a bid by incorrectly interpreting the Architect’s intent.

Request For Information

Architect: “No, no, I wanted all three like the middle one!”

  Be advised that many Architects include a General Conditions specification that stipulates that whenever the contractor is faced with multiple requirements, they should always defer to the most costly option. This gotcha specification works in obvious conflict with competitive market pricing. After the bid, it’s always obvious that they wanted something expensive. Before the bid, they don’t have time to answer your question.

Fast answers to easy problems

Estimators may have a few days with the plans before the Request For Information (RFI) deadline. Architects have RFI deadlines to provide themselves with sufficient time to properly respond to bidder questions before the bid deadline. On many commercial projects, it’s very common for the RFI deadline to be a week ahead of the bid deadline. Be advised that most Architects see absolutely no problem in answering all the RFI questions the day before or the day of the bid deadline. GC estimators won’t have time to generate easy to read directives for their subs. It’s a race to make last-minute changes before the deadline.

This leads to the first imperative of RFI writing; getting fast answers. It’s pretty tough to improve on a “yes or no” response in terms of rapid communication. By extension, this means that RFI’s should be written to elicit a yes or no response. The key here, is to understand that multi-step or multifaceted questions lead to confusion and delays.

Let’s say that the finish floor plan shows a room that’s missing any call-outs for wall finishes, trim, or flooring. With rare exception, specific paint colors won’t affect the price for bidding purposes. Asking if the walls should be painted may elicit a simple “yes”. In contrast, a request for the desired finishes of all the walls in room XYZ could lead to a situation where they don’t answer because the Architect is still debating between paint colors. Bid day passes and you never got to know if the room will be painted or not.

Addressing one issue per RFI allows the Architect to answer the easy questions right away. If they’re still debating about paint but not carpet, they won’t answer an RFI asking for both the paint and carpet. From an estimating standpoint, getting half the missing information might be worth its weight in gold.

Every design is a work-in-process

It seems painfully obvious that estimators questions are going to be focused on getting the job priced. If two options cost the same, we don’t need to know which one in order to bid the job. Design teams know that their published decisions are fulcrums for accountability. Estimators must keep in mind that design teams and clients may have little knowledge of how their aesthetic decisions affect the budget. An open-ended requirement in the plans is seen as a “placeholder” for a future decision. The problem for GC’s is that it’s a contractually binding requirement to an unknown. From the client and design teams perspective, the missing information is “no big deal” because they presume the estimator knows what everything costs all the time.

Request For Information

They get cranky when you point out the holes in their design”

Applying this insight, estimators are well-advised to do a little research on what’s at stake before they draft their RFIs. If a fixture specification failed to define the finish, the estimator should inquire as to what impact the available choices will have on pricing. If there are prices for the “good, better, and best” options, draft the RFI with those options listed. It’s possible that the design team is debating between colors at the same price point. Getting the design team to define the price point, solves the estimators problem. Questions that won’t affect your bid should be noted for future hand-off to the Project Manager since it’s not worth the administrative effort until you’re under contract.

Get a complex problem on one page, and a proposed solution on another

It can be particularly difficult to get a yes or no answer to a complex problem pertaining to spatial relations. Architects use a variety of perspectives to depict the project scope. It may require constant flipping between a plan view, a cross-section, and an elevation drawing to visualize the problem you’re trying to address. The RFI needs to be less work for the Architect and for everyone who must understand their response. One very low-tech way to address this problem is to literally photocopy the plan areas in question. Re-size and cut out the copies until they fit on a single 8.5″x11″ sheet. White-out every note, callout, or icon that doesn’t pertain to the question. Make a copy of this sheet. Use one for the question, and the other for a proposed solution. Label them accordingly. Bubble the areas in question to call attention to only what you’re asking about.

The RFI should simplify the problem and refer the reader to the first sheet, before suggesting a solution referred to on the second sheet. Simply asking “Is the proposed solution acceptable?” This leaves you with an RFI that could get a quick “yes” while providing your subs with a simplified two-page diagram of the issue and it’s resolution. Be advised, creating a simple diagram of a complex solution can be a very arduous task. Try it yourself and you’ll have newfound respect for Architects.

Many architects will follow-up later with an addendum or an ASI which incorporates their RFI direction into the plans.

Respect the designers intent.

Architects spend a great deal of time refining their aesthetic vision of the project. While competitive estimators are motivated to find cheaper options to land the job, Architects fulfill their duty to protect the design’s integrity. This often places them at odds with budget conscious clients and their contractors.   It’s therefore good form to treat their designs intent with respect. In the simplest of cases, an RFI might open with an explanation of the issue, followed by “we believe the design intent is: (your suggestion)…” wrapped up with “Is that correct?”

The tone of the question implies that you’re on their side and that you see their solution but you want to check with them first. Estimators should studiously avoid phrasing that communicates: “hey these plans are wrong, here’s a cheap shortcut.”

Request For Information

“Good information, but… wrong application”

Some thoughts on suggestions 

RFIs are the only way that a GC Estimator can communicate on the record with the design team. On the surface, it seems like an RFI could only be used to ask questions. In fact, the majority of the time, the GC will have a distinct preference for how any given problem is solved. Including a suggestion in your RFI is how you can try to steer the solution to your benefit. If there are multiple potential solutions, you should never assume that the Architect or the client will know which suggestion is the most cost-effective one.

I’ve encountered situations where moving a wall 3″ in a single direction saved thousands of dollars compared to any other option. Including that information in my RFI proved instrumental in getting a prompt reply. Architects who aren’t sure which choice will be the most cost-effective may request alternate prices on the bid. Alternates exponentially increase the estimators workload without offering much potential for reward. RFI’s that lead to more questions than answers are bad for business so share what you know to facilitate solid decision-making.

