Bidding – The Basics

This short but crucial step in the design process pairs a client with a construction company to get
the design from concept to reality. Much like an interview process, a call for bids is issued and
qualified construction companies review the set of documents prepared by the architect and
submit their qualifications and price to build the project. Construction companies – or contractors
– compete against one another to balance quality, service and price.  This is also the step in the
process where the architect’s role changes from that of product provider (set of drawings) to
service provider once again (much like the first few steps of design). The architect or designer
can guide the client through the bidding and negotiation process, but ultimately, the client will
form a contract directly with the construction company of choice. Some architects provide design
and construction services – known as ‘design-build’ services – but not all do, as it presents
another form of liability in the long and complicated process of architecture and design.

While the bidding process focuses heavily on overall project cost, there is also the issue of
quality which is best proven through a track record of built work and happy customers willing to
act as referrals. The process of bidding and negotiations varies largely among project types, with
different rules and expectations. For instance, government work or other public projects have
strict rules about the procedure for contractors to bid on a project while privately funded projects
are not always held to the same standard. Each project will adhere to a set of rules to ensure that
the process of evaluating different bids is fair and timely. Ultimately, the client must be satisfied
with the level of service they’ll receive from their chosen contractor to ensure their final product
will be money well spent.

Bidding – Digging Deeper

Generally, a project is announced and invitations to bid are sent to qualified contractors whom
the client is interested in working with. These contractors or builders will review a copy of the
construction documents as well as the materials and specifications to determine the price that
they can construct the project, including their overhead and profit costs. The contractor submits a
written statement containing the information on how much the project will cost, and the timeline
for how quickly the project will be completed. Some contractors will offer a job on a fixed fee
while others will charge a base cost plus a fee for other items in the contract. Still another option
is to set the price with a ‘guaranteed maximum’, often accompanied by a bonus clause that
rewards the contractor for staying under budget, or even ahead of schedule. Many clients prefer
to minimize their risk by having a firm number for their project, ensuring that no ‘hidden costs’
will pop up during construction. There could still be additional costs for those who agree to a
firm price, but those increases are usually caused by changing decisions that were already made
during design or documentation phases. It is always important to understand how future changes
will affect the bottom line – both for the contractor and the client.

During the review of the construction documents, questions may arise necessitating clarification
of the documents. For many questions, a simple written statement can be issued to all bidders,
while other questions may be complicated enough to warrant the creation of an additional
drawing by the designer or architect. To ensure clarity and fairness, each question and answer is
distributed to all bidders. It is important that the architect or designer answering questions from
bidders is knowledgable about the design intent of the project so that the integrity of the project
is upheld.

It may seem that bids submitted for a single job would be relatively similar since each contractor
is essentially providing the same service for the same project. However, there are several areas
where the price between contractors starts to vary and can have significant impact on the final
bid price. Some contractors focus on their profitability and aim to either maximize their profits or
undercut their competition. This can result in inflated profit margins for one company while
another submits a bid that seems ‘too good to be true’. Another area where companies can differ
in their bids is through material selections and labor. One company may have deals set up with
suppliers around town that provides steep discounts on certain materials while other companies
may have a great list of acceptable substitute specifications. Substitutions are often a method that
contractors use to trim a construction budget without changing the design or quality intent of the
project. During the materials and specifications phase of the design process, the architect or
designer may have listed some materials or equipment as a specific brand name item “or equal”.
This term allows contractors to offer suggestions for suitable substitutions that can trim costs.
For instance, if a contractor is asked to provide a high end brand-name windows “or equal”, the
contractor may submit a request to use an alternate brand name with similar attributes and
performance criteria that offers him significant discounts on products. In this way, one company
is able to underbid competitors. Labor is also a big factor in the bids that come in from various
companies. Specialized laborers or tradesmen will often be hired to perform specific tasks on a
project. Most contractors have a relatively small team and sub-contract out the majority of their
actual work to various trades. Many construction companies have a go-to resource list of
subcontractors that they are comfortable working with. Depending on a contractor’s resource list,
the timing of the project may shorten or lengthen depending on their availability.

When reviewing bids from contractors it is important to review not only the dollar amount but
the qualifications of the bidders themselves. What experience do they have on your project type?
Do they have references or built work that you can inspect? How did they handle past projects –
did they complete them on time and on budget with a proven method for identifying and solving
problems? It may also be a good idea to investigate their safety record. While it is ultimately the
contractor’s responsibility to ensure job site safety, it is always good to know that you’re
working with a company that values safety and takes all necessary precautions to ensure their
workers are abiding by standards. Another consideration is job site cleanliness. This may seem
like a bit of a contradiction, but job sites should be kept relatively neat and orderly. An organized
job site allows all the different trades to work more efficiently, saving the client time and money.
It also helps ensure a safe working environment and makes it easy to notice when something is
out of place or missing.

An architect can help their client understand the differences between bids and point the client
towards making the best choice for their project. Talk to an architect about their experience with
various contractors and ask lots of questions to understand what makes a great project team.