Contractor’s Corner: Winning a commercial bid – Nov 2019
By Dave Stafford
You may be one of three bidders on a project, or there may be more than 15 others. It’s always helpful to find out the landscape of a bid before you spend time preparing and submitting a bid document. Many an opportunity is lost through inadequate bid preparation or underselling your own company’s capabilities. Having made such mistakes over the years on commercial and government jobs, I have some ideas for avoiding them.
BREAKING DOWN THE BID
Read and pick apart the bid document, making a list as you go of important things such as closing date, bid opening date, items for inclusion, bid bond and amount, format for pricing, basis of award, who must sign the bid and so forth.
Bids may not be accepted if delivered after the bid closing date/time, although this can be waived. I once lost an opportunity because the bid was delivered five minutes late. The inflexible, autocratic purchasing agent said with a smirk, “Closing time was stated, the bid was late. I won’t accept it.” No amount of cajoling helped. The worst part was, we would have been the low bidder!
Will the bids be opened in a public forum and read? If so, you should be there to make notes about your competition’s pricing or exclusions. You may have an opportunity to question a low-ball price or missing information. One bid was tossed out because a bid bond was not included, another due to all-inclusive pricing instead of the pricing specificity format that was required. And a bid was rejected when the bid was signed by a sales manager rather than a company officer. The expected dollar amount of the bid will have a lot to do with the scrutiny. The lower the amount, the greater the chance that anomalies will be overlooked. Items that will not be overlooked: failure to sign the bid or pricing format irregularities.
When the dollar amount is large, the bid may be described as an invitation for bid (IFB) versus the request for quotation (RFQ). The main difference for you to remember is that an IFB means the buyer is asking you to bid specifically on his quantities and scope of work rather than an RFQ where you may offer your solution and scope of work to solve his stated problem. Yes, I am oversimplifying, but I lost a bid by being overeager and offering what I thought was a better result on an IFB once, and my bid was thrown out! Government bids are somewhat more restrictive than the private sector, but you may run into this type of scenario when bidding to a general contractor who is working on a large government project.
PRODUCT SELECTION MATTERS
Product selections are an integral part of most bids where commercial flooring is specified and installed. After you have done a thorough review of the bid document, zero in on the plans, specs and any blueprints.
My experience bears out that when there were glaring mistakes that were not caught, it was usually because the salesperson did not do a careful review of the finish schedule or the drawings or notes with the person doing the take-off. That was the culprit when an entire floor was left out as well as when another bid neglected to include installation labor on half of the flooring. That final review is where you uncover “rooms without doors” and large areas where no flooring is specified. Give yourself enough time to pose questions to (and get responses from) the architect.
Are you able to get the products required on the finish schedule? Are you set up as a dealer, and will you get the right price? I’ve passed on many a bid because of selected products, intractable mill reps, mill reputation or being on the wrong side of project pricing. If you cannot buy most of the products at some reasonable price with good terms, then why bother?
This is especially true when the specifier is unwilling to consider an “or equal” product substitution. The best case for you is when the architect or designer provides a couple of mill product choices and will accept either; perhaps a bid addendum will arrive that states other acceptable choices. Astute buyers realize that when they specify brand name products and “no product substitutions will be considered,” they may pay a bit more. Some will state that “brand name and color specification is to denote the quality and style that is acceptable and is to be descriptive and not restrictive.” That opens the door for other products and means more work for the interior-finishes designer but usually a lower (more realistic) price. If you specified the job, you may have a winning hand; if you did not, then you have a chance to offer a product from your favorite mill.
DOCUMENT, DOCUMENT, DOCUMENT
Processes and installation in the scope of work are where you turn their vision into reality. When reading over the bid document, were they clear on floor prep versus floor repairs, moisture testing, product delivery staging (for climate acclimatization), time allowed for prep and product installation, type of installation, inspection, and acceptance? Get those answers before bid day. Sometimes, it is a catch-22 situation; if you add conditions to your bid, they may not accept it; if you don’t, then you may be agreeing to an unrealistic delivery schedule.