GC estimators are looking for better, cheaper, and faster solutions. The natural opposite of all of these things are sole-sourced specialty products and their vendors. Sole-sourced items tend to have long lead times and high prices compared to similar products. Architects have very little concern for lead times or difficulty in managing prima-donna vendors. That’s the GC’s problem. As surely as night follows day, specialty products tend to create unusual problems for the build team. Bringing this back to RFI’s, the estimator will often find it necessary to resolve issues pertaining to, or caused by, specialty products.

Defensive designers will delay decisions

Architects tend to believe that high prices come with high quality (except for change orders), so design teams tend to be quick to shoot-down any efforts to replace over-priced products with substitutes. If you’re competitively bidding a project, the cost of an expensive assembly is only a problem when there’s a reasonable chance your competition will miss it. Estimators who ask for solutions geared towards retaining the annoying, expensive, and long-lead product will get quicker replies from the Architect than those which oblige the Architect to defend their design decisions.

The one-note trap

The more expensive, hard to get, or outright difficult the product is to work with, the more likely it is that the Architect will require it with a solitary note located where absolutely nobody would look for it. Estimators who catch the note risk losing the bid by including the high-priced item that their competitors will overlook. Architects spend lots of time picking out something that’s dear to their design, so it’s very suspicious that they’d take chances on its inclusion through minimalist notation. This may be a trap intended to make the GC pay for signature design touches that the client can’t afford.

Request For Information

Daylight is the best disinfectant

Whenever these traps are encountered, estimators should draft RFI’s identifying precisely where the note appears, why it appears to be an error (i.e. because it looks like it doesn’t belong) and asking the design team to confirm that the sole-sourced thing has no allowable alternates. When it’s appropriate, ask the design team to list the approved vendors of the specialty product, because chances are excellent that they worked with one of them directly.

Architects can’t afford to ignore that RFI, and by answering it publicly, the bidders are all on equal footing to compete. By all means keep that feature’s price handy because once the budget is blown, it should be item #1 on your list of Value Engineering ideas.

Some notes on notation

Construction Documents (CD’s) are the composite of a set of drawings (plans), Scope letters, Request for Proposals (RFP), specifications, soils reports, directives, Addenda, and RFI responses. Mid-sized projects may have literally thousands of pages in their specification manuals, and hundreds of sheets in their plans. After all the work in putting them together, design teams are often imperious about questions that are answered in the CD’s.

RFI’s should pointedly reference the applicable sheets, details, and specifications down to the individual sub-heading. If you don’t tell the design team where to find what you’re looking at, they won’t have much reason to believe there’s a problem.

Whenever necessary a screen shot, or photocopy of the relevant information with bubbling around the area in question should be attached to the RFI. The motivation is to guide the reader through your natural confusion. For example:

Note A on Detail 5/A5.1 calls for “5/8″ thick ceramic tile”, which corresponds with the dimensioned layout of the room shown on the Floor Plan Sheet A6.1 (see attached). In contrast, specification 9300-122,A,5 calls for 24″ thick ceramic tile (see attached). We believe the intent is to install 5/8″ thick ceramic tile.

Is that correct?

If not, please provide the desired tile thickness for the area in question.

Be forewarned, irrelevant details always attract attention and causes confusion. Screenshots are really easy but it’s virtually impossible to cut out all notes, dimensions, and icons that will distract your reader from the real question.

Formal for a reason

RFI’s are a formal and contractually binding process between the GC and the Architect/ owners representative. The questions and their answers become part of the defined project scope of the contract. This means that unless otherwise noted, the questions you asked the Architect during the job walk are off the record. They can absolutely disavow any direction, instruction, hint, or help they gave you.

You should not directly ask any questions of the Architects’ consultants (engineers, interior designers, landscape designers, etc.) because the consultant’s response would effectively bypass the Architects’ control over the design. Architects extend the same courtesy to the GC by not communicating directly with their subcontractors. Most GC’s instruct their bidders to direct questions only to the GC’s estimator and emphatically warn bidders that contacting the design team or client will result in exclusion from the bid.

Life in the slow lane

The price paid for binding answers is time. RFI’s involving multiple design disciplines take the longest since there is more coordination required to answer. If the design team is answering multiple GC’s questions, they might compile and collate the RFI’s looking to avoid redundancies on their next bid-directive. This leaves even the easy to answer RFI’s waiting for a last moment response.

RFI’s are frequently misunderstood, or mishandled leading to situations where after weeks of waiting, the response fails to solve your problem before the bid. Architects who don’t understand your situation aren’t inclined to extend the bid, or revisit a “closed” issue.

Estimators need to understand the stakes of writing RFI’s properly. Many botched RFI’s lead to Architect responses that add additional layers of confusion, risk and frustration. Perhaps worst of all, your competitors poorly written RFI might oblige you to sort out a problem they created.

Informal guidance          

Occasionally there will come a problem that leaves your estimate stuck until you’ve got the Architect’s answer. In these cases, Estimators should reach out to the Architect informally and ask for advice on how to phrase the problem so it will be easily resolved. Some Architects will appreciate the courtesy and may even tell you how they’ll answer your RFI. Not only is the RFI answered, but the estimator gains time to share the information with their subs before the bid.

Subcontractor driven questions

Skilled trade subcontractors can come up with some very technical questions. A GC Estimator may lack the trade-specific knowledge to properly articulate the question to the design team. Many GC’s simply copy and paste a subcontractors RFI onto their template and submit it as though it was their question. These RFI’s may be poorly written, or asking for information already provided in the CD’s.  Since skilled trades generally correlate to engineering consultants, the RFI responses may be full of incomprehensible engineering legalese. This is most prominently displayed when a soils engineer answers an excavators poorly written RFI.

Request For Information

Rick knows what he’s doing but his writing is atrocious.”

