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Thread: Covering for cost increases on proposal

  1. #11
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    As a small timer he does not have all that much clout. But on a $2 million project there should be enough material to grab the interest of suppliers if handled correctly.

    If he is dealing with the counter guy, he probably can't get much of a better deal. If he wants to do better he is going to have to deal more with the account managers and the suppliers more directly. I am always amazed at how prices can come tumbling down once you get past the counter guys. I am pretty much convinced the counter guys main job is to make you feel guilty about price shopping.
    Bob

  2. #12
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    Quote Originally Posted by petersonra View Post
    there is a huge difference between an act of god situation and the "normal" price fluctuations of this kind of commodity.

    i wonder what the other bidders are doing to protect themselves.
    A few years back we engaged an EC to run EMT/flex and pull cables for a fire alarm retrofit. He has a clause in his proposal that he was basing his price on $xx/ft for various cables tied to the spot price for copper, with yy feet on the project. We passed that along to the customer and they didn't complain. Copper prices were very volatile at the time.

  3. #13
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    Quote Originally Posted by brantmacga View Post
    I haven’t had an issue with this yet because most of the stuff I bid is fairly small, but it’s something that’s been on my mind.
    I do bid and get some larger projects here and there, and I’m curious what others do in case there is a drastic increase in commodities pricing (copper, steel, etc....)
    My supplier quotes are good for 24/hrs, and I expire my proposals after 30 days.
    I recently bid a job (that I did not get) that was just over $2M, and about 2/wks after the deadline, and before a contract was awarded, the material cost went up by $20k.
    I need to be including some sort of language to account for this. We obviously wouldn’t have signed a contract knowing the cost went up by that amount, but how do others approach this? Is it as simple as saying, “I can’t do it for this amount now.”
    I don’t know how the GC’s cover for this on their end but certainly they must.
    Companies sending out “Invitation to Bid” on projects, are just as aware as everybody else of the volatility of the market.
    Just because a contractor came up with the lowest bid is not a guarantee that he will be awarded the contract.

    This may not apply to small projects, but when you are dealing something that involves substantial amount of money. . . companies that are bidding out jobs also consider whether the lowest bidder could finish the job based on the bid price. Owners also have their own engineers, economist evaluating unforeseen events that could happen.


    Of course one can argue that the EC may have bond or “Completion Insurance” but companies/owners would rather not go this route if they can help it.

  4. #14
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    Quote Originally Posted by brantmacga View Post
    1% of the job sure, but certainly not the profit margin. 20 grand is 20 grand.



    Sent from my iPhone using Tapatalk
    While I agree with you, I'm more in agreement with Randy's reply. $2000000 is a pretty huge job, and you should be able to recover it elsewhere, such as limiting overtime minimizing mistakes waste Etc

    The largest job I have worked where material prices changed rapidly involved about 85,000 feet of communication cabling. This was back in 2008 were copper prices soared. I believe the material cost was close to 40% higher by the time the job was cabled then when the job was bid. Some of the cost was absorbed by the company already having cable on hand, and the rest was compensated for by more efficient installation practices, which wasted less wire and wear faster to install. While some profit was lost on that job the more efficient ways were carried on to Future projects resulting in very drastic cost-saving measures over the old style of doing things.


    Last year, we wired a city wash station that required two sets of three phase 500 MCM, full size neutral and 4/0 ground, run almost 400 ft. Wire prices changed enough from the time the job was spec to the time of job was wired to cost almost an extra $2,000 in wire cost alone. the gentleman I was working for at the time wound up eating it, and was not happy about it.
    Electricians do it until it Hertz!

  5. #15
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    2 mil div 16 is not a small job

    what kind of job allows you to back out of a bid and not honor it if you are low and within the valid period of 30 days?

    no bid bond?

    you need your suppliers to guarantee their quotes for the same period as you
    or until you get the notice to proceed and guarantee them that if you are awarded you will buy from them

  6. #16
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    Quote Originally Posted by Ingenieur View Post
    2 mil div 16 is not a small job

    what kind of job allows you to back out of a bid and not honor it if you are low and within the valid period of 30 days?

    no bid bond?

    you need your suppliers to guarantee their quotes for the same period as you
    or until you get the notice to proceed and guarantee them that if you are awarded you will buy from them
    You would think a supplier would be more willing to stand for a longer time on a quoted amount for a million dollar sale then for a thousand dollar sale.
    I live for today, I'm just a day behind.

  7. #17
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    doesn't make sense

    when the buyer quotes he likely (or the mfg) has already bought the material so the price is fixed
    likely on the shelf or in the warehouse, or at least the raw materials are procured

    if the price on FUTURE goods increases it sounds unethical (illegal?) to jack the price on present goods

    not talking 6+ months, but at least 60 days
    takes that long to settle contracts
    if it was based on daily price fluctuation it would be next to impossible to conduct business

  8. #18
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    Quote Originally Posted by Ingenieur View Post
    doesn't make sense

    when the buyer quotes he likely (or the mfg) has already bought the material so the price is fixed
    likely on the shelf or in the warehouse, or at least the raw materials are procured

    if the price on FUTURE goods increases it sounds unethical (illegal?) to jack the price on present goods

    not talking 6+ months, but at least 60 days
    takes that long to settle contracts
    if it was based on daily price fluctuation it would be next to impossible to conduct business
    Your commodity items - wire, cable, conduit, strut, are the most subject to daily fluctuations and sudden price changes. Switchgear, breakers, motor starters, lighting fixtures, etc. usually won't make as sudden price changes when the commodities used to make them change as there is more involved in their cost then then mostly just the commodity items they are made of.

    Steel conduit can make price jump at times but fittings usually seem to remain more stable.

    PVC conduit also seems to vary in price but fittings usually remain more stable in price.

    Loadcenters may vary some with steel prices, but circuit breakers to install in them usually remain more stable in price.
    I live for today, I'm just a day behind.

  9. #19
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    Heck, sunset it in 24 hours, they're not signing yours anyway...

  10. #20
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    My daughter works in the A/C world with a major supplier. The roof curbs alone for their units were looking at an immediate 45% price increase a week ago. IDK how it turned out.
    Tom
    TBLO

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