When you have a site inspection prior to bidding, go on record (in writing) that “given current site conditions, we cannot accommodate delivery within the preferred time.” You should state the reasons and/or the remedial action to provide the desired delivery. Often, the architect has just plugged in a number of days and is willing to be reasonable; however, if the project is behind schedule due to the general contractor’s other trades, you may be held to the original time unless you can show you were prevented from completion by others.
Papering your files (and adding pictures of problems) is particularly critical when there is a liquidated damages provision. Liquidated damages generally refer to a fine or assumed cost to the owner for each day you are late in delivering a project beyond the specified time. This may be $500 or $5,000 a day and will quickly destroy any profit you may have calculated for the project; usually this is a deduction from any final payment.
We were able to shut down the threat of liquidated damages on a job by offering a daily log and time-stamped pictures of other trades merrily working away when the areas were to have been clear for floor prep and installation. We agreed to bring in double crews once the area had been cleared and accept a change order for the difference in labor cost-not ideal, but better than the liquidated damages provision and a mark on our reputation.
GET A JUMP START
Competitors and their bid pricing may make you look good, bad or just inept. One reason to attend any public bid opening is to get a jump start on where you stand on a particular potential project; it is much better to uncover anomalies before any contemplation of an award. Even if not a public opening, prompt follow-up after bids closing is critical. Even a cursory look may point to bid deficiencies and where a simple explanation of a transposition error can keep your bid viable. “Your yardage quantities seem high, so your price is out of line.” After a review, I responded, “The bid addendum included an additional area and an attic stock requirement; both were included in the quantities and pricing on my bid.” As I expected, the apparent low bidder had not included those items in his bid.
Large dollar bids may require a bid bond and payment and performance bonding. Competitors sometimes overlook the difficulty of getting bonding and the 3% to 6% cost (of the project). Some bid documents require the cost of bonding to be included in the final pricing and others require a separate line item or just assume a flat percentage amount based on the bid price. The canny buyer will require the bidder to include a letter from his bonding company with a commitment to furnish a bond in the amount of the project award in the event they get the job.
Some bid awards are made on a price and bidder evaluation basis rather than strictly price. This prevents a lot of protests because it becomes a judgment call by the buyer. For instance, the formula might be 50% price, 30% bidder experience and financial strength, and 20% on the written plan for project management. Some will state a points basis for each segment and the highest point total from a bidder will get the award; others will not disclose but follow such a basis to avoid suggestions that a bid award was capricious or without merit.
When faced with this type of bid, be sure you understand the parameters and sharpen up your writing skills. It is crucial that complete, easy-to-read information be given in every segment. Here, you have an opportunity to sell the story of your company and its expertise, case studies of your successful projects, references, and financial stability. Don’t be wordy; be succinct and call attention to your strengths. This bid process is a lot more involved than just coming up with a price. It may take days to develop the right response.
To help you land the bid, ask appropriate questions. Be agreeably aggressive in getting answers. You can usually get away with strong questions as long as you do it with a smile on your face (or in your voice if on the telephone). Here are some examples,
• May I correct the transposition error in my bid prices/quantities?
• If I could reduce (or increase) the project delivery time, may I offer this as an option to adjust my pricing?
• Would I have any advantage if I could perform the entire job, such as floor leveling, repairs and substrate cleaning, installation of carpet, ceramic tile, hardwood, LVT or marble?
• How soon do you contemplate awarding the job?
• Are you using a point system or weighted-value scale to award the job?
• What would I have to do to get this job?
And some additional tidbits of advice:
• Purchasing agents hate to change their mind after they’ve made an award; get to them before they commit to an award.
• Filing a protest should always be the last resort and even a well-written protest may only succeed 10% of the time.
• Clients may be willing to pay a little more for convenience.
• Best value may trump low price if value is sold properly.
• Always try to include your stellar qualifications as a part of the bid package even if not required (a company brochure or list of several references).
• Be interested and always ask for the order.
Copyright 2019 Floor Focus