Question about giving out bid prices

[hbiss]

More hypothetical than anything but I was talking to a GC about this recently. Say as an EC you have a relationship with a certain GC. By that I mean they always have work and always ask you to give them a number for a job they are bidding. Most times you get the work.

Now, another GC calls you who is also bidding on the same job as the GC you know. He asks if you are bidding on that job and if so what your numbers are. You've never worked with this GC before, got your number out of the Blue Book.

Do you decline, give him the same number as the GC you work with or give him a higher number? Also keeping in mind that winning bidders doing public work have to say who their MEPs are and the numbers. So you risk POing the GC you have a relationship with if the other contractor should win.

Do GCs ask you to do the takeoffs and estimating for the jobs they bid or do they have their own estimators and come to you after they have won a bid?

-Hal

 

[gadfly56]

More hypothetical than anything but I was talking to a GC about this recently. Say as an EC you have a relationship with a certain GC. By that I mean they always have work and always ask you to give them a number for a job they are bidding. Most times you get the work.

Now, another GC calls you who is also bidding on the same job as the GC you know. He asks if you are bidding on that job and if so what your numbers are. You've never worked with this GC before, got your number out of the Blue Book.

Do you decline, give him the same number as the GC you work with or give him a higher number? Also keeping in mind that winning bidders doing public work have to say who their MEPs are and the numbers. So you risk POing the GC you have a relationship with if the other contractor should win.

Do GCs ask you to do the takeoffs and estimating for the jobs they bid or do they have their own estimators and come to you after they have won a bid?

-Hal

At my prior company we would occasionally get multiple requests to bid the same project. I think the record was 6. Everybody got the same number.

Now, as a fire protection company we didn't really have preferred relationships with very many contractors. There were a couple to whom I would mention that we had been asked by another contractor to give them a bid, but that was it. It's not like we were the only ones they were asking, either.

 

[Besoeker]

More hypothetical than anything but I was talking to a GC about this recently. Say as an EC you have a relationship with a certain GC. By that I mean they always have work and always ask you to give them a number for a job they are bidding. Most times you get the work.

Now, another GC calls you who is also bidding on the same job as the GC you know. He asks if you are bidding on that job and if so what your numbers are. You've never worked with this GC before, got your number out of the Blue Book.

Do you decline, give him the same number as the GC you work with or give him a higher number? Also keeping in mind that winning bidders doing public work have to say who their MEPs are and the numbers. So you risk POing the GC you have a relationship with if the other contractor should win.

Do GCs ask you to do the takeoffs and estimating for the jobs they bid or do they have their own estimators and come to you after they have won a bid?

-Hal

Isn't that just the nature of a competitive world?
It happened to us all the time. A main contractor would win the design & build for a project and then go out to a number of possible suppliers for competitive and compliant bids. That didn't exclude non-compliant bids as an alternative.

And it wasn't just down to nickels and dimes. The technical merits of your bid, previous references, good working relationships like you have with your GC would be considerations.

Of course it is your choice who you submit a bid to. But I would think it unethical to price a bid differently to another potential customer. If you really didn't want to go with that customer I'd submit a "no-bid". But you could miss out on business if that GC wins the project.

Just a bit of my thoughts and experiences on the subject.

 

[Strathead]

Isn't that just the nature of a competitive world?
It happened to us all the time. A main contractor would win the design & build for a project and then go out to a number of possible suppliers for competitive and compliant bids. That didn't exclude non-compliant bids as an alternative.

And it wasn't just down to nickels and dimes. The technical merits of your bid, previous references, good working relationships like you have with your GC would be considerations.

Of course it is your choice who you submit a bid to. But I would think it unethical to price a bid differently to another potential customer. If you really didn't want to go with that customer I'd submit a "no-bid". But you could miss out on business if that GC wins the project.

Just a bit of my thoughts and experiences on the subject.