GC estimators should take the time to learn what the sub is asking about. If this issue affects one bidder, it likely affects others. Getting to understand the problem and it’s likely solutions, is critical to asking only what you need to know. There are lots of sub estimators who were pressed into estimating, or are expected to estimate in addition to a host of other duties. RFIs before the bid should be decidedly geared towards answering estimating questions. You need to know enough to price the job, not to perfectly build it on bid-day.

Preparing for the bid

Sometimes the most dearly needed RFI’s go unanswered before the bid deadline. Estimators need to prepare contingency plans for every significant RFI. Generally speaking, the suggested solution in your RFI should be your bid-day default condition. If that RFI goes unanswered, then your proposal clarifications will need verbiage informing the client that you’ve included your specific solution to an issue raised in RFI (#) submitted to the Architect on (Date). Most clients aren’t paying attention to their Architects RFI log. A submitted bid implies that you had everything you needed to accurately bid the job. Architects who ran out of time answering RFI’s should have every sympathy with your situation. If the issue is serious enough that you can’t risk such a move on the project, it’s time to reconsider the opportunity. Sometimes missing information is intentional.  Weak design teams and unreasonable clients won’t improve after the contract is written.

 

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© Anton Takken 2015 all rights reserved


Plans and Specifications Part 2

Addenda, RFI’s and ASI’s

Addenda are Architect initiated changes BEFORE the bid. Architect’s Supplemental Instruction (ASI)’s are Architect initiated changes AFTER the bid.  This is significant because in most cases, the contract has been written before an ASI was issued.  The ASI should be reviewed for cost and schedule impacts which will require a change order to incorporate into the contract.

Directives from the Architect fall into a gray area, they are typically an informal document intended more to guide interpretations of intent than to augment the design.  An example would be : “The south end of the parking lot may be used as a material lay down yard.”

A Request For Information (RFI) is a question initiated by the General Contractor (GC).  If  there is only one GC bidding a project the RFI’s may be answered directly.  If multiple GC’s are bidding the RFI’s are often answered via a final addendum.  Newer changes trump older changes regardless of which document is used.

In a typical hard-bid situation the Request For Proposal (RFP) will include a deadline for RFI’s and a date for final addendum.  Depending on the duration of the bid, the final addendum may be delivered a day or two before the deadline.  The Architect compiles all RFI’s into a single Addendum document which answers all questions.  This ensures that all bidders are working on the same information. RFP’s are sent to GC’s from clients, whereas Invitations To Bid (ITB) are sent from GC’s to subcontractors (subs)

In practice, this often presents a situation where multiple significant changes to the bid must be accomplished in a very short amount of time.  The GC’s must hurry to get this information to subcontractors.

“I’ll get to that later…”

Many estimators “keep their heads down” trying to complete Quantity Take Offs (QTO), build estimates, and distribute the bid information to the subcontractors.

Plans and Specifications Part 2

Yep, gotta make production….

This practice can compound problems when new projects come in while other bids are underway.  Prioritizing work based on deadlines tends to reduce the effective bid envelope for your team and your subcontractors.

Failure to launch.

New ITB’s represent an opportunity to streamline the information before it goes out.  Well organized and easily searched files benefit your team and your subcontractors.  If your firm uses any kind of plan distribution software, the subs will move far smoother if the information is easy to find.  It goes against the grain of some folks to admit it, but it’s a simple fact that most subcontractors will not look at all the plans and specifications.  The subcontractors are not getting paid to bid, reduce the cost of bidding to your firm by being less difficult to work with.

This is what you actually “do”.

As addenda, RFI’s and directives come in, sort them to folders.  If possible, it’s immensely helpful to publish a bid directive listing the changes chronologically and broken down by CSI divisions.  This directive can become part of a proposal scoping set for the team on bid day.  Keep your eyes up and get the subs unfettered access to the plan information.  If too much importance is placed on having perfect QTO’s and estimate templates, the subcontractor bids will be lacking.  That means they’re either coming up short and costing you profitability or they’re padding for risk and costing you the win.  If you want to win profitable work, you need to run a good bid.  That means precise, prompt, and easy to understand information.  This is especially important with a weak design team.

Get your head up

An interesting paradox exists within the average bid.  The constant interruption that robs you of time to make final touches to your estimate before the deadline is directly proportional to the effort you sink into communicating earlier.  Many estimator’s feel they don’t have time to “spoon feed” information to their bidders.  These same estimators often end up either “walking a sub through” their bid at mach 6 minutes before the deadline, or they get really high subcontractor quotes from bidders trying to cover the risk.  Project Managers posing as Estimators seem predisposed to this mindset, much to their detriment.

Plans and Specifications Part 2

Keep it up Sparky, see how that works out for you…

Plan review

Taking a step back to the ITB, it’s very worthwhile to do a quick scan of the plans.  Get “the gist” of what’s going on for the project.  Take notes on which trades are involved and keep an eye out for trade overlap.  If there’s a new Roof Top Unit (RTU), you should see some structural support, plumbing, and electrical in that area (on the respective sheets).  Be wary of anything with “match existing”, or “building standard” as these are not specifications or definitions, they are requirements to field verify or guess.

Look for avenues for material movement.  Site logistics can often have huge influence over production rates.  Protecting pathways, elevators, stairwells, doorways, or exterior finishes are all often requirements for the project.

If you find an RFI question GET IT OUT RIGHT AWAY!  If possible, ask your RFI questions at the job walk because sometimes the architect will give an informal answer.  Whatever you find you should share with your bidders.

Check the specification manual for missing sections, it’s very common.  If there are any non-traditional relationships get them to the forefront.  Examples include owner furnished and contractor installed material.  Requirements to purchase materials from a national account, or vendor.  Requirements to coordinate with owner subcontractors and so on. Put all of these notes and comments on an eminently readable form easily downloaded by your subs.  If it can’t be read at 90 miles per hour, you’re including too much detail!

