Most of us are guilty of bargain shopping.  But by now, we all know that with the lowest price, we are forgoing something – quality, assurance, customer service, and so on. With projects that require large budgets like construction, we’re more than tempted to consider options that will save us costs.

 

What is “Suicide Bidding”?

 

In construction terms, it means submitting a bid at the lowest cost possible in the hope to be selected over other bidders based on pricing.  This can often occur during hard economic times, especially when the real estate market is assessed to slow down affecting the number of construction projects available. Some firms compete this way to maintain turnover or retain skilled labour, while others will attempt to regain their margins during the contract by adding variations.

 

General Contractors that offer bids based on low-cost do not always account for the potential problems that may arise during the project duration (which can include materials cost, shipping, labour costs, or even mismanagement of the different professionals involved in drafting site drawings).  More so, there are tendencies to overlook major cost factors that will eventually add up through change orders or through attempts to cut corners all the more increasing the initial estimate of the project cost.  With that, the results will eventually cause the project to run over-budget or over-schedule.

 

Here are some points to consider when assessing construction bids:

1. Experience

Seek proponents with similar project history.  Experienced General Contractors have a better understanding of the actual costs of the same project.

2. Capability

Does the proponent have the capacity to take on the project? Does the company employ qualified and legal personnel? Some GC’s underestimate their labour capacity which can lead to underperformance of their employees.

3. Services

Compare bids; although most GC’s will have similar offerings, those who qualify will more often provide value-added services beyond the scope of work like complimentary space planning and budget costing.

4. Credibility

Above all, delivering great and trustworthy service is the key to a successful project.  Credible firms will provide competitive pricing for the project based on pre-construction research and assessment, and most importantly, provide you with an accurate costing and project schedule.

 

In short, address prospects based on their experience and capabilities not just on pricing alone.  Pricing can sometimes be disguised as savings, but will ultimately add more to your costs and construction timeline.

Our team of designers and project managers provides years of experience that can help you better understand your project needs.  Feel free to contact us for more information.

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