Panic Bids driven by the economy? .... a rambling.... 

Professional Surveyor Boards » Business & Ethics » Panic Bids driven by the economy? .... a rambling....

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313
Posts: 2

Joined: 11/25/2008
Topic  Panic Bids driven by the economy? .... a rambling....       Flag »  Reply »
Quite often I run across new projects to bid for construction. Put forth the time and look at what it really takes to do the job, professionally, accurately with very little profit if any. I do not have the overhead of mid to large sized companies. I've captured all my hard costs and truly know what it takes for me to do a job "at cost". More often the not, I receive feedback regarding bids to find that my number is double the bid they went with. I have a few theories on how this is possible:

1) The old mentality to "buy" the work to mop up market share and whereby creating "staying power" and driving competition to hibernate or fold up.

2) Contractors are bidding the work using their GPS equipped machinery.

3) We're freaking out and panicking so we have someplace to drive our work vehicles to tomorrow....

Also, at our chapter meetings you don't have to listen too hard to hear that "So & So" undercut another one....

Has this person figured out a way to be more competitive or are they missing scope items to tag the clients on the back end?

All in all, I love this profession and I'm fortunate to have stumbled upon it. The History, integrity and diversity, in my opinion, is unmatched compared to any other career. In good times it's easy to be a fantastic surveyor. In trying times... It means even more. I'm sure we've all witnessed things we would have never witnessed outside this economy.

Any thoughts or comments?


  Tuesday, November 25, 2008 at 8:12:08 PM
Isleno
Posts: 42
Location: Gonzales, La USA

Joined: 10/20/2008
Reply  Re: Panic Bids driven by the economy? .... a rambling.... Flag »  Reply »
Undercut prices are the result of one of three things.  

    1.   The guy doesn't plan on doing a complete and professional job.
    2.   The guy plans to limit performance to the tightest interpretation of the scope of work and make a killing on change orders. 
    3.   The guy made a blunder and is going to eat the job.
  Sunday, November 30, 2008 at 7:04:08 PM
Will
Posts: 14
Location: Allentown, PA USA

Joined: 10/21/2008
Reply  Re: Panic Bids driven by the economy? .... a rambling.... Flag »  Reply »
It is idle to speculate why someone has underbid you. Unless you know why, you are only making yourself sick trying to come up with an explanation. On the other hand, if you know why, it may be incumbant on you to contact the "offender" and make him/her aware of the technical requirements he/she may not have considered or of the ethical impropriety of gross underbidding. The manuals of practice and codes of ethics (statutory or societal) of most states provide guidance in this matter. Sometimes, it is necessary to point them out to "fellow" practitoners who seem not to be familiar with them or intentionally ignore them. -  Wilhelm Schmidt
  Wednesday, December 17, 2008 at 3:56:51 PM
jessho
Posts: 6

Joined: 11/13/2008
Reply  Re: Panic Bids driven by the economy? .... a rambling.... Flag »  Reply »

Unless you have the bid tabs, you really don't know if you're getting accurate feedback on your price. Another thing is how the bid is presented. Are all of the bids in a certain format? Is there a time limit? Are there certain insurance requirements?

I'm a construction general superintendent. I like to believe I have business and professional ethics, so I don't practice "beat down" efforts that many project managers have developed into a fine art. The typical progression is:

-Bids are advertised

-The bid request is either lump sum, or ambiguous.

-The project manager, or estimator, looks at the bids, doesn't like the numbers, or want's to make more money.

-The prospective winners are all given the same line: Your price is way to high, so one, or more bidders offers savings.

Eventually, the project manager/estimator is faced with a choice to accept the lowest price and take a chance, or use the bidder he likes, which he intended to use all along, but he wanted to keep honest. If they get what they want, they'll get the same work at a lower price, which was their intention from the beginning.

You can't win against this type of system, unless you are the favorite bidder. I've found more of this type of management in commericial construction, due to the generally lax requirements for insurance and bonding towards subcontractors. The general contractor will take a chance that there won't be any problems, or the subcontractor lacks the resources for litigation. Usually, subcontractors discover the system, and either refuse to bid or submit high prices to cover contingencies. Ultimately, the general contractor drives their own prices up too high and they have to go out of business or seek new territory.

 

 

  Thursday, December 18, 2008 at 10:08:35 AM
313
Posts: 2

Joined: 11/25/2008
Reply  Re: Panic Bids driven by the economy? .... a rambling.... Flag »  Reply »
I generally get feedback on most bids such as

you were 1 of 17 bidders that ranged from $4k to $28k

Mine was $12K by the way.

Another was a gas station I lost to a bid of $5400..... including as-builts?????

Thank you all for your comments and perspectives.


  Tuesday, January 06, 2009 at 4:10:38 PM

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