Paint a picture, don’t write a book

Don’t forget that alternates may be defined haphazardly in the plans.  Sometimes the very best solution is to draw boundaries and color areas on the plans to convey limits of phasing, breakdowns or alternates.  Referring subcontractors to tedious detail drawing buried in the Architectural plan set is less helpful than a single page saved for their quick viewing.

Ideally, you want to include as much of this information into the subcontractor ITB as you can.  Telling them when the job walk is, what they’ll need to look for, and how the bid must be broken down at the START tends to have much better impact than later down the line.

Great expectations and future plans

Bid day arrives and subcontractors are sending in proposals with items missing.  It’s quickly clear that they didn’t read the specs, the addenda, or whatever.  What could possibly be their problem?  Take a moment and consider a few things.  Are you competing on this bid?  If so, is this subcontractor a loyal bidder to your firm?  If not, this may be an insight into how your competition handles their bid documents.

Many subcontractors will bid a project to a GC then send a version to competing GC’s.  Depending on the project and the GC’s in question, each one may receive a different number.

It can be very frustrating to suspect a competitor won a job by carrying a subcontractor that was missing some scope items.  One way to keep this from happening is to notify the sub they’ve made a grave mistake and send them a link to your well-organized construction documents.  Even if they don’t have time to revise their number, they may still pull their bid from your competitors.  In one kind act you may earn the respect of a subcontractor and prevent a competitor from snagging the job.  That subcontractor may well return the favor by giving your firm their best price on the next job. All of this hinges on the presupposition that you have your “ducks in a row”.  This is one way that the best estimator can rise to the top.

Posting plans and specs

Wherever possible it is more professional to post the INDIVIDUAL pages of the plan set rather than one file.  Large files take longer to download and consume more computer resources for subcontractors than they should.

Save the pages with a MEANINGFUL TITLE.  Bear in mind that many file systems will automatically alphabetize a list of files.  Beginning the page name with its number in the stack will help keep things in order.  Specification manuals can be broken into major divisions as well.

Whatever system you use, be sure to log in as a subcontractor and view the experience firsthand.  Some systems are very time-consuming to obtain the plans.  Do whatever you can to make it fast and easy to get the plans.

Incoming changes!

Changes to the construction documents during the bid can be an enormous interruption.  Time is of the essence which makes you question why some Architects thoughtfully arrange their materials into humongous files that choke email, and cripple servers. Balance speed against utility.  If the architect replaced every sheet in the plan set but only changed two pages it behooves everyone for you to pull those changes out.

Addenda should be in separate file folders on your server, or web drive to make it easier to find everything. Again, save the files as individual pages to make it faster for subs to get what they need.  If the Design Team’s narrative is weak, consider writing your own addendum narrative.  Be very, very, cautious of design teams that won’t bubble, box, or otherwise highlight their changes on the CD’s.  It’s either incompetence or dishonesty,

Plans and Specifications Part 2

Sometimes it’s both.

 

Seek to balance speed in getting the information to your bidders against providing easy to understand information to your bidders.  Weak design teams with sloppy addenda merit a request for a deadline extension.  Don’t hold your breath because weak design teams often work for bad clients who have high expectations and low budgets.

Control the risk by doing your best to ensure that the subcontractors pick up on all the changes.  Often it’s possible to immediately post the addenda files, then follow-up with supplementary information and better file management.

Technology

Most estimators use some form of bid letting software or a private server.  Some of the bid letting software systems will automatically send an email to every invited subcontractor every time you post an addendum.  Private server systems vary but most of them require a separate email to go out announcing that new information is available.

Private servers have plenty of advantages but without automated emailing, there exists the potential for changes to be posted unannounced.  Many firms expect an office administrator, intern, or secretary to handle bid communications.  Few estimators follow through to ensure that everything is getting transmitted properly and professionally.  Subcontractors may not want to speak up when an administrator is sending incomprehensible emails for fear of being excluded on future bids.

Feedback

Since bid communications are so critical, it’s a good idea to generate a secret “fake subcontractor” that has an outside (not part of your firm) email address you can check periodically to ensure you’re getting all the posted changes.  Emails with ITB’s should include the pertinent details in the body of the email.  The deadline should be included in the subject line of the email.  Some GC’s send generic emails with links to the actual invite buried in text or within attached documents.  This is needlessly time-consuming, unprofessional, and self-defeating especially when the link is to a site requiring usernames and password.  While we’re on that topic, usernames and passwords are just terrible time-wasters.  Sites that demand a commitment to bid, or identification verification’s before allowing access to the construction documents are ineffective. Lot’s of estimators hope that these systems will alert them to who’s bidding as some measure of confidence that they’ll receive bids on time.  Estimators need to focus on selling the opportunity rather than nagging for commitment.  Subs will not feel obliged to bid a job simply because they once clicked a “Will Bid” button to see the plans.  Systems that “bury the lead” behind links, buttons, or other nonsense are reducing the odds that your bidders are making your projects a priority.  Few of these systems would persist if more estimators ever saw how irritating they are.

Follow through

Speaking of irritating, plenty of estimators feel that nagging the subs via phone calls is a vital and necessary part of the bid.  This drudgery is often passed on to the aforementioned administrator, intern, or receptionist.  The notion that nagging subs leads to bid is very flawed.  Subs remember to bid on work they want to win and show particular enthusiasm for projects they feel likely to win.

Consider the following;  Estimators transmit endless demands.  Bid this by then, include this, not that, be low and maybe we’ll hire you but no promises.  Subcontractors are looking for opportunity and they are turned away by risk, uncertainty, and delay to name a few.

