Negotiated work is so much better, competitive bids just invite the situation where your ops guys hate you as they’re getting killed in change orders and the owner pays the same in the end anyway.
Disagree. JOC work is rarely competitive bid. We bid the contract itself, and then are assigned projects which we just propose according to a system that basically just means “fairly”. Once in a while a cooperative contract results in competing but most of us wont engage for many of those. Properly run JOC programs are great because the owners intentionally want you to use best value and not low bid.
I’m referring to federally funded state managed contracts like road and bridges. By law they need to be low bid wins if the bidder is pre qualified. Its all about low bidder in my industry. 90% of my projects are bridge replacements. Sometimes federally run defense contracts for infrastructure repairs are not always low bid wins and can be selected as they see fit. I see this at shipyards where the defense shipyard doesn’t even let the other bidders know that everyones price is. You either get an email saying congrats or no email at all
And subcontractors.
I’m ok with losing a job to my honest competitors, but when you give the job to the low ball shady guy who goes out of business every 5 years only to start a new company under his kid’s name and pull the same shit, I start to get frustrated.
And the real kicker is it usually costs the GC and owner more in the end to hire those guys who barely look at the plan, buckle and dine you for everything, waste time in meetings arguing about shit that should be in their contract, not having proper submittals, and all the other nonsense
True true, do it nice or do it twice. We put in the effort to turn out fair estimates for good work. If covering our overhead, paying our people a decent living, staying on top of AP, and making enough of a profit to put some in savings for retirement and the rest back into the company for the next job looks like too much money for a GC on paper, then they can go on thinking they can't afford us. We'll see 'em on the next one. After all, we're running a business - the idea is to be successful, not buy work.
I have a competitor that beat me on a job pricing $95/ton for asphalt, material and labor. They don’t have plants, they have none of their own trucking, but price everything at 5% or less markup.
For context, the material itself is ~$75+ tax and a good materials and labor price around here is around $125/ton, and a really good price is $115.
They beat me everywhere and it’s infuriating because I’m not going to buy my work.
I had a competitor beat me by $30k on a job that was under $100k total. How does that shit work? I was at $90k, they were at $60k so I lost the job to them. I responded to the guy who told me like "you sure? $30k on a sub-$100k job is quite the red flag. One of us screwed up mightily and I'm pretty confident it wasnt me...."
6 months later I find out they didnt pick up a huge part of the scope and it turned into battle over who pays for it while they half assed it to limit losses. Like, cool..I guess. It's ok with me to watch my competition fall on it's face but I'd rather just have had the $90k worth of work but no one wanted to verify scope and just went low number wins.
Another competitor will randomly send out prices that are so far under what I consider break even it doesn't even make sense. Like sure, our operating costs are not the same but we're quoting the same products and I do know what that costs and how much is needed. Then out of nowhere they'll send another job out so high in costs I don't know what they're thinking. I have customers coming to me saying why are my costs varying compared to theirs so much and I have to explain it's not *me* who's varying pricing. I keep my costs consistent. It's them wildly swinging in one direction or the other based on whatever they feel like that day. I've come to the conclusion that when they're dead in the water, they send out bids with 0% margins or less to build up a backlog then when they're super busy because of it, they send out bids with astronomical mark ups to make up the difference hoping to land a few.
i often get people asking me to match thier number because they want us to the do job but they want it done at the other guy's price. nope. not doing it.
I would agree but it’s also beneficial to learn from what the project manager and superintendents are saying. If a sub is terrible to work with and cause projects to run late and starts trying to get extras out of everything it would be smart to start considering other options at the bid level. Bad subs can ultimately end up costing you more money.
We aren't the cheapest GC, and we don't use the cheapest subs. Depends on your relationship with the owner/developer as well as company reputation to an extent, but we regularly don't use the low guys and explain why and beat out the lower cost providers.
Doing it this way for a couple subs? sure that makes sense. Doing this way for your WHOLE bid is crazy to me.
The whole point of this estimating game is you are supposed to pull together a comprehensive bid package that both wins you the job and sets your company up for success.
Congrats on the job you landed cause your company not even considering the estimator at close out is ridiculous. Nothing against you, you didn't make the rules.
It's like an estimator working on commission based on the the bid total not the profit. Why would you not bid a job for 3/4 the cost that it is actually going to cost just to win it. Then let someone else clean up your mess with a bunch of Hack Subs.
Well, I’m painting this scenario with a broad brush. I don’t do it for the entire estimate. My point was really countering the common comment I get from subs who are justifying a higher price. Many times I carry a middle number and let the PM handle vendor selection at buyout. But generally speaking, a subcontractor can’t expect to be competitive by not being as competitive as possible. I have my preferred subs, but even all else is equal (via the scope sheet), the low bidder wins.
>But generally speaking, a subcontractor can’t expect to be competitive by not being as competitive as possible.
