In the eighth part of our Bidding Insights series brought to you by Construction Data Company (www.cdcnews.com) in cooperation with the Stevens Construction Institute, (www.stevensci.com), we discuss the pressures of being the low bidder on a project. One cannot discuss estimating without mentioning one of the overriding pressures that are brought to bear on contractors of all sizes – i.e., to be the lowest bidder.
Like it or not, many owners still utilize the low bid system to determine who will be awarded the contract. Whether or not the low bid system is ideal in selecting a contractor is a discussion beyond the purview of this summary; however, its existence cannot be ignored or diminished. Under the low bid system, contractors are under the following pressures:
• To Make a Profit
• To Retain Crews
• To Keep Equipment Utilized
• To Enter a New Market
• To Get Convenient Work
• To Win a “Portfolio” Job
• To Beat Competitor(s)
Firms must be careful not to adopt a low bid mentality on all of their projects. Yes, there are projects in which the owner is only looking for the lowest bidder; however, firms must decide whether or not these are the type of owners and projects that fit their “perfect” profile. Value orientation is a much preferred alternative to the low bid system.
For those who primarily bid public sector work, Construction Data Company can help relieve some of the stress associated with the low bid system. Subscribers can access both similarly bid projects from the past, as well as the original bid results in the case of a rebid. Depending on the timeframe, this information will be available either through Lead Manager™ or our Commercial Construction Market Intelligence™. Subscribers can use this information for comparison purposes, both in terms of their own prospective bid and the bids submitted previously by competing contractors.
(Note: This assumes that the information was released to CDCNews. Some jurisdictions have provisions that do not require original bid results to be released in the case of a rebid.)