Bid and post-bid tactics

Bid and post-bid tactics

Greer, Frank

by Frank Greer, CPE

Editor’s note: Part three of the using and abusing averaging series will appear in the next issue.

Introduction. Several years ago, while sipping coffee and shooting the bull with several other painting contractors at the plan service, I mentioned that I bid like lightning – I never strike with the same bid quote on the same job twice. That is, if there are 10 general contractors bidding on the same job, then I might very well put out 10 different numbers or number combinations on that job.

This column is about bidding tactics. I will enumerate some of the smarter ways I have learned to bid work so that I am not only the low bid at bid closing time, but am also awarded the contract. After all, we all know that just because you were initially the lowest bid doesn’t mean a competitor won’t walk into a GC’s office several days later, cut your number, and get the job!

Late bidding. Wouldn’t it be nice if everyone in the construction business were as honest as Abe Lincoln? Well, some people are ethical. Many are not. Give an unscrupulous general contractor enough time before bid closing time and he’ll play “call my favorite painting contractor.” So, the object of the game of bidding is to put out your bid proposal as early as possible to the GCs you trust, and as late as possible (or not at all) to the GCs you suspect as bid peddlers.

Who can you trust? Here’s a personal war story. We’ve done a lot of business with a particular Tucson general contractor through the years. I believed that all of their estimators were totally trustworthy – and still do. However, one of my competitors had a mole in their office. Seems that this painting contractor was having an affair with a secretary in this GC’s office and she was leaking bid prices to her beau. This particular contractor was picking up a lot of work because he had an inside source on bid pricing. As for the answer to the question – a lot fewer people than you think.

Dealing with bid peddlers. Some painting contractors do not bid to general contractors who are suspected of shopping painting bids. That’s fine. As for me, I believe if you’re going to bid a job, then bid everyone. Just bid the bid peddlers at much higher pricing: say, 15 to 25 percent over your highest legitimate bid to other GCs. Giving bid peddlers high bids does several things:

1.) If you’re their only bid, it gives them a real number to deal with and prevents them from using a plug (i.e., their own best-guess number) for painting. This makes their overall number non-competitive.

2.) This prevents Cheat at Cards (dba CAC) Painting from being low by telling a Crooked as a Dog’s Hind Leg (dba CDHL) Construction, “Hey, put me in at 10 percent below your lowest paint bid.”

3.) It keeps bid peddlers busy during the bidding period and may even frustrate them.

4.) If you bid late, it ties up their fax and/or phone lines – i.e., prevents them from getting other bids that might make them low.

Don’t get mad, get even. If CDHL Construction invites you to bid a negotiated job (because the owner requires three painting bids), and you know you’re bidding against CAC Painting, why not give CDHL a noprofit bid? That way, one of two things happen: You actually get the job and at least recover your overhead, or CAC takes the job at 10 percent under cost and has the pleasure of paying CDHL and the owner for the privilege of painting their work. (Hey, if the latter happens, CAC is busy doing work for nothing and you’re helping them load up with a lot of cheap work. They may be out of the bidding market for awhile. Or, help CAC get enough cheap work and they may learn a new version of the Monopoly card that reads, “Go directly to jail. Do not pass Go and do not collect $200.”)

Bid abstracts. If you’re bidding a large job, then providing a bid abstract a day or two before will help the project estimators at GCs’ offices review and understand your scope before the hustle and bustle of bid day. (For those new to the game, a bid abstract is your bid proposal without bid amounts.) Providing a bid abstract allows you to bid as late as possible, since the estimators are already familiar with your scope.

Twin faxes. Until recently, we only had one fax machine on a dedicated line in our office. Recently, I installed another fax machine. The fax is on a switch on our four-line business phone system. Flip a switch and – voila – the fourth business line becomes another fax line. This allows us to fax out a bid in half the time. Thus, we can bid closer to bid closing time. Remember, the later you bid, the more you protect your bid proposal from the bid cheats.

The last-minute cut. In this version of the bidding game, you put out a reasonable number early by fax, so that GCs have plenty of time to analyze your bid scope and hopefully list you as low (or one of the low) paint bids for the project. Then, as close as possible to bid closing time, you whack your base bid proposal price with a phone call. This ploy is especially useful when dealing with a job that not only has a base bid price but also has alternates (changes in scope of the work that increase or decrease your bid price).

P.S.: I only use this ploy on occasion and only on very large jobs. That way I don’t irritate the estimators in GCs’ offices with constant gameplaying.