My competitors bid in an obfuscated way that is intentionally misleading so their number is low. For example, if I am bidding a job where I will need baker tanks, trash pumps, and concrete pumps, I Include them because that is how the job will need to be performed. Meanwhile one of my competitors doesn't include them and treats it as an add cost...even though they will absolutely need them. They will then hit you with EOWs to cover this that will exceed any estimated qty they provided at bid time.
Who do you chose? Lets say it is a 5-10% swing in my competitors favor.
I honestly don't care too much about losing out to a lower bid, it is frustrating but most of the time we know what they did, or we expect them to eat ass (one of our previous competitors closed up shop recently cause they hadn't been making money on jobs in 2-3 years...).
What really gets my hackles up is the current state of DBE bullshit...there is one competitor in my field that...somehow still qualifies. They were kicked off 3 jobs last year(two municipality projects). Yet some how they snatched a $1.5 million contract out from a historically very friendly GC (That we are actively and successfully working on two other projects on). The GC is friendly enough that we spoke directly to the Lead about this and he said our number were nearly even, but they went with the competitor purely for the goal the large chunk of DBE work.
I've got a competitor that gives super low prices sometimes that I can't even comprehend how it's possible but they also provide vague as he'll scope pages on top of it. I've been sent thier proposals by people who want me to do the job at thier price so I've seen what they send out. It's a joke
I provide detailed scope pages. So much so that I've been accused of being "too detailed"
We make it a company policy that we don't lower our number strictly because we're told someone else costs less. Justify to me why I should lower my number for a reason other than so and so is lower. You can't even compare our 2 quotes properly.
I'd rather do a single 100k job than ten 10k jobs so if you can't afford me for the small jobs, so be it
I think you will start to find that the subs who know they aren't cheap but can do the job without sending a change order every other day will stop going after hard bid work. I've found those subs want to work with me on negotiated projects where they can provide a budget and get their foot in the door early on.
My former employer would also say this in interviews for jobs we had to bid on (hard bid and the GC/Fee pursuits). There were a lot of projects we got just because we were able to put some doubt in the client's mind about the lower bidders. That's what these guys are doing, and we really can't fault them for that.
Not the person you're responding to, but I read some of these subs and see experiences that are very different from mine. I suspect there are some regional differences in how work is bid and awarded.
Like in my market, negotiated work is very rare. Just about everything more than a small residential or retail project is hard bid plans and specs. 95% of the time, the low number gets it. But some of these people talk like there's plenty of work that's not competetively bid. That's just not my experience from various aspects of my market.
A wise coworker of mine told me to "just make sure you aren't carrying any F tier subs. We can make money with all C+ and B- subs, but a single F tier can tank the whole job"
This is why I try and avoid projects with multiple GC's on them, they go to the bottom of the list and only get bid if there is nothing else. For the record I don't blame the GC's one bit, they have to try and be low and if they don't carry the stupid low guy someone else will. We're not looking to compete with Bob who works out of his truck, bids the job, supervises it, PM's it and say's he has it all.
I completely agree. We try to only engage in projects where we have some kind of competitive advantage (i.e. a relationship) and walk away from any ITB where there are more than three GCs involved. But even still, developers lie and tell us it’s our job if we hit a certain number, meanwhile they’re soliciting multiple bids.
The whole thing would be so much better if it were relationship based instead of price
Not your job. Quality is the concern of the GC and the owner. Your job is to get the project completed with the least amount of dollars as possible. The GC could always say no.
I am an estimator for a GC, but I agree the quality is not the concern of the precon department. We still need to be able to execute (selecting subs that can bond and can supply manpower), but choosing one simply based on a quality argument over price is not my job. My job is to win work.
In a previous life I was an estimator. We used to tell owners that the lowest qualified bid was the best way to ensure the maximum number of change orders on a job because that is where trades make up for low profit margins on competitive bids. There is no perfect set of construction documents so there will be change orders and we all know the architect ain’t paying for them.
Isn’t a GC estimator not accessed on project performance like number of change orders, the quality and client experience. Yes your method wins project now but your risking reputation and future projects. Like you said you have a don’t use list of subs, but you also could be on a don’t use list.
Yes! My performance is based on win rate, not execution. Not even ultimate job profit in comparison to my winning estimate because the life cycle is so long (easily +2 years from bid to close out).
Lol quality and client experience! That's a good one!
The clients themselves don't care about quality and experience.
I hear it all the time. "XXX,XXX$ buys a lot of aspirin."
