copper qualifier for bids

[pgordon]

Does any body have any suggestions on how to word one's bid proposal
for the fluctuating price of copper? Some times the award comes weeks
after the bid date.

 

[petersonra]

I do not think there is a real good answer to this question.

You could put a provisio on your bid that it is subject to the price of copper not exceeding some number. But in reality, other stuff could well go up in price before you get the order too.

But, putting those kinds of conditions on your bid in most cases will get your bid tossed out as non-responsive if they are asking for a fixed price.

 

[muskrat]

Some suppliers will quote a price for 30-60 days, but after that????
Maybe wording in bid that price is good for that length of time????
Tack on a % if not by that time frame???Good luck!!!

 

[rodneee]

do not do what i did

do not do what i did

Does any body have any suggestions on how to word one's bid proposal
for the fluctuating price of copper? Some times the award comes weeks
after the bid date.

the last time i remember copper spikes like this was 2009...having the same fears as you; i decided i better include something in my bid to protect myself...conjuring up all the wisdom passed on to me from an 11th grade creative writing class, i wrote a one paragraph addendum...my prose was perfect...my content was the truth as if right from the mouth of God...all this was for naught as i was passed over for the job...later i found that my well written blurb on the unstable cooper market was interpreted by them to mean nothing more than "THIS IS NOT A FIRM BID" (which was correct)...

i brought up a potential headache before it happen
ed and thus was out of the game before it started...

 

[G._S._Ohm]

the last time i remember copper spikes like this was 2009...having the same fears as you; i decided i better include something in my bid to protect myself...conjuring up all the wisdom passed on to me from an 11th grade creative writing class, i wrote a one paragraph addendum...my prose was perfect...my content was the truth as if right from the mouth of God...all this was for naught as i was passed over for the job...later i found that my well written blurb on the unstable cooper market was interpreted by them to mean nothing more than "THIS IS NOT A FIRM BID" (which was correct)...

i brought up a potential headache before it happen
ed and thus was out of the game before it started...

If it's 40% likely that the price of copper will go up by 20% by the time they award the bid then you should increase your asking price for the copper from today's price by 0.4 x 0.2 = 0.08, 8%.

Other bidders will figure these risks differently and so may or may not win over you.

They do seem to be asking the bidder to assume the risk of changing material costs.

If the awarding entity believes they know these likelihoods better than the bidders
http://en.wikipedia.org/wiki/Asymmetric_information
then the bidder with the worst estimate will be taken advantage of.

This kind of problem is studied a lot in Game Theory. The theory recommends you make a matrix of costs/penalties depending on the outcome.

There are four cases, along with likelihoods.
You underbid and win the contract
You underbid and do not win the contract
You overbid and win the contract
You overbid and do not win the contract

 

[petersonra]

You might try putting a clause in your bid allowing you to back out under certain conditions.

The problem is that most times they want a fixed price and whatever time it takes them to get around to deciding what they are going to do.

A bidder that puts a lot of conditions on his bid may have it thrown out on the grounds that the bid does not meet the conditions of the bid spec.

I would suggest carefully reading the commercial terms of the bid spec. It is not unheard of for this kind of problem to be covered. Sometimes it is somewhat obliquely handled.

 

[shockin]

If the price of copper goes down between the time you bid and the time a contract is awarded do you give the owner a discount?

I think not. You can't have it both ways. Add in to your bid whatever you think is appropriate to cover escalating costs.

 

[SmithBuilt]

Right or wrong here is what I do.

● Due to rising material costs we reserve the right to adjust this proposal if materials increase more than %5 from the date of this estimate.

Supply houses have a record of what the wire price was each day, at least mine does.

One caveat. I have good working relationships with the companies I work for. They are all ok with the wording. They know I will treat them right. I have never had to use this either though. I have been ask to give a set price and will, but they know up front it will be higher.


I think in today's world economy you have to cover yourself. Even if you put in a really high price actual costs could exceed it.

 

[Cavie]

Right or wrong here is what I do.

● Due to rising material costs we reserve the right to adjust this proposal if materials increase more than %5 from the date of this estimate.

Supply houses have a record of what the wire price was each day, at least mine does.

One caveat. I have good working relationships with the companies I work for. They are all ok with the wording. They know I will treat them right. I have never had to use this either though. I have been ask to give a set price and will, but they know up front it will be higher.


I think in today's world economy you have to cover yourself. Even if you put in a really high price actual costs could exceed it.

Just curious, Do you offer a 5% credit if the prices go down.Just had to ask.:roll:

 

[SmithBuilt]

Just curious, Do you offer a 5% credit if the prices go down.Just had to ask.:roll:

I'm sure you already know the answer. I do not put it in my contract or advertise it, but if a customer ask I would credit. After all I'm in this for the long haul.

 

[tkb]

Just curious, Do you offer a 5% credit if the prices go down.Just had to ask.:roll:

When was the last time you saw prices go down? :grin:

 

[G._S._Ohm]

This is a win-win for the awarding agency and a risky gamble for the bidder.

The low bidder will be awarded the contract and lose money if he/she underestimated the cost. Then he/she will be stuck. The worst the awarding agency will do is get a fair price.

I guess this is not illegal - the law only protects those who knew better - the rest will learn a lesson.

 

[tkb]

No mater what you qualify in your proposal it gets ignored by the GC and then they expect you to sign their one sided contract based on the plans and specs.

 

[dduffee260]

We use something like this - " Today's current copper price is $4.41 per lb. If not awared a contract within 20 days of this transmittal the contract price may increase due to the rising price of copper. The amount of copper in this project is $36,600".....it looks something like that. I am not at the office so I can say for sure but it is something of this nature. We have not had to use the commodity clause yet but I feel just by putting it in the bid proposal it would give you a chance.

 

[Besoeker]

FWIW, this is a clause from a transformer manufacturer's quotation:

Prices are based on current copper values and are subject to fluctuations in LME.
LME is the London Metal Exchange - I'm in UK.
"Fluctuations" covers up or down.
Our cable suppliers usually have a similar clause.

 

[kwired]

You may want to consider what percentage of the bid is directly effected by the price of copper, and figure out how directly a change in copper price will effect profit assuming all other items remain the same.

If you are installing a 2000 amp service with copper conductors obviously copper can be a large percentage of the cost. If you are installing a lot of lighting fixtures copper may or may not be a significant percentage of the cost.

 

[SmithBuilt]

No mater what you qualify in your proposal it gets ignored by the GC and then they expect you to sign their one sided contract based on the plans and specs.

One contractor I work for basically copies my specs into the contract with the customer. So not only is the contractor on board the customer has signed also.


I know that will not work for all contractors. I would argue that most GC's put a similar clause in their contracts with customers.