The amount of labor expended in irritating the subs could be much better employed in making it easier to bid for subcontractors.  Estimators could address most of this by shifting their attitude.  Thoughtful actions that reduce subcontractor risk are huge because they make the job more profitable and easier to win.  Work that’s more profitable and easier to win is a better opportunity.  Subs are working with much less time than you are.  If they have a question, don’t delay, dither, or pass the buck.  Asking for alternates is asking for additional work.  If your answer hinges on knowing the dollar value of an option, tell the sub that.  An educated guess may give you enough insight to pick a path and get the sub rolling.  Subcontractors can be incredible sources of knowledge so don’t be afraid to ask a question to help yourself to give a better answer.  If it needs to go in front of the Architect then get the RFI drafted right away.  Write it yourself, if you don’t understand the question, you’ll surely screw it up at some point along the line.  Take the time to learn what’s involved so you can represent the build team knowledgeably and responsibly.

Final thoughts

Be aware of how you appear.  Overly cautious and conservative estimators may pose little risk to subcontractors.  However they pose little opportunity on a hard bid because they are consistently high.  It’s an estimate which means there MUST BE SOME RISK which means you must make difficult decisions.  Make sure your bidders know you’re actions align with your words.  Many fraidy-cat bidders call subcontractors claiming they are “really going after” a job.  Over time their calls end up unanswered. Speaking of unanswered calls, it’s significant to maintain professional distance.  Be kind, polite and professional but keep it short since time is money.  Subs that like to talk a lot should hear from you just before lunch to provide a handy conversational exit.

Whenever possible you should use email to maintain a record of the who’s, what’s, when’s, and why’s.  Make an effort to personally thank at least one different subcontractor every bid.  That will get you remembered because it’s shamefully rare.

Plans and Specifications Part 2

 

 

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© Anton Takken 2014 all rights reserved


How to lower prices

A common follow-up question to “How much to build this?” is “Could it be done for less?”.  If you are losing to competitors frequently enough , the answer would be yes, yes it can.  There’s a tendency to look at a bid as if it’s simply the total of all the subcontractor quotes.  This perspective has limitations in that it implies that cheaper subcontractor quotes is the only way to arrive at a lower total bid.

But why are their quotes so high?  Risk is the most common reason.  Subcontractors must assess factors that go beyond a narrowly defined scope of work listed in their contracts.  For example market conditions may have created a labor shortage that limits the amount of projects the subcontractor can safely take on.  Bid invites for projects that are planned to start during peak seasons will create a twofold risk for the subcontractor.  First, if they win the job and labor is scarce, they will have to pay a premium to adequately staff the job.  Second, if they fail to land enough profitable work during peak season they jeopardize their annual earning potential which may leave them saddled with a fastidious low profit job, which is a very serious problem.

GC Estimators can address this risk by carefully evaluating bid opportunities that are leading up to and during peak season.  Are the plans ready for permit? Does the client have funding? Can they start when they claim they will?  Could they start earlier or later?  Lots of ambitious clients choose to break ground in the summer to reduce weather delays.  School remodeling typically takes place when the kids are out as well.

From traffic signals to hand grenades – timing is everything!

This is not the time to be optimistic and giving the client the benefit of the doubt.  If a client looks wobbly or has a history of late starts tell your subs you anticipate a later start date.  If the client is obligated to timelines for contract awards and project closeouts include that on your invitation to bid.  Specification manuals are sometimes thousands of pages long and Architects can’t be bothered to list pertinent details like start dates, completion dates, liquidated damages, bonding requirements, Taxes, or Davis Bacon Wage requirements in one place no matter how much it would benefit mankind (but I digress).  Honesty counts, I have been involved with bids that were upwards of 20% higher than the best we could do on bid day because we couldn’t count on the client to start when they said they would.

Projects that get pushed back inevitably collide with work for responsible clients. These collisions can be immensely expensive especially when small projects “just won’t end” to free up needed resources.

Order of operations

Projects with limited subcontractor scope may still require several mobilizations to the project to complete.  In extreme situations, the mobilizations are more expensive than the scope of work.  Imagine a project that requires a new doorway to be cut into an existing wall.  The painter might be tasked with painting the wall around the new opening, the door frame, and the door itself.  If the painter were allowed to paint the wall after the frame was installed ,they could get the wall and the frame painted in a single trip.  Shipping the door to the painters shop allows them to paint it when convenient and bring it with them when they come to paint the wall.  Cutting 50% of their mobilizations and allowing them to paint a door in a less chaotic environment reduces their labor and risk on the job without changing the scope of work.  Be creative and find alternate solutions.  Taking this door example a different way, let’s say the door is wood and must be stained to match the wall trim.  A painter is going to have to obtain a stain sample, mix, match, and apply that finish.  The millworker will bring pre-finished trim to the job site to install.  They have all the equipment to stain and finish the wood door and bring it with them when installing the trim.  The stain WILL match because it’s the same material from the same equipment.  Again, the staining can occur in a controlled environment at the subcontractors convenience.  The painter ends up with a single mobilization, so does the millworker.

If the work is inconvenient or likely to interfere with more profitable pursuits subcontractors will price it higher.  Don’t let dogmatic tradition dictate the schedule, look for the efficient approach.  Don’t be afraid to make things cheaper for a “little” scope of work.

House cleaning

Part of what defines the work is the GC.  Many firms are monoliths of unresponsive yet demanding bureaucracy.  Estimators who don’t have a rapport with their subcontractors are rarely well-informed as to what influences each bidders view of the job.  Giving prompt, uniform, and firm direction in reply to subcontractor questions builds a positive association with your firm.  They will be more inclined to speak honestly with you about their limitations, interests, and concerns.  Dithering, weaseling and CYA replies achieve the opposite.

Project Engineers that hastily reject submittals without explanation create administrative log jams that delay critical path deliveries.  Project Managers who fail  to develop, maintain, and manage project schedules often become “screamers” as the deadline approaches with long punch lists.  Taken together, these “dynamic duo’s” are artery clogging masses in the project’s bloodstream.