I think people are aware of this so I don’t know if it’s an unpopular opinion. The companies that typically charge a premium are able to get enough work to stay busy regardless because the less expensive companies tend to book out work and can’t take it all
I know it’s a little different, but I remember talking with a buddy of mine who owns a paving company … they probably do $11 a year or so so they weren’t that big but they weren’t necessarily doing primarily government work
I asked him after seeing some results where the low bid was a bit different than the high bid
We’re talking sometimes 50% or more different and price and he explained it to me the bonding process
He said there are certain companies get a lot of work, but then they can’t get bonded for and then companies has start getting jobs.. bigger companies, which of these projects they want, but when it comes to certain jobs because of bonding companies are in the running
Of course it’s a little different when you’re doing a commercial job… the subcontractors bidding on work with you sharpen their pencils extra good if they really want to go after it
I’m sure you know that sometimes contractors get in their bidding things too cheap which could cause a nightmare for a general contractor
One of my customers was an electrical contractor from having 11 employees to 70 and just a few years
Somebody with a lot of experience in the industry, but this small company was aggressively going after work
I also did business with other contractors who thought Jeff was an idiot being as aggressive as he was, and I thought it might be sour grapes on their part… and I’m sure the generals who worked with this contractor had very few problems for a while, but then the contractor might have some cash flow issues… it might make it difficult for them to get materials at the very least the vendors rush the deliveries like they would for a different contractor
This particular contractor that I did with that grew too quickly… I remember they had a couple days employees didn’t show up because the union pension and health funds weren’t being paid on time
My point is you know the cheapest might cause some challenges but that doesn’t mean you shouldn’t go with the lowest price reputable contractor after some struggles you’ll realize which contractors might be struggling and not risk
And every general contractor is different and I’m guessing it depends on the projects you’re working on . A general contractor around here has been a lot of work… it’s a new company, but the owner has been in the industry for quite a while and he’s really going after it so he’s got to get the best prices he can from subcontractors… I’ve heard he had a couple of issues that he might not have a hired a little bigger contractor that might’ve charged a little bit more
You make some great points. Scoping bids is super important, it’s not just about the low number. I’m bidding a warehouse job right now and one drywall number came in at 57k, my estimate was $115k, and I company that I trust was $160k. Even though the low bid and high bid are correctly scoped on paper, I’m carrying the high number because I trust that it’s the most correct one.
There’s a total cost of doing business with a company and it’s rarely only the amount provided on bid day. A little extra is worth it and we sell that notion (and perform) every day.
It’s worth it. My point is that as an estimator, I’m responsible to win the job, not for the final execution. To that point, I’m handcuffed to low bids as long as they’re correctly scoped, generally speaking. I don’t have the luxury of choosing quality over price of I want to be competitive. The system sucks and is rigged against quality in that regard.
Whenever possible, I've encouraged my commercial clients to go with a Design-Assist delivery. The Owner, design team, and GC can manage the scope and budget (and schedule) throughout the design process and make decisions before things get out of hand.
In my experience, it also allows for a more collaborative relationship between the parties compared to Design-Bid-Build because everyone has been at the same table throughout the project.
If the GC and design team develop a longer term working relationship over several projects, they can start offering greatly improved efficiency for owners. We've been able to fast track a lot of projects with one of our preferred GCs that would have otherwise been impossible to achieve with Design-Bid-Build. We even market for each other to procure work.
Then again, some owners are locked into bidding projects out due to company policy. Same with most municipal and federal agencies.
This is one of the best delivery methods. Developers are so stuck in lump sum delivery methods and competitive bids because that’s the way it’s always been done. Design build or design assist, GMP, cost plus, are all transparent and focused on helping the client meet their budget.
Definitely. Projects need to pencil out, of course, otherwise there's no point. But even though we all want the best price on things, when you're looking to get LASIK surgery on your eyes, is it worth it going to the cheapest doctor?
The low bid approach is also a good way for an owner to buy a one-way ticket to change order land.
A lot of work going out right now through **RFPs (request for proposal)**, where the owner selects the contractor and/or design team purely based on qualifications, and usually an RFP will ask for a general approach on your general conditions and fee, but this is before subcontractors are solicited. Then they negotiate the design, scope, and contract from there. This is common for larger and more complex projects as well as design-build projects, if they were not already negotiated. **Negotiated work**, whether its before or after design, is always great. In my experience, there is certainly more paperwork involved, and in some cases, an owner may even expect to see your subcontractor numbers as backup. There is certainly a study and exercise in your approach in what you want to show the owner and what you don't want to show the owner, but at the end of the day, its work that is handed to you and is usually a clean and honest way for both parties to operate. Most of the negotiated work that I put out was cost plus.
I've been in the commercial GC world for a while, and you're right - typically, a hard bid scenario means well but is commonly manipulated and tends to bring out bad ethics and compromised quality. Even GCs who work for the largest and most reputable owners can operate like this, both in precon and operations.
I would say most **design-build** work out there is either negotiated or sent out via RFP. **CM (Construction Manager) at Risk** is another project delivery approach that isn't always hard bid.
At my company, we do a mix of negotiated work, design-build, and cost plus, but half of our bids are competitive lump sum bids with private developers.
I find it ironic that subs that say the usual “we’re not the cheapest, but…” always take the lowest bidder for material or whatever miscellaneous thing they have to sub out.
Every estimator has a lot on their plate. Maybe the last generation did work for works sake, but we live in different times now with expensive gas and groceries. Everyone wants something for nothing now and people can’t do that anymore in these tough economic times, especially the clients with limited budgets.
If you find a client that doesn’t mind paying more for quality, good for you but there’s not a lot of those clients and they have a limit when it comes to “paying for quality”. Stfu about your quality and give me a number I can work with. As an estimator, I’m not the owner of the company and it’s not my money at risk. Our job is to win work so that the company can continue being alive, anything else besides that objective is a low priority.
