Value Engineering

[CircleG22]

This may be more rant than question, but it has happened twice in the past month and would appreciate some feedback on this issue. On one tenant finish bid I noticed that the lighting specs were for all high dollar fixtures. Knowing the owner, I was pretty sure he didn't know what they were asking for. I gave him an alternate lighting price with a savings over $5000.00 for a 3200 sq ft office space. After the bid date he contacted my competition, told him my lighting price, and had him rebid. On the other job the engineer spec'd CU for the service lateral and panel feeders. Because of the recent increase in prices and the fact that the panels feeders did not have heavy loads I asked the engineer if it was OK to bid AL. She OK'd the alternate. I checked with the owner the next week to see how our bid looked and he informed me that he was waiting on the other bids. I then found out he had contacted my competion and had them bid AL. I'm feeling a bit burned. I went out of my way to find savings for the customer (and give myself an advantage) and as a result I was rewarded by having the projects go to someone else who made no effort. Am I justified in feeling I have a right to bill these customers for value engineering or not. I would really appreciate some thoughts on this. The economy is tough enough as it is. Can anyone tell me of a way to protect myself in bidding projects without alerting everyone to various alternates. Thanks,

 

[charlie b]

First of all, welcome to the forum. That said, you are not going to get any support from me on this issue. I would want all the prospective bidders to be basing their prices on the same project requirements. Point in fact, I would not have told you individually that (for example) AL conductors were acceptable. Instead, I would have publically told all prospective bidders, yourself included, that that substitution was going to be allowed. Getting two different prices for two different offerings does not help me make a decision on which offer to accept.

 

[dkidd]

I agree with Charlie totally. Anything else would be unethical for an engineer.

 

[xformer]

you could also include a refundable charge for your bid if your customer chooses your job.

 

[masterinbama]

I agree with Charlie totally. Anything else would be unethical for an engineer.

And illegal on a publicly funded project. As for value engineering I prefer it to be done after I sign the contract. That way you don't have to cut every penny to give the customer savings.

 

[LarryFine]

First of all, welcome to the forum.

Ditto!

Am I justified in feeling I have a right to bill these customers for value engineering or not.

Unfortunately, they're not obligated without a contract, but it doesn't hurt to ask.

Can anyone tell me of a way to protect myself in bidding projects without alerting everyone to various alternates.

Bid as spec'ed, mention the savings possibility, but keep the details to yourself.

 

[mkgrady]

No, you do not have a right to charge for value engineering your proposal. What the customer did was unfair but not illegal.

Even if the customer had informed the rest of the bidders about your ideas prior to bid submission it appears you would not have been low.

Maybe next time you could bid the job as specified, indicate to the customer that you have found ways to reduce their costs, and ask to negotiate those savings after the bid is submitted. This way you are not giving them the info needed to help your competition beat you on price.

 

[LarryFine]

Maybe next time you could bid the job as specified, indicate to the customer that you have found ways to reduce their costs, and ask to negotiate those savings after the bid is submitted. This way you are not giving them the info needed to help your competition beat you on price.

Didn't I say that? :grin:

 

[cdslotz]

First of all, welcome to the forum. That said, you are not going to get any support from me on this issue. I would want all the prospective bidders to be basing their prices on the same project requirements. Point in fact, I would not have told you individually that (for example) AL conductors were acceptable. Instead, I would have publically told all prospective bidders, yourself included, that that substitution was going to be allowed. Getting two different prices for two different offerings does not help me make a decision on which offer to accept.

In my world that would be a "voluntary alternate". They go below the line on my bids.
"Value engineering" usually takes place post-bid.
I would never go out for an alternate lighting package and throw the manufacture's rep or the consultant under the bus. And if I am asked to VE the fixture package, I always go to the specified rep and let him work it.
I have to work with the same reps and consultants job after job. And trust me, reps have a good memory.

 

[mkgrady]

Didn't I say that? :grin:

Yup. But I didn't see you sneak it in before I finished typing. I must be a plagerist!