GC’s who have their project managers bid their own work often receive different subcontractor rates depending on which PM is going to run the job.  This is why.

How to lower prices

“You could say workplace tension is a factor…

 

None of which is to say that everyone at a GC must be everybody’s friend or always “play nice”.  GC’s that win work that’s run smoothly and profitably without screwing anyone will have plenty of admirers.

 Working around the situation

The modern bidding environment is very formal and compartmentalized.  The GC’s are not permitted to informally ask the design team questions.  Subcontractors are not permitted to ask questions of anyone but the GC’s.  Bureaucratic delays ensue, forcing critical decisions to the end of the bidding period (if then).  Then the bids come in and often the client is displeased with the price and all value engineering suggestions.  After all, they paid the design team to get everything this far,now they’re forced to choose what to amputate from their vision of the project.  The client doesn’t see much value in the ritual of the Request For Information (RFI) exchange.  So take the opportunity to push the project back on track by providing leadership BEFORE the job is off the rails.

“An appeaser is one who feeds a crocodile hoping it eats him last” Winston Churchill

Many GC’s seek to avoid exposing an Architect’s mistakes in hopes that “playing ball” will naturally resolve complex issues.  Assuming the Architect will fully grasp all the issues and costs of a problem is how we get half answered questions, cost over-runs, and project delays.  Often these problems are apparent at the bid stage.  Cost additions post bid are change orders that the owner doesn’t appreciate.  Ambiguity in the plans can raise moral dilemmas that unscrupulous competitors exploit to snag a job.  Closing the gaps BEFORE the bid levels the playing field and protects the client.

Subcontractors may feel the same way only they must rely on often feckless GC’s to get direction from the design team.

Start on the right foot by writing RFI’s in a professional manner.  Reference an actual drawing that you’ve cropped to the area(s) affected.  Wherever possible ask Yes/No questions to simplify things.  Offer reasonable solutions and imply that you think that’s what they intended.

Here’s an example:  Detail XYZ has a note requiring process X  however detail PDQ has a note requiring process Q.  ABC Construction believes the intent is to use process X at only West facing openings and process Q at all other openings.  Is this correct?  If not, please define the desired process for the openings in question.

If the architect writes “yes” on your RFI and sends it back to you, you’ve generated an easy to follow instruction for subcontractors to bid on.  Legalese or weasel wording makes for ambiguity which is risk.

Now most estimators will just send this RFI to the Architect and steadily grow their frustration as the bid date advances without a reply.

Get what you need as soon as you can

It may be possible to call the Architect off the record before sending the RFI.  Phrasing and tone are important.  Portray your efforts as striving to make an easy to answer RFI.  The intention is to establish your desire to honor their design, not list mistakes you found in their plans.  If done with diplomacy, it’s possible to get the answers you need before you send the RFI.  Some Architect’s will formally answer all RFI’s at one time for their convenience.  Typically via addendum  just before the deadline.

Broadcast the answer’s

Knowing the answer early means you can create a bid directive for your subcontractors  well in advance of that addendum which will confirm and formalize your instructions.

GC’s that aren’t afraid to give accurate and precise direction are rare in the market.  If you make it easier to bid to your firm, there’s an excellent chance that you’ll attract bidders to your projects.  Be advised that asking for alternates for scope of work that “could go either way” depending on an Architects reply can be a sizable request.  It’s typically much harder to precisely “break out” some scope of work after the bid is complete.  Get such requests out an in front of your bidders as soon as you can.

“I’m too busy to answer you right now”…

Subcontractors bring a profound level of specialized knowledge and diverse experience to the bidding environment.  They typically have far more customers clamoring for their attention than the average GC could imagine.    Subcontractors do not have the luxury of analyzing a single project from the invitation to the deadline.  They may only be able to invest a small amount of time in bidding the work because their scope work isn’t valuable. GC’s are who are unwilling to “spoon feed” subs looking for answers are missing the bigger picture.  “It’s in the plans” is a pithy response that results in a furtive hunt for as long as their charity outweighs their frustration.  Trades with limited scope, or with scope of work that’s only shown on an obscure detail drawing are likely to come up short on bid day if you don’t let them know what you’ve found.  The interplay of alternates is immensely frustrating for subcontractors.  Items that are affected by trade overlap are likely to have conflicts when decisions are left to interpretation.  Does the roof top unit come with its own fused disconnect or does the Electrician have to supply it?  Is carpet demolition by a demolition subcontractor of a flooring sub?

A well-defined estimate should output scope of work checklists that you can send to your bidders to reduce bid-day confusion.  Try to remember that competitive bidders default to EXCLUDING anything that’s questionable in their scope.  If you don’t know enough about the item in question you should call trusted subs and get their input.  Not everything with pipe connected to it is in the plumber’s scope, not everything with wires is an Electrician’s job.  A skylight might be handled by a Glazier, a Specialty skylight subcontractor, a roofing subcontractor or even a carpenter depending on the specifics of the situation.  Be advised that there’s more than one way to address a scope of work.  Sometimes the cheapest option is overlooked.

 Plan wrangling                

99.99% of the time bid documents are transmitted as Portable Document File (.pdf) files.  This can be a blessing or a curse depending on several factors.  First of which is the way the document is formatted.  A fair number of Architects will transmit one file with all the plan pages included in order.  The advantage is that there’s no chance that any single page will be omitted.  The disadvantage is that this makes the file large and cumbersome for the majority of bidders.  Alternately, the plans can be transmitted by sets defined by group i.e. “Architectural, Structural, Interior Design, Civil, and MEP,”.  Finally the plans can be transmitted as individual sheets.

The naming convention of the file is very important.  Individual sheet files need to be renamed to match the sheet name.  “Sheet #21” is meaningless whereas “A5-3 West Elevations” defines the page. Don’t assign this task to folks who lack construction knowledge, the results are uniformly awful.