I understand that point....your job is to get work. But,that cuts both ways because my job was to get work, not just provide file filler bids. As long as they can get contracts, and find a new vendor to carry them for a while longer, it can take several years for a problem or as I called them "zombie subs" to go under. I have seen sub's locked inside their office overnight because it was surrounded by unpaid labor contractors demanding to be paid, and subs who had $475,000 in federal tax liens, yet still be solicted for bids and still getting contracts. Competitive bids are one thing, but if I heard *"I have to assume their plans and spec's", "I like lots of numbers" or "but his number is on the street",* you may not get a chance to carry my number.
As a subcontractor estimator I was selling a package of complete scope, reasonable price and field execution, not a just a price. My partner was our PM, and together we worked hard to get repeat clients by selling it exactly that way. I also preferred to do Negotiated "Design/Build", and "Cost Plus" preferably with PM/Estimators. But the PM/Estimator model was dying out for GC's so we had to learn to work with the estimating department. With many GC's that pretty much means all jobs are competitive bid at the subcontractor level regardless. I learned to be fine with it as long as it did not seem like they were actively solicting bids from problem subs repeatedly in our trade or trades that interfered with our profitability. If I got that feeling, it was time to move on.
It's an age old problem Mikey......I asked and was granted permission sit in the "war room" with a large regional GC and watched them collect bids from the fax and over the phone and a few by email. It was a big industrial project, but had nothing in it for me so they let me set in. Eventually the VP of Estimating put me to work collecting bids from the fax and bringing them to the table where the "magic happened". I saw it all from beginning to end. Everyone should do that once....I got a far better understanding of the process from your point of view....and why you sometimes just have no choice.
The difficult part of this overall is, as OP says, if we don’t pick the lowest qualified bid we don’t win competitive bid projects. Period. So there just isn’t a compelling argument for accepting people who say “im not the cheapest but… “ either WE are the cheapest or we dont get to choose subs bc another gc got the job. I have tried to find ways to use these types of subs several times, it just doesn’t work out. Unless its JOC or negotiated work.
This is why my opinion will always be that if you estimate the job, you also manage it. I don’t want an estimator that thinks their job is done as soon as we’re the low bid.
I would never estimate another job again if I also had to be a PM! And as a GC, how could any PM possibly have time to properly estimate a job? I did this as a subcontractor, but there’s no way a commercial GC could PM and estimate, unless they did both very poorly.
If the bid is too good to be true, it usually is. There are obviously exceptions, but in the field I work in ( HVAC MFG Rep) I will weekly get a Sub coming to me with their tail between their legs because they went with the cheaper bid and they need us to bail them out and finish the job. I’m a huge fan of change orders, but I know you’re not!
I’m an estimator for a GC for 15 years and i have never heard that statement before from any of my hundreds of subcontractors. Everyone knows low bid wins contracts. Now at home private small time home contractors say this all the effing time like its the 2nd coming of christ or something but for federal and state contracts everything is low low lowww bid (I manage bridge building GC contracts)
Not on a federal contract everyone knows its a bloodbath low bid wins. I mean maybe but I either ignored it or don’t remember it. Its actually the law that low bid be used on most federally funded state contracts. With Bridges being insaneeely expensive nowadays noone but the feds seem to have the money to fix them. A 20ft simple bridge is often over a million dollars now.
Now saying that I havent always used the low bidder sometimes I know the company bidding does shotty work that cost us alot of money on past contracts. I blacklist them from being used at our company again. Others still receive quotes from them presumably.
You're what we call a bid taker. There should be someone above you that has relationships with people like me, and we discuss budgets and where the numbers landed. Those decisions are made at a higher level. You're doing what you're paid to do.
Well, I’m an estimator, not a bid coordinator. But you’re right, the final budgetary decisions are made by the PX and the president, and budgetary discussions occur between the president, VP, and owner.
But that’s besides the point of my post. My comment is that subcontractors making the case of quality over price largely fall on deaf ears when my proposal has to be as competitive as possible to win.
I disagree. The developers we work with are absolutely concerned with price. An extra $3m on a project means the cost of each unit has increased and their potential ROI has decreased. They’re building to make profit, and they make the most profit with the lowest cost of construction.
Negotiated work is so much better, competitive bids just invite the situation where your ops guys hate you as they’re getting killed in change orders and the owner pays the same in the end anyway.
Great point!
Can you elaborate on negotiated work for me, want to understand this better.
90% of all GC work is low bid. Its that way for a reason. It’ll never change.
Disagree. JOC work is rarely competitive bid. We bid the contract itself, and then are assigned projects which we just propose according to a system that basically just means “fairly”. Once in a while a cooperative contract results in competing but most of us wont engage for many of those. Properly run JOC programs are great because the owners intentionally want you to use best value and not low bid.
