With the time off, I?ve been able to make nice with one of the head project managers at an established GC. We go out for lunches and I have spent some time in the GC's estimating dept.
Here?s what I saw the morning of the bid opening for a million (1.5 mill about) dollar job.
All of the sub-contractors were faxing in their quotes for the job, some had faxed in numbers the day before, to the GC?s estimating dept.
The project manager (PM) was looking over the bids, prices for mechanical work (plumbing, electric, HVAC); low prices were just over 100,000, prices from established mechanical outfits were right at or above 200,000.
The established mechanical contractors were the high price. Most had a boiler plate of exclusions attached to the bid with wording that stated if you don?t put OUR exclusions in the contract then this price is void. Also had a lot of language about payment & billing & scheduling of work.
Most of the low prices had no exclusions.
The PM penciled in a LESS than average price for all the mechanical trades and laughing said ?let?s see if we can get it done for this dollar amount?. The PM said that established contractors that have estimating departments and were good for getting prices on work; smaller contractors had lower prices but were unreliable for prices and work. The PM also stated that he liked smaller contractors because most of the time they would come to his terms. Established contractors were a ?pain in the neck???.
Now it?s about 9am the man who owns the GC sticks his head in the door, the PM starts to complain how he hasn?t been able to vacation due to the economy. The owner of the GC said to the PM ?you have the SOANDSO job coming up, if you can beat your subs up and get the job done for less, with NO EXTRA?S, take the saved money and go on a cruise (~9000.00).
The PM grabbed the SOANDSO job folder and called all the subs (on speaker phone). In a nutshell the PM would say that the sub was too high, come down in price, I?ve got more work for you. Most of the subs caved.
What I saw is that the lowest bidders caved no problem; the established businesses would not budge much on price. This is interesting because the guy with the lowest price would lower it more, but the guys with the higher prices would not drop the price much?.
PM also made the point of saying that if he was forced to use one of the established sub contractors(high price), that he would try to make the other trades(low price already) cave and come down in their price more to make up the difference for the established sub contractors high price.