 

[LarryFine]

Yup. But I didn't see you sneak it in before I finished typing. I must be a plagerist!

Man of few words.

 

[weressl]

In my world that would be a "voluntary alternate". They go below the line on my bids.
"Value engineering" usually takes place post-bid.
I would never go out for an alternate lighting package and throw the manufacture's rep or the consultant under the bus. And if I am asked to VE the fixture package, I always go to the specified rep and let him work it.
I have to work with the same reps and consultants job after job. And trust me, reps have a good memory.

In 'our' world value engineering precedes design engineering. Think about the waste that you already expended in completing a design and then have to redesign it around a different criteria?!

 

[CircleG22]

Value Engineering

I wasn't specific as to the course of events in the bids. At the walk-thru with the owner at the tenant finish project, (no other electrical contractors attended the walk-thru) I brought the subject up about an alternate package. He was not aware what the engineer had spec'd and had he known would have rejected the spec'd package. We went throught the same supplier and rep for the lighting alternate. With the service feeders I included the AL conductors as an alternate with the engineers approval. There was a savings of $6,000.00 on the AL conductors and had I known that the owner was going to offer that option out to the other bidders after the bid date I would have done things differently. I try to do my best in saving my customers money. If I see something that seems unneccessay I approach them. I do not, however, feel that I should be doing this for my competition. Thanks for the input.

 

[mivey]

Man of few words.

He who posts first posts loudest. :grin:

 

[mivey]

... I try to do my best in saving my customers money. If I see something that seems unneccessay I approach them. I do not, however, feel that I should be doing this for my competition. Thanks for the input.

Unfortunately, the customer did not have any loyalties (or maybe they did). Yeah, you were used but lesson learned. Fool you once, shame on them, fool you twice...

 

[ceb58]

When you bid again if you find ways to save money KEEP IT TO YOUR SELF. If you get the job then you can offer an alternate solution to save them money. Prime example would be your Al situation. You say you could have saved them 6k. If you had got the job you could have went back to them and present them with the idea and a savings of 4k. You make money,they save money.
Another thing is do not submit your bid until almost closing time of the bids. This doesn't give them time to bid shop your bid to the competition.

 

[BJ Conner]

It can work both ways.

It can work both ways.

The process is the way I have allways seen it done. If your competators have proposed a change you would have also been notified and ask to rebid.
The same should go for mistakes on drawings. The common and ethical thing to do is advise all bidders of errors that could make a difference in cost.
Nobody's getting cheated, and the owner is getting the best price in a fair process.

 

[ksmith846]

When you bid again if you find ways to save money KEEP IT TO YOUR SELF. If you get the job then you can offer an alternate solution to save them money. Prime example would be your Al situation. You say you could have saved them 6k. If you had got the job you could have went back to them and present them with the idea and a savings of 4k. You make money,they save money.
Another thing is do not submit your bid until almost closing time of the bids. This doesn't give them time to bid shop your bid to the competition.

DITTO......always offer VE after contract and give them 2/3 of the total saved. If you know it will be approved IE: direct permission from the EE and no one else knows...lower your bid to get the job and then offer up your added savings to the owner/GC.

 

[tkb]

I hate going to bid walkthroughs with the customer without a defined scope or spec.
I have been on many without any other contractors even though there will be multiple bidders.

The customer tells each bidder something different and the contractors ask different questions and different suggestions that don't get conveyed to all of the bidders.

This results with prices that are all over the place.
One guy will bid RGS and another PVC.

The bids are never apples to apples.

I have learned to be as vague as possible in the proposal and password protect it so they can't copy and paste it to send it to someone else for their buddys to price.

 

[dkidd]

and no one else knows...lower your bid to get the job and then offer up your added savings to the owner/GC.

Does anybody else here have any ethical problems with statements like this in this thread? I always try to warn the Owner that he is not getting fair value for the reduction in quality for changes after the contract is signed.

There, I've stuck my neck out. Let the abuse begin.