How to play the game?

[sjaniga]

Can someone please tell me how the "get in low, then kill them on extras" game is played? We started this business a couple of years ago thinking that if we did exceptional work, showed up when we were supposed to, and were honest and ethical that we would do good in the industry because there sure are enough shady contractors out there. This has not been the case, and a lot of generals tell us that they love our work, but when they are bidding against other generals they have to take all low bids or they will not get any work either. For example we just gave a quote to a school for their new bus garage, they bought an existing facility with a 480/277 400-amp service with one 200 amp panel for the office that is completely full, and need 50 receptacles in the parking lot to plug these buses in, each bus has a 1200 watt 120v engine block heater, the contractor that came in 5000.00 low said he could do it with one 200 amp panel, 120/208v, You do the math. The school said they had to take the low bidder, they are saving 5 grand. As a business owner, I have always said I would not play dirty, but being honest and giving people what they need is getting me nowhere fast. Sorry, but I felt the need to vent, any suggestions?
Scott

 

[Guest]

Re: How to play the game?

Homey don't play that! But here's how it works:

One way to play the game is to find defects in the specs. You bid the job at cost knowing it can't be built per specs. Once you get the contract you do an add/subtract change order to change the specs. to something viable. I had a bid to install 4000 set-back thermostats on gas wall heaters. This involved running a 120-volt circuit; EMT; a 120-volt by 24-volt transformer; a 24-volt set-back thermostat, etc. Multiply by 4000 and it was nice contract. I found a direct replacement thermostat; got the contract at cost; did a change-order-subtract. This reduced my cost by about 80% but I only gave them back 60%. I made my money on the subtract. There were other parts of the contract that were modified to my advantage after the fact too-- and I saw those gaps up front.

Other jobs are so complicated that they likely end up in adds & subtracts. Some bids are done at cost and they sock it to them on the adds, and don't give as much credit on the subtracts as was figured into the bid.

It's all a gamble so you must be a gambling man which I am not. I choose not to do these bid jobs any longer-- it's too nerve wracking.

I remember bidding one particular job where my bid was the highest and my timeline for completion was the longest. Of course I lost the job and the winning bidder had over-runs that ended up exceeding my bid. My bid had it right-- he had it wrong-- and got change orders-- and he made money before he got fired and the Boys & Girls Club ended up in the lurch. They had no more budget left to complete the job.

The biggest weakness in bids is "allowances". If you figure them too high you lose the job-- even though they should not be factored in to the bid on their face value. The person with the lowest allowances can get a job even if their base bid is higher.

Check out some special programs and see if you qualify. These will give you a 5% leg up. For instance, disable veteran, woman or minority owned, qualified small business, etc.

What state are you in?

[ September 23, 2003, 08:17 PM: Message edited by: awwt ]

 

[racraft]

Re: How to play the game?

The proper way to play this game is to not play it. Point out why your bid is appropriate (materials, time, etc.), and that those without essentially the same materials are teasing the customer.

Playing the game may get you work, but it may get you a lawsuit, too. If someone low-balled me and then tried to make it up, they would soon be talking to my lawyer.

 

[pierre]

Re: How to play the game?

I was in the same boat you are in and it was driving me insane. One day by luck I met a retired IBM executive. We talked about the situation and he said to me it is a time issue. The 'sluff' will die back and the cream comes to the top. At the time I was struggling and it did not make sense to me. I was in business for 2 1/2 years and going broke. But in a manner of another two years it turned around and over the years I have developed a client base that accepts my price for good work. Hang in as hard as it is, this industry needs good people like you!

Pierre

 

[sjaniga]

Re: How to play the game?

Pierre, thank you for the encouraging words, I think that was just what I needed to keep pressing forward.
Scott

 

[russellroberts]

Re: How to play the game?

Ditto to what Pierre said.It won't happen overnight,but word will get around about the good job and work ethics you seem to promote.

We're small(2 people)and can't compete with the big guys on some things,but service changes,rewiring,and custom new homes are beginning to be our mainstays.

Stay after it Sjaniga!

Russell

 

[rrrusty]

Re: How to play the game?

Hang in there things will come around; People will hear about you and work will come your way; I have a small ad in 2 local papers;1-1 line ad in phonebook and have 2 lighting places giving out my cards and my time out is 3-6 weeks on average and only a 1 worker shop

 

[tonyi]

Re: How to play the game?

I have an uncle who was a GC doing custom building and remodel work for 40+ years. After a while and a number of very happy clients, he never had to competitively bid a job for decades after that. He was able to keep his crew busy on no-bid strictly referral work. Building "your rep" takes a bit of time, but there ARE people out there who are willing to pay for a quality job done with quality materiels...it just won't be the Arvida's and other big tract builders throwing up cookie cutter crap, or the guy trying to pinch pennies and do everything on the cheap, cheap, cheap (but do you really want the grief of working for those types anyway?)

