The Competitive Bid Process

Of all the moments on a job, the bid phase gives me the most heartburn. It is a stressful period full of hardcore short-term deadlines and while my personal history tells me that I don’t really have anything to worry about … I still worry.

Comparing Bids

It has been bid central in the office for the last month – a fairly unique situation around these parts. Over the last 10 years or so, we have been doing fewer and fewer competitive bids, seeing a dramatic rise in popularity of the negotiated bid, but we have two really nice commercial jobs (here and here) that are pretty much as the same level of development and both clients wanted to go through the competitive bid process.

There are times when I think it would be more productive, and certainly more entertaining, if we were to place all of our qualified contractors into a cage match with a bunch of melee weapons (in our case, these would be calculators, three-ring binders, and notepads) and see who wants to survive the project the most.

Competitive bid drawings have to be substantially more complete than if we had gone a negotiated bid route. It only seems fair that if you are going to use the cost of the project as a criterion for selecting the contractor, that the architect put together a comprehensive and thorough set of documents (drawings AND specifications) so that everyone has a “fighting” chance.

The methodology that I go through when doing a competitive bid doesn’t really change based on the size of the project (excluding really small, and really large jobs). We just issued a project for competitive bid yesterday, but we just selected the contractor (for this job) just last week after a 4-week bidding and review period. Since this process has been consuming most of my time, I thought I would take a moment and walk you through it.

This is one of my out-of-town projects, I had to do a lot of research when selecting the contractors we wanted to invite to bid the job. It started easy enough … I did a Google search to come up with a list of contractors. From there, I spent time on all of their websites looking at their portfolios and the caliber of projects they chose to highlight. From there, I tracked down the architects for those projects and made some calls to find out some fairly generic information about the experience. I didn’t treat these calls as an inquisition, but the questions typically centered around:

  1. How responsive was the contractor?
  2. Do you consider this contractor a team player?
  3. Did the initial bid reflect the final cost of the project?
  4. Have you worked with this contractor more than once?

After working my way through these phone interviews, I contacted the contractors to find out if there was an interest in bidding our project and did they have the bandwidth to take our project on should they be selected. It shouldn’t come as a surprise but the contractors I spoke with were all friendly, but they were quick to say “yes” or “no” about getting involved – something I greatly appreciated. In the end, I spoke with about 8 contractors and we ended up asking 5 to go through the process.

Once it was time to issue the documents, we uploaded everything online and sent the contractors links to access the files. They were given slightly more than 3 weeks to assemble their bids.

  • Week One: This time period is designated for the contractor (and their subcontractors) to familiarize themselves with the documents and formulate any questions they need to have clarified in an effort to eventually present their best bid. We typically require any questions to be submitted to us by the end of this first week.
  • Week Two: This is the time period where we (the architects and our consultants) and working towards answering all the questions that were submitted. This sometimes just means pointing the contractors in the right direction, possibly putting a note to some scope of work, or it could mean that we need to generate a drawing (or two) to help clarify our intent.
  • Week Three: It’s all coming together at this point and the bids from the contractor are due. In our office, we always make this day a Thursday because I don’t think people are at their best on Fridays or Mondays …they just aren’t.

Whenever we are the architects on a competitively bid project, we try to work with the contractor up front and as soon as possible so that they know we are responsive to their questions and we will solve any problems on paper before they show up on the job site. The positive aspect to the client is that the competitive bid process reduces the possibility that the contractor and architect are simply looking out for their own best interests rather than the client. It is completely reasonable that the owner would like to make sure that they’ve explored their financial options along multiple paths and have a good understanding of what size bed they are getting into before they have to commit to buying the bed. Competitive bids also can provide the client with some comfort in that the contractor is being diligent in preparing a cost-effective bid on the project rather than simply guesstimating or putting all their golfing buddies on the project.

So if we fast forward to the project we sent out for a competitive bid, the question you should all be asking yourself is “What happened?” Since I am still here and writing this post, you can rest assured that the numbers did not cause me to go take a flying leap off some building. Turns out, the numbers were almost all too close to one another that we ended up with a different sort of problem.

[needle scratching record … hopefully Sussudio by Phil Collins]

What does that mean? Does that mean that the bids were “too good?!?”

Almost … but not really. We went through a cost estimate process last December and came up with a forecasted cost to the project and this was the number we had been working towards throughout the remaining design development and construction drawing phases. When all the bids were qualified, there were only $175,308 dollars separating the low bidder from the highest. While $175k is a lot of money, it only represents about 5% spread … that’s really good in case you didn’t know and I can proudly say that this is an indication on the quality of the documentation we put together. Our low bid came in $219.75 below budget … that’s right … under budget.

With such a small delta between contractors, you can’t summarily toss out the high and low bid and only work with what’s left in the middle. We ended up having our two favorite contractors into the office to present their logic behind the bid and why they would be the right choice should we select them. Both contractors had already been vetted and both were capable and qualified to do the work, so this was going to come down to who did we like best and who did we feel like we would enjoy working with over the next 8 months … and so that’s what we did.

In the end, we did not pick the lowest bidder, but rather the contractor we felt was the best qualified for this particular project. I can tell you with absolute clarity, that when you find yourself, either as an architect, or a client, being in a position to select your contractor not based on cost but on a host of other considerations, you drink a few beers when making that decision.

… and that’s exactly what we did.

Cheers,

Bob signature FAIA


Source: Life of an Architect