Not aggressively I wonder what your thought process is on this statement? If I have a long KNOWN standing relationship with a contractor, my bid has that consideration. I know how they work and where the pitfalls are. I know what they will do for me and I know what they will expect from me. So it is quite likely that I am willing to do work for the known quantity for less than the unknown.

In another scenario, I know the other contractor and their way of doing business generally costs me in my experience. Why wouldn't I put more in my bid to cover anticipated expenses?

I don't see this as having anything to do with ethics, any more than Home Depot giving a 10% discount to Veterans.

 

[Besoeker]

In another scenario, I know the other contractor and their way of doing business generally costs me in my experience. Why wouldn't I put more in my bid to cover anticipated expenses?

Your bid, in writing, should detail the exact extent of what work and/or services it covers. Your acceptance of it should also be in writing. That overs both parties. If your customer requires anything not so covered it may be requested verbally but should be accompanied by a written VO. You might want to include a statement to that effect in your original bid We did.
That may sound hard-nosed but avoids who said what, agreed to what type disagreements.

One other point and it may or may not be applicable in your case. With new customers, we usually had a credit check done before accepting an order.There are a few companies who can do that but there is a fee of course. You might want to weigh that up against your contract value.

I'm not trying to tell you how to run your business. Just a few comments based on my experiences.

 

[Coppersmith]

At my prior company we would occasionally get multiple requests to bid the same project. I think the record was 6. Everybody got the same number.

I have no experience making big bids like these, but I do work with several GC's who routinely ask me to bid work for smaller jobs. Seems to me a GC would have no reason to be PO'ed if a sub gave the same number to multiple bidders and eventually ended up working for another GC. If the number is the same, the sub is not influencing the outcome. Of course, people are people and some may hold a grudge even if it isn't logical.

 

[cdslotz]

But I would think it unethical to price a bid differently to another potential customer

This is easy....If I was asked to give a price to a GC I've never worked before on a public job (or any job), I would either decline, or give him a higher number....and I would tell my GC what I am doing

Remember, you have a relation with your GC that you have worked for and he provides you opportunities over and over again. He will respect your number and not shop it.
The other GC just wants your number "off the street" as they say. He has no intention of giving you the job.
On public jobs, GC's will sometimes list two or three EC's in their bid form, citing that they need to scope out these bids, which is done all the time.

Not unethical.....it's strategy. I always ride the horse that brung you

 

[Strathead]

Your bid, in writing, should detail the exact extent of what work and/or services it covers. Your acceptance of it should also be in writing. That overs both parties. If your customer requires anything not so covered it may be requested verbally but should be accompanied by a written VO. You might want to include a statement to that effect in your original bid We did.
That may sound hard-nosed but avoids who said what, agreed to what type disagreements.

One other point and it may or may not be applicable in your case. With new customers, we usually had a credit check done before accepting an order.There are a few companies who can do that but there is a fee of course. You might want to weigh that up against your contract value.

I'm not trying to tell you how to run your business. Just a few comments based on my experiences.

No matter what you bid form says, there are always variables. There are usually things you agree to do anyway, or things you figured were SOP that the GC felt you should have covered. Plus a good company and a good superintendent will always make for a more profitable job.

 

[Besoeker]

This is easy....If I was asked to give a price to a GC I've never worked before on a public job (or any job), I would either decline, or give him a higher number....

And potentiallylose the business?

 

[Besoeker]

No matter what you bid form says, there are always variables.

Unknowns by either you as the supplier or the customer, I agree. You may choose to swallow them as a matter of goodwill to keep a good relationship with your customer.
But if it is going to seriously affect your bottom line, would you?

 

[Strathead]

And potentiallylose the business?

Every time you bid the dollar amount you go in with will potentially "lose" business. Let me ask you a direct question. Do you find or believe that you make exactly the same amount of money when you work for two different people?

 

[Strathead]

Unknowns by either you as the supplier or the customer, I agree. You may choose to swallow them as a matter of goodwill to keep a good relationship with your customer.
But if it is going to seriously affect your bottom line, would you?