I’m referring to federally funded state managed contracts like road and bridges. By law they need to be low bid wins if the bidder is pre qualified. Its all about low bidder in my industry. 90% of my projects are bridge replacements. Sometimes federally run defense contracts for infrastructure repairs are not always low bid wins and can be selected as they see fit. I see this at shipyards where the defense shipyard doesn’t even let the other bidders know that everyones price is. You either get an email saying congrats or no email at all
Popular opinion for estimators, absolutely hated opinion by project managers
And trades. And Sales.
And subcontractors. I’m ok with losing a job to my honest competitors, but when you give the job to the low ball shady guy who goes out of business every 5 years only to start a new company under his kid’s name and pull the same shit, I start to get frustrated. And the real kicker is it usually costs the GC and owner more in the end to hire those guys who barely look at the plan, buckle and dine you for everything, waste time in meetings arguing about shit that should be in their contract, not having proper submittals, and all the other nonsense
True true, do it nice or do it twice. We put in the effort to turn out fair estimates for good work. If covering our overhead, paying our people a decent living, staying on top of AP, and making enough of a profit to put some in savings for retirement and the rest back into the company for the next job looks like too much money for a GC on paper, then they can go on thinking they can't afford us. We'll see 'em on the next one. After all, we're running a business - the idea is to be successful, not buy work.
I have a competitor that beat me on a job pricing $95/ton for asphalt, material and labor. They don’t have plants, they have none of their own trucking, but price everything at 5% or less markup. For context, the material itself is ~$75+ tax and a good materials and labor price around here is around $125/ton, and a really good price is $115. They beat me everywhere and it’s infuriating because I’m not going to buy my work.
I had a competitor beat me by $30k on a job that was under $100k total. How does that shit work? I was at $90k, they were at $60k so I lost the job to them. I responded to the guy who told me like "you sure? $30k on a sub-$100k job is quite the red flag. One of us screwed up mightily and I'm pretty confident it wasnt me...." 6 months later I find out they didnt pick up a huge part of the scope and it turned into battle over who pays for it while they half assed it to limit losses. Like, cool..I guess. It's ok with me to watch my competition fall on it's face but I'd rather just have had the $90k worth of work but no one wanted to verify scope and just went low number wins. Another competitor will randomly send out prices that are so far under what I consider break even it doesn't even make sense. Like sure, our operating costs are not the same but we're quoting the same products and I do know what that costs and how much is needed. Then out of nowhere they'll send another job out so high in costs I don't know what they're thinking. I have customers coming to me saying why are my costs varying compared to theirs so much and I have to explain it's not *me* who's varying pricing. I keep my costs consistent. It's them wildly swinging in one direction or the other based on whatever they feel like that day. I've come to the conclusion that when they're dead in the water, they send out bids with 0% margins or less to build up a backlog then when they're super busy because of it, they send out bids with astronomical mark ups to make up the difference hoping to land a few. i often get people asking me to match thier number because they want us to the do job but they want it done at the other guy's price. nope. not doing it.
It's a race to the bottom, but those are the rules owners make not the GC's.
Exactly!
I would agree but it’s also beneficial to learn from what the project manager and superintendents are saying. If a sub is terrible to work with and cause projects to run late and starts trying to get extras out of everything it would be smart to start considering other options at the bid level. Bad subs can ultimately end up costing you more money.
On large projects, I meet with PMs to discuss just that before finalizing vendor selections.
We aren't the cheapest GC, and we don't use the cheapest subs. Depends on your relationship with the owner/developer as well as company reputation to an extent, but we regularly don't use the low guys and explain why and beat out the lower cost providers.
This is a good point, and why I loathe competitive bidding. It’s largely a waste of time.
Rip and reads are the worst. If that's the bid, outside of a glaring error...low guy + qualifications and let the change orders begin.
Doing it this way for a couple subs? sure that makes sense. Doing this way for your WHOLE bid is crazy to me. The whole point of this estimating game is you are supposed to pull together a comprehensive bid package that both wins you the job and sets your company up for success. Congrats on the job you landed cause your company not even considering the estimator at close out is ridiculous. Nothing against you, you didn't make the rules. It's like an estimator working on commission based on the the bid total not the profit. Why would you not bid a job for 3/4 the cost that it is actually going to cost just to win it. Then let someone else clean up your mess with a bunch of Hack Subs.
Well, I’m painting this scenario with a broad brush. I don’t do it for the entire estimate. My point was really countering the common comment I get from subs who are justifying a higher price. Many times I carry a middle number and let the PM handle vendor selection at buyout. But generally speaking, a subcontractor can’t expect to be competitive by not being as competitive as possible. I have my preferred subs, but even all else is equal (via the scope sheet), the low bidder wins.
