By Paolo Benedetti
It shouldn’t be too surprising that, as a designer and builder who cares about quality and craftsmanship, I’ve spent some time thinking about bidding and ethics.
As I see it, bidding against other contractors to win the opportunity to install a project is a fair and worthy exercise if the project’s specifications are well defined. This describes most government and public works jobs, which by nature come with clearly defined sets of standards.
The situation, however, is usually very different with residential projects, where a property owner generally comes out of the bidding process needing to review a wildly diverse heap of quotes.
For the most part, these bids will sort themselves into two piles pretty efficiently: Low cost and quality don’t tend to be good bedfellows, and it goes without saying that you get what you pay for. But generally speaking, there’s more for the consumer to consider than price, which is why I spend some time introducing them to a few key concepts whenever they’re willing to listen.
First, I let them know that circulating a simple plan layout without specifications or details is asking for trouble. Many contractors do not possess the skills, experience or education to identify potential problems with projects at this stage, so asking them to “bid it as presented” or saying “It’s a design/build project, so go ahead and specify what you’ll do differently” simply isn’t sufficient.
Builders get sucked into these no-win situations all the time, and I don’t know whether the contractors or the homeowners are more to blame.
Second, I do all I can to let them know what the term “design/build” really means from the bidder’s perspective. As I see it, describing a project in this way asks builders to bid the project based on the minimal information the homeowner has provided and encourages them to assemble a lowball bid based on that information.
Once the bid is won, the game changes: As the details begin to gain definition, the contractor points to the original documents and begins to rack up the change orders.
Lots of the time, these changes start flowing when the low bidder gets the soils report and all sorts of special engineering comes into play. If the engineers say the vessel must be built stronger with special foundations not covered by the basic contract; if they say the surge tank on the vanishing-edge pool is too small; if they say the plumbing is too small; if they say that raised walls meant to hold back water must be waterproofed inside and out, the only sound to be heard is “ca-ching!”
If the finish materials the client has selected will require additional labor and special installation methods; if the walls have been built too high to allow for the client’s favorite thick stone coping; if extra pumps and filters are required to make the vanishing edge, spa jets and waterfeatures work – well, again the loudest sound you’ll hear is “ca-ching!”
In these bidding situations – where nothing is ever truly clear enough – the contractor will never be concerned about cost over-runs, basically because the only margin to be made on such a job comes from the change orders. The homeowner might think a pool is a pool, but the low-bid contractor knows differently right from the start.
So now the homeowner is stuck with an underqualified contractor because the documents were signed before the project was fully specified – and the contractor is now fully entitled to be paid for any changes that come along. If that seems like a bit of a racket, it’s because it probably is, and the biggest lesson the homeowner learns is that the lowest bidder wasn’t so cheap after all.
This is why I suggest to any prospective client who will listen that they should insist on having a well defined and specified set of plans before putting any job out to bid. It costs a bit more up front, but in all likelihood it will save them thousands of dollars in the long run. And suddenly, all of the bids will start to look a lot more similar!
This is why I also ask these prospects to stop and think: If your design/build bidding process does nothing more than force contractors to bid low and keep their observations of deficiency issues with your plans to themselves, how do you benefit?
Then I leave them to answer some additional hard questions: Why are some bids so much higher than the rest? What do these higher-priced contractors see that the others do not? What are they going to do that the others won’t? If the client answers these questions honestly and wisely before it’s too late, then bidding suddenly becomes a level playing field and ethics (good or bad) aren’t so much a part of the picture.