No and that extends to an unknown contractor. It is a decision that has to be made on the fly. For example, there is one huge Construction Manager in the United States. I will not name them here, but I can pretty much promise that anyone commercial knows them. If my boss even forced me to bid a job with them (which he wouldn't) I would absolutely add 10% to the bid because I know the way they do business would warrant it.

 

[Besoeker]

Every time you bid the dollar amount you go in with will potentially "lose" business. Let me ask you a direct question. Do you find or believe that you make exactly the same amount of money when you work for two different people?

Most of what we did was custom design and build of industrial control systems. Not unique. More sections, different powers.........different applications from rolling mills to aircraft wind tunnels. But we made similar margins. Does that answer your question?

 

[gadfly56]

Most of what we did was custom design and build of industrial control systems. Not unique. More sections, different powers.........different applications from rolling mills to aircraft wind tunnels. But we made similar margins. Does that answer your question?

It's not about different sectors. GC1 sends you a straight up job, good specs and complete plans, managable change orders. GC2 sends (deliberately) vague specs and incomplete plans. Incomplete in that they have deliberately omitted work they know the client wants. He'll change order everything and hold you to a 10% margin with no O&A. You know the project will grow by about 40%. Do you send GC1 and GC2 the same kind of pricing?

 

[Strathead]

Most of what we did was custom design and build of industrial control systems. Not unique. More sections, different powers.........different applications from rolling mills to aircraft wind tunnels. But we made similar margins. Does that answer your question?

It does in the way that it bolsters my point that there are different circumstances and the decisions have nothing to do with morals.

 

[hbiss]

Pretty much as I thought. But getting back to the last part of my question, have you found any GCs that take off a job themselves, win the bid then solicit subs? Do you think that's a more attractive proposition even if the GC want's you to "work with him" on the numbers?

-Hal

 

[Besoeker]

It's not about different sectors. GC1 sends you a straight up job, good specs and complete plans, managable change orders. GC2 sends (deliberately) vague specs and incomplete plans. Incomplete in that they have deliberately omitted work they know the client wants. He'll change order everything and hold you to a 10% margin with no O&A. You know the project will grow by about 40%. Do you send GC1 and GC2 the same kind of pricing?

You precisely define in writing exactly the scope and limitations of what you are offering. Nothing more, nothing less.
If your customer has omitted things, deliberately or otherwise, that's their problem. Not yours.

 

[gadfly56]

You precisely define in writing exactly the scope and limitations of what you are offering. Nothing more, nothing less.
If your customer has omitted things, deliberately or otherwise, that's their problem. Not yours.

The rub is that contracts nowadays - and I mean the standard AIA contracts - are so onerous that the deliberately punish you for pushing change orders. Now, the owner and GC game that restriction to squeeze your margins even more. It doesn't matter how good your exclusions are, they are counting on change orders to finish the scope. You get cost plus 10%. That's it. And "cost" doesn't include your O&A.

 

[cdslotz]

And potentiallylose the business?

There is no potential bidding a GC that wants your number only because you are on the list... and he wants all EC's numbers to feed to his guy

 

[petersonra]

The rub is that contracts nowadays - and I mean the standard AIA contracts - are so onerous that the deliberately punish you for pushing change orders. Now, the owner and GC game that restriction to squeeze your margins even more. It doesn't matter how good your exclusions are, they are counting on change orders to finish the scope. You get cost plus 10%. That's it. And "cost" doesn't include your O&A.

I would not call them onerous. they are what they are. if you don't like them, or are not set up to bid that way, feel free to let someone else have those projects. EC's that know how to deal with those kind of projects make money on them, and the risk is relatively low, even with lower margins. You do need to capture ALL your costs to make it work though. A lot of contractors push those costs into overhead to make bidding easier. You want to get paid for the fasteners you used. Along with the consumables. And ALL the labor including the time it took your foreman to come up with the change orders. And all the time spent sketching stuff up because there were no drawings. And the mileage. and the rental costs for the equipment.