TRADE SECRETS

Inside Secrets of a Construction Professional

Created to give clients the same advantages that the most astute contractors gain for themselves in the negotiation/budget/bidding process

1.  Don’t have competing subs include money for risky situations.  They’ll include imagined costs far in excess of the most probable outcome.  They have to do this as a good business practice.  It will leave the sub with way too much unused money that will only add to his profit.  Therefore, place a contingency for all risks in the owner’s budget and he rightfully can keep the gain.

2.   Quite often it is more advantageous to bid subs against a budget rather than each other.  Depending on the state of the economy and the qualified bidders available (especially on out of town work).  The focus to meet a budget is often greater than that required to beat a competitor.

3. Solicit suggestions after the competitive pricing phase of the project.  This starts the creative quest to gain a cost advantage from the lowest base cost. The owner gains and the most ingenious subcontractors feel rewarded as an important team member.

4.  Don’t let subs package their bids.  First figure out how best to package for the owner’s benefit.  Much packaging is to procure bigger fees for the bidder.  For an owner to reduce his costs, find the lowest prices from individual sources and package that amount in a way that produces the “net” lowest cost.  Then make this the target for all bidders.

5.  Many times it is best to wait to purchase some of the contracts that are needed later in the project.  This can give a 3-4 month window to pick a more competitive time to request bids.  Holding back usually gains better prices.

6.  On smaller projects add one or two carpenters to assist a “working” superintendent in completing certain trades such as studs, drywall, ceilings etc.
This reduces the supervision cost and warrants a lower bid.  Even by sharing this gain the owner greatly benefits.

7.  Offer immediate payments for a subcontractor upon successful completion of their work to earn a discount.  This can quite often be as much as 5%, especially if you know the project went well for them.  This can create money to benefit an owner with free or no fee extras.  This saves the owner and gains the contractor a long-term relationship.

8.  Never use the same subcontractor, (no matter how good), more than 60% to 70% of the time.  It keeps them competitive. It also allows upcoming subs to know their competitive bid will be considered.  This is an advantage to all.  If you claim to be competitive you must provide the bidding environment that produces tight prices.

9.  Do not leave open items in bidders “scope of work”.  If you feel that some new items will arise during the project, ask for a unit price at the time the sub is bidding the project.  This can save as much as 20% the cost.

10.  If you’re bidding two or three projects at the same time offer to award all of them to the same bidder for a discount.  This is an obvious way to buy in quantity.

11.  Don’t place an unqualified bidder on a bid list.  This will cause the qualified bidders to drop out or offer a “quick” high bid, knowing they cannot beat the unqualified submittal.  There is nothing worse for your reputation than building projects with unqualified subs just to gain a low price.  Qualified bidders, when engaged creatively, can do more for a budget than anything.

12. Offer as many up front free services as you can think of.  Preliminary layouts, budgets, evaluations, etc.  Anything to get an owner to the bank with enough details to procure a loan.  Up front free services will endear your company to an owner.  It is when he needs it the most. 

*Continental Companies is the marketing name being used by two legal entities: Continental Construction Company, Inc. and Continental Designs, Inc.