Time and time again as we speak with contract administrators in the private sector we keep hearing the same frustrations when it comes to preparing a bid comparison: bidders all estimate the job differently and they aren’t able to compare pricing effectively.
This is especially true when the project scope is not properly identified item by item by either the owner or the administrative consultant, but can also be true even if all items have been listed.
There are a couple things you can do to minimize the pain of comparing apples and oranges in the bidding process. Here are the most common issues and some ideas on how to prevent them:
1. Bidders have missed multiple items in their scope.
If there was one thing I would insist you do, it would be to clearly define the scope of work required to complete item by item, line by line. This includes providing quantities and units for each item of work, as well as an estimated completion date per section.
You could put the onus on the contractor to analyze all the grades, the specifications and details and have them provide lump sum pricing but you are setting yourself up for potential conflict.
The next points all assume you will be using a detailed unit price bid form during your tendering and bidding process.
2. Units or quantities have been changed on the bid form.
As the bid calling authority you have gone through the trouble of doing all the quantity take offs and creating an itemized bid form. However, when you open the bids, you are surprised that some contractors have changed some quantities or units. Arghhh!
It’s quite common for bidders to edit the schedule of prices to make the bidding process as convenient for them as possible. They may be used to pricing work in a specific way, say tons of asphalt instead of square meters, and I’m sure they have their reasons (valid or not). But, now it’s your problem to figure out why they did it that way and convert it back to your units.
The way I see it, you have 3 options to make your life easier:
- You could reject the bid entirely that was altered to teach them a lesson.
- Issue a post-bid addendum to confirm that these items need to be priced a certain way or,
- Use a program that doesn’t allow bidders to change the units or quantities at all.
The unfortunate reality is that if you allow it, human nature will ensure it will happen again, and again!
3. Bidders Missed Prices in the Bid Form
You receive all the bids and you’re happy to see that one contractor is severely under budget. You think, “hmmm, this could be good news for the owner!”. Until you notice that they didn’t fill in all the pricing, they selectively chose what to include and what not to include. Insert angry emoji here!
Similar to the above issue, you could either reject the bid, have them resubmit or have a program that doesn’t allow incomplete submission.
If you do allow incomplete submissions, ensure your process has a bid leveling feature in order to easily fill in the gaps and compare apples to apples post tender.
4. Contractors missed Addenda
Most tendering and bidding processes have a form that is required to fill out by contractors when it comes to acknowledging addenda. These forms are typically manual and received at the same time of bid submission.
The problem is that if an addendum is missed it typically disqualifies a bid, which is a waste of time for the bidder and the bid-calling authority.
In order to prevent this, you could email or call all bidders prior to the closing date to ensure they’ve received the addenda, or you could automate this by using web-based software that records whether or not your bidders have received and read the addenda. That way when you open up the results, you are confident that they are all comparable and complete.
5. Contractors have not visited the site prior to bid submission:
“Oh, this isn’t what I expected.” Surely your contractor’s favourite excuse.
If you’re tired of hearing this, conduct a mandatory bidders meeting. It does 2 things, it ensures bidders are serious about bidding the work, and it ensures they are all aware of current site conditions as well as the project timelines. Make sure to call the bidders to guarantee they know about the meeting or send them a calendar invite.
Sending an email and hoping that they will receive it and schedule it themselves leaves too much room for error. Good contractors are busy and unfortunately might not catch your message in time. It’s important to confirm whether the meeting is mandatory or not, and stick to your guns. If some contractors don’t show up, don’t allow them to submit.
6. Contractors don’t properly read specifications and miss important details.
Things get busy, especially during construction seasons. Some bidders might procrastinate going through the bid package before it’s too late. If they are rushed to assemble pricing, they might not read all the details and specs that are proposed.
One way to encourage bidders to go through the details and specs earlier in the process is to set a question deadline. Deadlines are motivating and will most likely push contractors to open up your bid package sooner rather than later.
The question deadline also ensures that you aren’t scrambling hours before the due date to issue an addendum, should a valid question come in.
7. Your firm forgot to share all bidder questions with all bidders.
Obviously your firm strives to catch all inconsistencies between your specifications, drawings and details, but on large jobs it’s almost impossible to catch everything. During the bidding process, bidders will certainly ask for clarification or additional details.
In order to keep the bids as comparable as possible, you must properly record all bidder questions, formulate clear answers and send out the appropriate addenda. Although, since questions can come by email, in person or by phone, it happens that some of these questions get missed! Well, not by you of course, but someone else in your office ;).
Make sure you have a system to record all questions and keep them safe, especially if you have a number of contract administrators working on the same bid call. Ideally, you only allow bidders to submit questions via one option in order to simplify this process.
8. Bidders all have different inclusions and exclusions.
You can minimize bidder inclusions and exclusions if you properly define the scope of work and remove the need for assumptions. The best thing to do is ask yourself whether or not each item can be properly estimated with certainty. If you place too much risk in the contractor’s hands, they will likely make assumptions in order to lower the unknowns. For example, whether or not hydrovacing is included, or the use of winter heat for concrete work.
If there is a portion of the scope that is uncertain, make use of provisional pricing, either with a defined quantity or unit price. These items shouldn’t be part of the total contract price, yet should be available to pull from should they be required, at which point you could make a change order. Provisional pricing ensures that pricing remains competitive yet keeps the emphasis on the scope of work that is guaranteed. Put yourself in the contractor’s shoes and try to predict the inclusions and exclusions they would use to either gain an advantage over other bidders, or to minimize their exposure.
At the end of the day if you take a little extra time to setup your tendering/bid calling process with these easy to implement tips, you can minimize and even prevent a bunch of frustrating steps required after the bid closes. At ContractComplete, we’ve created a system that automates the distribution and collection of tenders and bids, in order to save you time and minimize mistakes by consultants and bidders. Feel free to Book a Demo to see whether or not it could help you and your firm.