Ted Garrison writes an interesting discussion of the construction low bid process here at the Southeast Construction site. The industry’s thinking about this process seems to be changing more publicly. The changes have taken a long time, however.
As it became the norm, the “bidder” mentality may have produced a breed of construction contractors who thought that their only role was to serve the Owner’s wishes of cheap price. Cheap price is what many Project Owners, especially Owners who are also Public Agencies, still want. They believe it is best. Although giving the Customer what they ask for has some merit in a marketing sense, marketing should also serve Customers by advising them of better solutions to their problem.
In the current construction economy where many companies are struggling for survival, survival is leading some who had “sworn off” low-bid, multi-bidder projects to venture back into that arena. But they do it because they believe that maybe it’s a way to survive until things turn around. If you’ve been in that game, you know what it’s like. As the joke often goes, when 15 companies submit low bids for a project, the winner is the one who makes the biggest error. Or, it’s the one who bid below cost on purpose for some reason such as keeping people busy and hoping to get enough change orders to improve their financial position.
There’s still a contradiction in some companies who claim not to compete in the low-bid world. They still use low-bid selection with their vendors and subcontractors. They work hard to get work from customers through a more reasonable process such as negotiation or “best-value” competition. Then, when they win the work, they go out to buy materials and to hire subcontractors based on lowest price bids for the work. Maybe this can be explained in a material purchase (buying lumber, for example) but when the work involves a subcontractor who includes labor, materials, construction equipment, and some design, it’s almost “do as I say not as I do”.
Take a look at what Ted has to say.