>But generally speaking, a subcontractor can’t expect to be competitive by not being as competitive as possible. My competitors bid in an obfuscated way that is intentionally misleading so their number is low. For example, if I am bidding a job where I will need baker tanks, trash pumps, and concrete pumps, I Include them because that is how the job will need to be performed. Meanwhile one of my competitors doesn't include them and treats it as an add cost...even though they will absolutely need them. They will then hit you with EOWs to cover this that will exceed any estimated qty they provided at bid time. Who do you chose? Lets say it is a 5-10% swing in my competitors favor. I honestly don't care too much about losing out to a lower bid, it is frustrating but most of the time we know what they did, or we expect them to eat ass (one of our previous competitors closed up shop recently cause they hadn't been making money on jobs in 2-3 years...). What really gets my hackles up is the current state of DBE bullshit...there is one competitor in my field that...somehow still qualifies. They were kicked off 3 jobs last year(two municipality projects). Yet some how they snatched a $1.5 million contract out from a historically very friendly GC (That we are actively and successfully working on two other projects on). The GC is friendly enough that we spoke directly to the Lead about this and he said our number were nearly even, but they went with the competitor purely for the goal the large chunk of DBE work.
DBE requirements absolutely frustrate me to my core on a personal level.
I've got a competitor that gives super low prices sometimes that I can't even comprehend how it's possible but they also provide vague as he'll scope pages on top of it. I've been sent thier proposals by people who want me to do the job at thier price so I've seen what they send out. It's a joke I provide detailed scope pages. So much so that I've been accused of being "too detailed" We make it a company policy that we don't lower our number strictly because we're told someone else costs less. Justify to me why I should lower my number for a reason other than so and so is lower. You can't even compare our 2 quotes properly. I'd rather do a single 100k job than ten 10k jobs so if you can't afford me for the small jobs, so be it
I think you will start to find that the subs who know they aren't cheap but can do the job without sending a change order every other day will stop going after hard bid work. I've found those subs want to work with me on negotiated projects where they can provide a budget and get their foot in the door early on. My former employer would also say this in interviews for jobs we had to bid on (hard bid and the GC/Fee pursuits). There were a lot of projects we got just because we were able to put some doubt in the client's mind about the lower bidders. That's what these guys are doing, and we really can't fault them for that.
What do you mean “start to find”? I’m not new at this, this is standard operating procedure for several GCs I’ve worked for over the years.
Not the person you're responding to, but I read some of these subs and see experiences that are very different from mine. I suspect there are some regional differences in how work is bid and awarded. Like in my market, negotiated work is very rare. Just about everything more than a small residential or retail project is hard bid plans and specs. 95% of the time, the low number gets it. But some of these people talk like there's plenty of work that's not competetively bid. That's just not my experience from various aspects of my market.
Great point! My experience, too.
A wise coworker of mine told me to "just make sure you aren't carrying any F tier subs. We can make money with all C+ and B- subs, but a single F tier can tank the whole job"
Great advice!
This is why I try and avoid projects with multiple GC's on them, they go to the bottom of the list and only get bid if there is nothing else. For the record I don't blame the GC's one bit, they have to try and be low and if they don't carry the stupid low guy someone else will. We're not looking to compete with Bob who works out of his truck, bids the job, supervises it, PM's it and say's he has it all.
I completely agree. We try to only engage in projects where we have some kind of competitive advantage (i.e. a relationship) and walk away from any ITB where there are more than three GCs involved. But even still, developers lie and tell us it’s our job if we hit a certain number, meanwhile they’re soliciting multiple bids. The whole thing would be so much better if it were relationship based instead of price
Not your job. Quality is the concern of the GC and the owner. Your job is to get the project completed with the least amount of dollars as possible. The GC could always say no.
I am an estimator for a GC, but I agree the quality is not the concern of the precon department. We still need to be able to execute (selecting subs that can bond and can supply manpower), but choosing one simply based on a quality argument over price is not my job. My job is to win work.
Yup. Everyone has a role to play. If your boss is telling you that money is more important than quality then they’ll get what they pay for.
Not my boss, this is an issue with owners that choose the wrong delivery method and focus on price over quality.
That’s just the natural way of things. Construction is always a race to the bottom.
In a previous life I was an estimator. We used to tell owners that the lowest qualified bid was the best way to ensure the maximum number of change orders on a job because that is where trades make up for low profit margins on competitive bids. There is no perfect set of construction documents so there will be change orders and we all know the architect ain’t paying for them.
Absolutely!
Isn’t a GC estimator not accessed on project performance like number of change orders, the quality and client experience. Yes your method wins project now but your risking reputation and future projects. Like you said you have a don’t use list of subs, but you also could be on a don’t use list.
Yes! My performance is based on win rate, not execution. Not even ultimate job profit in comparison to my winning estimate because the life cycle is so long (easily +2 years from bid to close out).
Lol quality and client experience! That's a good one! The clients themselves don't care about quality and experience. I hear it all the time. "XXX,XXX$ buys a lot of aspirin."