Getting bid results. If you’re hoping the phone will ring to let you know that you were low bid on a competitively bid project, don’t hold your breath, because you’ll die gasping for air. Truth is, painting is usually just a percent or two of the cost of most construction projects, and the estimator usually has more important things to think about (e.g., project submittals and job mobilization). So, keep tabs on what GC was apparent low on the job, and when the job is awarded, call the GC. Be persistent, but don’t be a pest.

By the way, on larger jobs, you might want to call a few of the unsuccessful GCs and get bid results on the painting first. Surely, you know one of the estimators at one of the GCs’ offices well enough to get the right information. If not, it has been my personal experience that out-of-town general contractors always appreciate bids from local subcontractors and are usually very receptive to my calls for painting bid results. That way, if the GC who was awarded the job starts playing games and says you weren’t low, you might be talking to a bid peddler. Talk firmly and professionally if that happens, but do what you must to get a straight answer. Example: Threaten to not bid future work if you suspect the GC is not on the up and up.

Lightning never strikes twice. In the intro, I stated that I never strike twice with the same bid. That is, I bid different general contractors with different prices. Why? Well, for one reason, our painting costs may be different. Let me explain. General Contractor A may have great field supervision. General Contractor B pays lousy. General Contractor C may employ subs who can never get it right the first time or who can’t finish their work on time. All of these different variables impact overhead and profit. If General Contractor D has great job superintendents and pays early, why shouldn’t you give him a bidding edge over General Contractors A, B, and C?

There is another reason for varying your paint bids. If you vary your bid amounts (especially on bids with alternates) from GC to GC, you can sometimes smoke out a bid peddler by analyzing how CAC Painting got your numbers. Example: You bid CDHL Construction at $110,000, $22,500, and -$3200 respectively on the Base Bid, Alternate 1, and Alternate 2 on Casper’s Casino. CAC’s bid amounts are $109,500, $22,400 and -$3250 on that same job. It doesn’t take Albert Einstein to figure out that E does not equal MC2 in that situation!

Another hint: On the above job, call your buddy over at Straight as an Arrow Construction, tell him you suspect CAC Painting got your numbers, and ask when CAC’s fax bid came in. If your friend tells you CAC Painting bid the job at 2:52 on a 3 p.m. bid close, your suspicions may be well founded.

Sub lists. Most government entities (city, county, state, and federal) require general contractors to submit a list of subcontractors that they propose to use on each job they bid. Many people do not know that once a government job is awarded, the sub list becomes public record. That is, you have a right to know who was listed as the low painting contractor on a particular contract. So, if you have problems getting bid results from a general contractor who is the apparent low on a government contract, call the contract administrator for the government agency responsible for the project and ask who was listed as the painting contractor.

The morals of the story. When I was a young man growing up in a small town in southeastern Missouri, I played a lot of pool….eight ball, nine ball, rotation, etc. Weeknights and weekends, I lived at Shorty’s Pool Hall. My life’s aspiration was to own a diamond-studded pool cue. Hah! In any event, I was shooting a game of eight ball against Larry, one of the jocks on our football team. We weren’t calling shots. I made an unbelievable and very lucky shot. Larry commented, “Greer, all you ever shoot is ?#@!.”

I told him, “Hell, Larry, we’re only playing for fun. But if you want to play a little money ball and put your money where your mouth is, here’s the game. One game of eight ball for five bucks. Call all banks, rails, and kisses. I’ll spot you three balls and shoot one-handed behind my back. Since I won last game, I own the table. Put up or shut up.”

Larry put up. I won the game by two balls. Larry shut up. Matter of fact, he never mouthed off again – not even when I made a slop shot in a game for funsies. Morals of the story: 1.) Always know your competition. 2.) When there are rules, play by them; when there are no rules, there are no rules. If you want to live in an idealistic world, join a commune. If you want to win at bidding, play as fair as possible: Integrity is a precous commodity. On the other hand, if you sit down to play cards with a cheat, you must play with no rules or he’ll beat you every time.

Philosophers call such morality “situational ethics.” I call it plain oldfashioned common sense.

Postscript. I always say, “He who bids last, bids best.”

Certified Professional Estimator Frank Greer is vice president of Nelson J. Greer Painting of Tucson, AZ and a member of the PDCA Cost and Estimating Committee. He also is currently president of the Southern Arizona PDCA Chapter. In 1995, he received the Estimator of the Year Award from the Old Pueblo Chapter of the American Society of Professional Estimators. Greer has also contributed to the writing of PDCA national standards and technical papers.

Copyright Finan Publishing Company, Inc. Jan/Feb 1999

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