Be advised that re-naming sheet files tends to scramble the page order if the page names aren’t alphabetical or sequential.  In those cases, I find it easier to put the page number at the beginning, followed by the sheet name.  From the example above you would have “23  A5-3 West Elevations” as your file name.  Keeping the plans organized, and accessible is absolutely critical for reducing the amount of time a bidder has to spend trying to get what they need.  Imagine you’re making highway signs for the autobahn, decisions need to be made quickly so the information must be clear.

Welcome to the FF&E Rodeo

This becomes much more challenging when you’re bidding work in certain markets.  The multi-family, retirement, and assisted living, market often use interior design teams who create “Fixtures, Furnishings, and Equipment” (FF&E) packets.  Those that have crossed my desk are a perfect storm of inefficiency.  Cut sheets for carpet, chairs, paint, wall covering, light fixtures, plumbing fixtures, appliances, etc. are combined into one continuous file that’s generally riddled with nomenclature not shared by anyone else on the design team.  Carpet types on the Architectural plans do not correlate with the FF&E types because these teams don’t coordinate.  There is no effort made to place similar materials together so it requires a comprehensive search to find all specified material for a given trade.

Start by breaking down the FF&E files into individual cut sheet files.  Use naming conventions to sort them to either Construction Specifications Institute (CSI) number or trade name.  Maintain an inventory of what you’ve found on a spreadsheet.  The next step is attempting to match the cut sheets to the types listed on the plans (a daunting task).  RFI’s need to be promptly filed where applicable.

Be advised that very complex RFI responses are often delayed.  If you break your list down to trade specific materials it should help focus the design team’s resources.  Presenting your subcontractors with a completed schedule for the material in the FF&E documents reduces their risk immensely. Avoid “narrative” responses wherever possible.  Provide highlighted drawings showing the locations you think they’re addressing.  It’s been my experience that Interior Designers are loath to use plan notation for RFI replies.  This tendency wastes your precious time. If they won’t draw a picture, draw one for them. Be advised that information like room numbers is frequently missing on consultant plan pages which compounds the confusion with narratives.

Drive the bus or get taken for a ride…

Similarly, conceptual or design/ build efforts can be based upon a hodgepodge of plans, pictures, and narratives.  It’s incredibly annoying for subcontractors to read through all the pages of a narrative looking for their scope of work.

Subcontractors are bidding to YOU, so YOU need to put your assumptions out in a comprehensive manner.  List out the presumed scope of work for every trade you’ve invited being careful to add precise direction for areas of trade overlap.  For example, if there’s a kitchen, YOU must declare if the equipment will be gas or electric.  If the client intends to furnish material, then list that too.  If you’re competitively bidding, define what you expect the budget to be.  Leaving everything up to the subcontractors means you’re riding the bus, not driving.  Define desired level of finishes using unit costs wherever possible.  If there are hard specifications or special inclusions, make sure that the affected bidders are aware of this.  List things according to trade to make it easier for them.  If it sounds as though conceptual or design-build estimates are more work than a traditional hard bid, you’re right!

To the subcontractor, missing information on conceptual bids generally equals “excluded”. Design-build presents an onerous situation for subcontractors.  They’re expected to “protect” the GC from uncertainty but they must also compete.  Exclusions are costly – limit their risk by defining what is and isn’t in their scope of work. The MEP trades are facing a significant amount of work to design-build a project.  Weak, weasel-worded, or unknown requirements will push them to simply bid high to let someone else take on the troubled job.

Bids are not free

Sometimes the reason a GC fails to attract low bidders is due to the image they’ve cultivated on the market.  Constant losses are an indicator to subs that it’s time to change horses.  Subcontractors don’t know who was second, third, or fourth low, the awarded GC is all that really matters to them.   A lot of GC’s assume that their competitors were working off the same subcontractor numbers.   In fact, it’s common for subcontractors to give better pricing to low risk or better clients.

Closed doors and open windows.

There are also a lot of cases where a GC has a low bid subcontractor  all to themselves.  GC’s that enjoy this situation have a few things in common.  First off they are aggressively promoting acceptance of qualified subcontractors.  Many firms are enormously insular about widening their list of pre-qualified vendors.  Striking  the proper  balance between competitive pricing and risky subcontractors is a process of continual refinement.    If you’re consistently not winning, you need to be widening the list of acceptable subs.  Unsolicited bids or late bids from subcontractors who just heard your firm was bidding are prime candidates for review because they are already bidding work in common with you.

 Winners pick winners

Another thing these GC’s have in common is that they are conscious of wasting subcontractor time.  It’s senseless to invite subcontractors to bid work they’ve consistently lost in the past.  Just as it’s unethical to invite a sub you wouldn’t  hire, it’s not ethical to invite a sub knowing they are going to lose.  Classify subcontractors according  to their key markets will help immensely in ensuring that they’re paired with the right work.  Too many estimators focus on “at least three” subcontractor bids per trade.  If one sub has never won similar work, it’s time to find another contender.  Be advised that subcontractors are often in “sales mode” when answering questions about their firm.  Base your classifications on their verified performance.  Keep in mind that often subs are much larger than they may appear from your desk.  A mid-sized GC employs a fraction of the people that a mid-sized subcontractor does.  It takes a lot of resources to actually perform the work.

When times are good, it’s imperative to bid Subs  on select lists.  When times are bad – it’s critical to show subs you’re picking market leaders.  Prove it by winning.

Your voice

Many GC’s employ an intern or hapless office worker to manage bid communications and invitations.  The least sophisticated firms have someone on the phone nagging subcontractors endlessly for bids.  “The personal touch” is considered a benchmark of getting things done in the bid world.  Possibly there are  subcontractors who feel this is a much-needed aspect of the bid courtship.  For most others, this is a mindless intrusion into an already hectic day.  If the project, GC, or client strikes the sub as a bad opportunity,  forcing them to explain the situation to an intern or receptionist won’t help.