 

[charlie tuna]

Re: How to play the game?

i have been in business for 22 years--had up to 23 men working at my peak --- learnt the best way was to be in total control of my business. read an article in a trade magazine about general contractors will eventually be phased out since they have nothing to provide the customer for the fee they charge. we haven't worked for a g.c. in ten years! we work commercial office buildings and only direct to building ownwers or tenants. the owners call us into meetings with general contractors and ask us to do a certain tenant space--" no problem " we tell them "as long as we are working for you the owner" and then the normal question comes from the g.c. - "how do you stay in business ?" ------ we tell them " we get payed for the work we provide "ON TIME"! our real problem is too much work - most of the time - but when your referal is good work at honest prices the customer will usually wait... it'll come and it will be benifical to you and your employees!!!

 

[jrdsg]

Re: How to play the game?

charlie's right. our experience is very similar. the only work we do for gc's is on design-build, when the gc is there basically as a construction manager.

there are rare exceptions to this rule, but the overwhelming majority of our business is direct to the owner.

keep it up.

 

[ron]

Re: How to play the game?

First, I am not an electrician. But I can share the tension (or lack thereof) felt between the engineer and a low bidding "playing the game" electrician.
Now that my drawings and specification have improved over the last decade or so in the design business, I get some enjoyment from the tension felt from the guy playing the game with me. Generally, I represent the owner, and my job is to ensure the owner gets what is in the contract.
The guy that plays the game bids the job at cost or less, assuming there are significant errors or shortcuts available within my documents. After the project is awarded, the sweat begins, because the shop drawings and submittals get rejected, as I will not approve an inferior substitution. It goes on when they realize that I get to visit the site and perform my own punchlists. Luckily I'm the most familiar with the documents that I draw.
Very often the contractor playing the game ends up in a significant hole ($$$), that he/she can not escape without leaving the project before the end.
Keep providing quality work, and they will come.

[ October 04, 2003, 09:04 PM: Message edited by: ron ]

 

[roger]

Re: How to play the game?

Bottom line here. (I'm talking about formal bids and bid openings)

# 1 we can only bid what is shown, this includes alternates, be it adds or deducts

# 2 the contract documents are the same for all.

# 3 the architect and engineer design the work but low bid and sometimes reputation win the contract.

# 4 If you are giving a quote to a questionable GC inflate your price

# 5 Those who deliberately low ball and try to gouge on C.O.'s are low life's to the owners, designers, and industry. They ruin the honest bidders chance to make a modest profit, they loose money themselves, and the owner gets a substandard product. The designers end up frustrated because their intent is far from achieved, and in some cases the bonding company has to pay out. (god forbid)

Remember good or bad times, honesty will come back to you.

OK I'll get off my soap box and I didn't mean to offend anyone.

Roger

[ October 04, 2003, 10:04 PM: Message edited by: roger ]

 

[spkjpr]

Re: How to play the game?

I too am just starting up. I am a single man resi shop, working nights and weekends, work industrial on mid shift full time. I don't play games. If I bid a job, that is the price I charge. If I miss something I chalk it up to experience,if I run into something I could not have forseen then I will discuss it with the owner and it will be an added charge. I have been going for 6 yrs and the last 2 my business has picked up. It really pays to have a good reputation, not a lot of jobs.

 

[doctorbob]

Re: How to play the game?

Ditto Most of the Posts...

There is one thing that I change in the bidding process.. I don't!!! Except when I am paid to do a Site Survey and I charge a minim fee of $250, then I apply that fee to the contract, if I get it.. That may sound hard core to most of the other C-10's here, but I eliminate the problems with bidding that way... Most of the work that I do is Low Voltage stuff anyway, but occasionally I do a rough-in or pre-wire.. I keep it honest and above board, and I don't lose any money, because if they don't want it done my way, I don't take the contract..
I re-established in 1999, but prior to that, I learned the hard way to stay away from the "Low Bid" people... I always figured that my integrity and reputation was worth more than anything else..

 

[pcoleman]

Re: How to play the game?

I loved this post. Honest, to the point and at one time or another, those of us who are in business, have all experienced this phenomenon. I think he is on the right track. When in business, you?re selling yourself, your ethics, and your professionalism. People tend to quickly sort out the bad from good. There is enough work around and customers want what he has to offer. My advice is to skip the contractors and processes that require low bid as a sole basis for selecting potential contractors. Let them "bottom fish". My most lucrative work is negotiated. My continuing work comes from happy, satisfied customers recommending us to their friends.

Interestingly, we have great general contractors looking for us. Credit checks and references are two way with us. We check them and they check us.

My final word is DO NOT CHANGE. KEEP THE ORIGINAL PREMIS FOR YOUR BUSINESS. DROP THE BOTTOM FISHERS.

 

[kelley]

Re: How to play the game?

I too am working to start my business. i have found that you have to stick to your guns and be honest and up front with the client/customer.I tell them that this is my price/prices and why and thats it. as my dad used to say honesty is the best policy

Kelley