In my world, I’m often brought into companies to help them identify opportunities for efficiencies, especially those that can be further enabled by technology. One area that has always posed a challenge for project owners and general contractors is the review of competitive bid packages provided by contractors or specialty subcontractors.
This usually happens as projects are still in the planning stages, and budgets are getting refined as the start/bid date for the project gets closer.
Polar Opposites Fuel a Disconnect
On one end of the spectrum there exists a rather tranquil world, where well-defined scope, quantities and statements of work nicely align so bidding parties understand exactly what is expected of them, and there is little room for exclusions and non-adherence to technical specifications. From my vantage point, this exists in only about 10-15% of all cases I see.
On the other end of the spectrum, there is a bit more chaos: the project’s scope changes rapidly as business decisions fluctuate and design iterations are released; poorly defined work packages are open to interpretation as to what will be included or excluded, and the bidding parties put almost as much time and effort into the careful wording of these inclusions and exclusions as they do arriving at a price for the work. Again, from my vantage point only, this exists in about 10-15% of the cases I see.
It’s Time to Refocus
Let’s assume for the moment that we cannot affect either of these extremes, and instead focus on the 70-80% of all projects that fall between these polar opposites. Here are some of the things an owner or a general contractor can do to mitigate risk and ensure budgetary coverage for the work to be performed:
- Scope quantification: One true measure of a clearly defined scope package is the ability to quantify the work and define the work packaging. Any additional requirements, such as additional mobilizations due to phasing of the work, should be communicated and considered within the bid package.
- Apples-to-apples comparisons: In the case where one bidder has defined exclusions, these need to be monetized to ensure proper coverage in the cost estimate.
- Split/no-split: When dealing with unit price proposals, it’s necessary to make sure those unit prices are contingent upon providing all of the scope. Review any of those unit prices that stand on their own if a combination of contractors/subcontractors is selected.
- Review status: Make sure all quotes have been reviewed to check for accuracy, inclusions/ exclusions, and risk associated with wide variances between quoting parties.
- Make sure all bidders have the latest scope documents: As scope changes, it’s important to ensure all quoting parties have the most accurate documentation.
InEight’s Project Cost Management tools have been helping Owners and Contractors streamline the quote management process for over 30 years. Our project cost estimating solutions can help you achieve certainty on your next project.