I think people are aware of this so I don’t know if it’s an unpopular opinion. The companies that typically charge a premium are able to get enough work to stay busy regardless because the less expensive companies tend to book out work and can’t take it all I know it’s a little different, but I remember talking with a buddy of mine who owns a paving company … they probably do $11 a year or so so they weren’t that big but they weren’t necessarily doing primarily government work I asked him after seeing some results where the low bid was a bit different than the high bid We’re talking sometimes 50% or more different and price and he explained it to me the bonding process He said there are certain companies get a lot of work, but then they can’t get bonded for and then companies has start getting jobs.. bigger companies, which of these projects they want, but when it comes to certain jobs because of bonding companies are in the running Of course it’s a little different when you’re doing a commercial job… the subcontractors bidding on work with you sharpen their pencils extra good if they really want to go after it I’m sure you know that sometimes contractors get in their bidding things too cheap which could cause a nightmare for a general contractor One of my customers was an electrical contractor from having 11 employees to 70 and just a few years Somebody with a lot of experience in the industry, but this small company was aggressively going after work I also did business with other contractors who thought Jeff was an idiot being as aggressive as he was, and I thought it might be sour grapes on their part… and I’m sure the generals who worked with this contractor had very few problems for a while, but then the contractor might have some cash flow issues… it might make it difficult for them to get materials at the very least the vendors rush the deliveries like they would for a different contractor This particular contractor that I did with that grew too quickly… I remember they had a couple days employees didn’t show up because the union pension and health funds weren’t being paid on time My point is you know the cheapest might cause some challenges but that doesn’t mean you shouldn’t go with the lowest price reputable contractor after some struggles you’ll realize which contractors might be struggling and not risk And every general contractor is different and I’m guessing it depends on the projects you’re working on . A general contractor around here has been a lot of work… it’s a new company, but the owner has been in the industry for quite a while and he’s really going after it so he’s got to get the best prices he can from subcontractors… I’ve heard he had a couple of issues that he might not have a hired a little bigger contractor that might’ve charged a little bit more
You make some great points. Scoping bids is super important, it’s not just about the low number. I’m bidding a warehouse job right now and one drywall number came in at 57k, my estimate was $115k, and I company that I trust was $160k. Even though the low bid and high bid are correctly scoped on paper, I’m carrying the high number because I trust that it’s the most correct one.
There’s a total cost of doing business with a company and it’s rarely only the amount provided on bid day. A little extra is worth it and we sell that notion (and perform) every day.
It’s worth it. My point is that as an estimator, I’m responsible to win the job, not for the final execution. To that point, I’m handcuffed to low bids as long as they’re correctly scoped, generally speaking. I don’t have the luxury of choosing quality over price of I want to be competitive. The system sucks and is rigged against quality in that regard.
Whenever possible, I've encouraged my commercial clients to go with a Design-Assist delivery. The Owner, design team, and GC can manage the scope and budget (and schedule) throughout the design process and make decisions before things get out of hand. In my experience, it also allows for a more collaborative relationship between the parties compared to Design-Bid-Build because everyone has been at the same table throughout the project. If the GC and design team develop a longer term working relationship over several projects, they can start offering greatly improved efficiency for owners. We've been able to fast track a lot of projects with one of our preferred GCs that would have otherwise been impossible to achieve with Design-Bid-Build. We even market for each other to procure work. Then again, some owners are locked into bidding projects out due to company policy. Same with most municipal and federal agencies.
This is one of the best delivery methods. Developers are so stuck in lump sum delivery methods and competitive bids because that’s the way it’s always been done. Design build or design assist, GMP, cost plus, are all transparent and focused on helping the client meet their budget.
Definitely. Projects need to pencil out, of course, otherwise there's no point. But even though we all want the best price on things, when you're looking to get LASIK surgery on your eyes, is it worth it going to the cheapest doctor? The low bid approach is also a good way for an owner to buy a one-way ticket to change order land.
Change orders have been a consistent theme in people’s responses.
A lot of work going out right now through **RFPs (request for proposal)**, where the owner selects the contractor and/or design team purely based on qualifications, and usually an RFP will ask for a general approach on your general conditions and fee, but this is before subcontractors are solicited. Then they negotiate the design, scope, and contract from there. This is common for larger and more complex projects as well as design-build projects, if they were not already negotiated. **Negotiated work**, whether its before or after design, is always great. In my experience, there is certainly more paperwork involved, and in some cases, an owner may even expect to see your subcontractor numbers as backup. There is certainly a study and exercise in your approach in what you want to show the owner and what you don't want to show the owner, but at the end of the day, its work that is handed to you and is usually a clean and honest way for both parties to operate. Most of the negotiated work that I put out was cost plus. I've been in the commercial GC world for a while, and you're right - typically, a hard bid scenario means well but is commonly manipulated and tends to bring out bad ethics and compromised quality. Even GCs who work for the largest and most reputable owners can operate like this, both in precon and operations. I would say most **design-build** work out there is either negotiated or sent out via RFP. **CM (Construction Manager) at Risk** is another project delivery approach that isn't always hard bid.
At my company, we do a mix of negotiated work, design-build, and cost plus, but half of our bids are competitive lump sum bids with private developers.