Sometimes the subcontractor will ask a question intended to help quantify the job.  Inevitably the caller lacks  decision making authority to adequately resolve the issue.

Lots of businesses create customer service positions with authority but no allowance for decision making.  The Department of Motor Vehicles is a prime example.  From the receiving end one message is quite clear:

 

How to lower prices

“We don’t care, and it shows…”

 

I’ve heard GC estimators discussing this situation and several claimed that they had their lead estimators making such calls because the interns or secretaries didn’t get results. Its better to ask: “why don’t subs want to bid?”Not getting nagged enough is the least likely reason.  It’s exponentially more likely that the Subcontractors don’t see a viable opportunity.  If these GC’s were  honest about their chances on an average bid, they’d likely admit that they’re wasting their subcontractors time to an alarming degree.

Targeting specific work should entail having a select list of excellent subs who pursue the same kind of work as you.  Those subs will bid because it’s a great opportunity and they’ll have better pricing because it’s what they’re good at.

Honesty: the great amplifier!

Nagging, cajoling, withholding, and threatening are symptoms of a backwards relationship.  If you’re looking at work that’s a good opportunity for you AND your bidders, you won’t need to shout to attract attention.  I have found that voluntarily providing bid results attracted more bidders than nag calls.  It’s less work if you publish them using the same system as your invitations.  Also, it reduces the nagging phone calls you receive  from subcontractors looking for bid results.

A friend at the gallows

Subs bidding to GC’s over time will notice patterns.  If your firm never wins a certain type of work, you can’t reasonably expect help from them.  Lots of false hope is pinned on loyalty bidding.  Subcontractors may choose to bid to a GC they’re loyal to, knowing that GC won’t win.  Time is precious so they need to get on to better opportunities.  Padding the number and pushing the bid out the door lets them maintain the relationship without the GC consuming all their time.  It’s common to hear such GC’s claiming that “no subs are bidding this job” as they beg bids out of their subcontractors.  Meanwhile, the winning GC has plenty of bids.

The situation could be fixed in several ways.  First off  you must quit chasing losses because it’s senseless to repeat an action that’s failed in the past.  Second, maintain market pricing by cultivating new subcontractor bids.  Third, provide pertinent feedback to your loyal subs .  For example they may not know that you lost by $50 last time. Teamwork relies on communication.

Commitment

Just about everything in the modern bid environment is about stalling; whether it’s  commitment to relationships, contracts, using a low bidder, or even admitting bid results.  The pervasive mindset is that stalling for time is the best move since any other action might play against you.  Jobs are often advertised using terms like teamwork.  In fact, teamwork tends to mean whatever’s convenient to the GC.

For example, three bids for one trade arrive.  The high bidding sub has breakout and alternate pricing that illustrate a very high level of thoughtful detail.  The low bid sub has very little information and the inclusions don’t mention several items the high bidder listed in breakouts.  The middle sub may list all the inclusions of the high bid but without the alternates or breakouts.

Taking low bidder’s total plus the high bidders breakouts gives a sum just below the middle bidder.  Let’s say you call the low bidder and get the adds which come in  within a percentage point of your earlier tallies which tells you that they’re now complete.  Using that bid is now very low risk.

…who’s the fairest of them all?

Consider for a moment the subcontractor’s view of that example.  The high bidders proposal enabled the GC to ask the right questions of an incomplete bidder to arrive at a sound proposal.   Knowing what each answer was worth before asking is huge.  The middle bidder was the legitimate low bidder based on original proposals alone.

How would things change if all three bidders had held their proposals till the last-minute?  The first option is to disqualify the incomplete proposal and carry the 2nd low.  The second option is to take the high bidders adders plus the low bidder’s bid and accept the risk that their formal proposal may not tally as expected.  Jobs are won and lost on these terms all the time.

“Teamwork is everybody doing what I say”.

At the estimators desk, the “teamwork” here allowed the GC to hire the most irresponsible and incomplete bidder.  Without the 2nd and 3rd high bidders, the low bid proposal would lack comparison data .  This creates a significant trap to the unwary or uniformed estimator.  If this situation persists over several bids, it would become obvious that there is little incentive for bidder #3 to continue submitting proposals.  If bidder #1 is consistently missing scope items, this may be a sign that they are attempting to snag change orders. This is an insightful example of how that GC’s brand of  “Teamwork” may be perceived!

How to lower prices

“Better call in the D team…”

 

Lessons learned

It’s reasonable to compare proposals. Sometimes unexpected items will come to light on a proposal which prompt follow-up questions to other bidders.  There is a certain duality to be expected where conscientious bidders may include so many details into their bids that they drive themselves out of competition.  Likewise, the lax or harried bidder may miss something that makes their bid low.  It’s the estimators job to sort all of this out, to include calling and scoping apparently incomplete bids.

This is entirely different from maintaining a subcontractor list intended to facilitate hiring hack bidders.  The GC must offer value to the subcontractors if they are to receive bids.  If the GC will accept incomplete bids, the playing field is tilted against the professional subcontractors.  From the outside looking in, this is little different from bid-rigging since legitimate bidders cannot expect a contract in good faith.

Correcting course

Hack bidders should be directed  to submit complete proposals or risk disqualification.  The estimator must fortify the GC position by more thorough take off pricing to back-stop these risky subs.  Unsophisticated subcontractors may offer attractive pricing that’s worth the risk.  Be cautious of staffing projects with such firms.  As the saying goes, trust but verify.

GC’s must strike a balance between subcontractor sophistication and market value.  Those that do, find themselves winning competitive work profitably.  Those that don’t are either losing money or losing bids.  Don’t let it happen to you.

 

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© Anton Takken 2014 all rights reserved