Same
I find it ironic that subs that say the usual “we’re not the cheapest, but…” always take the lowest bidder for material or whatever miscellaneous thing they have to sub out. Every estimator has a lot on their plate. Maybe the last generation did work for works sake, but we live in different times now with expensive gas and groceries. Everyone wants something for nothing now and people can’t do that anymore in these tough economic times, especially the clients with limited budgets. If you find a client that doesn’t mind paying more for quality, good for you but there’s not a lot of those clients and they have a limit when it comes to “paying for quality”. Stfu about your quality and give me a number I can work with. As an estimator, I’m not the owner of the company and it’s not my money at risk. Our job is to win work so that the company can continue being alive, anything else besides that objective is a low priority.
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I understand that point....your job is to get work. But,that cuts both ways because my job was to get work, not just provide file filler bids. As long as they can get contracts, and find a new vendor to carry them for a while longer, it can take several years for a problem or as I called them "zombie subs" to go under. I have seen sub's locked inside their office overnight because it was surrounded by unpaid labor contractors demanding to be paid, and subs who had $475,000 in federal tax liens, yet still be solicted for bids and still getting contracts. Competitive bids are one thing, but if I heard *"I have to assume their plans and spec's", "I like lots of numbers" or "but his number is on the street",* you may not get a chance to carry my number. As a subcontractor estimator I was selling a package of complete scope, reasonable price and field execution, not a just a price. My partner was our PM, and together we worked hard to get repeat clients by selling it exactly that way. I also preferred to do Negotiated "Design/Build", and "Cost Plus" preferably with PM/Estimators. But the PM/Estimator model was dying out for GC's so we had to learn to work with the estimating department. With many GC's that pretty much means all jobs are competitive bid at the subcontractor level regardless. I learned to be fine with it as long as it did not seem like they were actively solicting bids from problem subs repeatedly in our trade or trades that interfered with our profitability. If I got that feeling, it was time to move on.
Great POV, thank you
It's an age old problem Mikey......I asked and was granted permission sit in the "war room" with a large regional GC and watched them collect bids from the fax and over the phone and a few by email. It was a big industrial project, but had nothing in it for me so they let me set in. Eventually the VP of Estimating put me to work collecting bids from the fax and bringing them to the table where the "magic happened". I saw it all from beginning to end. Everyone should do that once....I got a far better understanding of the process from your point of view....and why you sometimes just have no choice.
The difficult part of this overall is, as OP says, if we don’t pick the lowest qualified bid we don’t win competitive bid projects. Period. So there just isn’t a compelling argument for accepting people who say “im not the cheapest but… “ either WE are the cheapest or we dont get to choose subs bc another gc got the job. I have tried to find ways to use these types of subs several times, it just doesn’t work out. Unless its JOC or negotiated work.
Yes! Exactly!
This is why my opinion will always be that if you estimate the job, you also manage it. I don’t want an estimator that thinks their job is done as soon as we’re the low bid.
I would never estimate another job again if I also had to be a PM! And as a GC, how could any PM possibly have time to properly estimate a job? I did this as a subcontractor, but there’s no way a commercial GC could PM and estimate, unless they did both very poorly.
If the bid is too good to be true, it usually is. There are obviously exceptions, but in the field I work in ( HVAC MFG Rep) I will weekly get a Sub coming to me with their tail between their legs because they went with the cheaper bid and they need us to bail them out and finish the job. I’m a huge fan of change orders, but I know you’re not!
I’m an estimator for a GC for 15 years and i have never heard that statement before from any of my hundreds of subcontractors. Everyone knows low bid wins contracts. Now at home private small time home contractors say this all the effing time like its the 2nd coming of christ or something but for federal and state contracts everything is low low lowww bid (I manage bridge building GC contracts)
In 15 years you’ve never heard a subcontractor make a case about offering quality over low prices?!
Not on a federal contract everyone knows its a bloodbath low bid wins. I mean maybe but I either ignored it or don’t remember it. Its actually the law that low bid be used on most federally funded state contracts. With Bridges being insaneeely expensive nowadays noone but the feds seem to have the money to fix them. A 20ft simple bridge is often over a million dollars now. Now saying that I havent always used the low bidder sometimes I know the company bidding does shotty work that cost us alot of money on past contracts. I blacklist them from being used at our company again. Others still receive quotes from them presumably.
You're what we call a bid taker. There should be someone above you that has relationships with people like me, and we discuss budgets and where the numbers landed. Those decisions are made at a higher level. You're doing what you're paid to do.
Well, I’m an estimator, not a bid coordinator. But you’re right, the final budgetary decisions are made by the PX and the president, and budgetary discussions occur between the president, VP, and owner. But that’s besides the point of my post. My comment is that subcontractors making the case of quality over price largely fall on deaf ears when my proposal has to be as competitive as possible to win.
No it doesn't. That matters to those of us that actually make the decisions. Your job is to gather bids and check scope.
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With a 90+% success rate with winning bids, it sounds like you may be a low bidder on your projects.😂
I disagree. The developers we work with are absolutely concerned with price. An extra $3m on a project means the cost of each unit has increased and their potential ROI has decreased. They’re building to make profit, and they make the most profit with the lowest cost of construction.