Construction – hard bids

October 14th, 2010 by Stephen Jones Leave a reply »

  The AGC SmartBrief contained an article revealing the very stark reality of hard bids in the Las Vegas construction market. Las Vegas isn’t the only market hit hard by the economic downturn, but it exemplifies the boom and bust of commercial construction.

 • Here are the statistics revealed in the article:
• Bid value is down 40%
• 15-20 bidders per project
• Gap between high and low bids is 40%
• Bidders are coming in from out-of-state

 In a hard bid scenario it’s the lowest bid that wins. The Owner gets a great price from the bidders: a price as much as 30% below projected cost, or as an article about the Las Vegas market indicates, 40%.

Experienced Owners know that these hard bids come with hidden costs including change orders, delays, and claims that end up costing them additional money. Even if those extra charges were to add 20% to the cost of the winning hard bid the owner has still realized a 10+% saving over the original projected cost.

 Hard bids have become the de facto bidding process

  In an environment where there are smaller projects with plenty of bidders, it’s imperative that you remain competitive on your fees and general conditions. How ? At-risk General Conditions are typically 7-11% and getting skinnierby the day  in this economy. In a hard bid, when your schedule extends by even one month, you’ pay the whole expense out of that 7-11%.Can General Contractors master the schedule, even in hard bid conditions?

 Vico Control can help you to bid a shorter schedule, as well as to manage and to meet that tighter schedule. Vico Control also allows you to vet the credibility of the bids from subs with whom you’ll be sharing the risk. The software and methodology gives you a much clearer, farther-forward-look at the project so that you and your team can make early adjustments. Gain the ability to do ‘what-if scenarios’ and strategize how you will bid the job: and better understand how to attack the project and prepare a more competitive price based on schedule control.

It’s counter-intuitive to think that a tighter schedule mitigates risk yet a quantities-driven, location-based, and resource-balanced scheduling solution will give you a competitive advantage. 

  • You want to develop hard bid strategies quickly, but might not have time to develop a BIM;
  • You know you’ll discover change orders during the project, but you want to find them sooner (and cost them competitively);
  • You understand that construction-caliber quantities drive a more precise schedule and estimate – you just haven’t seen it in action;
  • You want to protect your fee and believe that 4D and 5D BIM done right will mitigate project risk.

  Cost planning allows you to build multiple iterations of the estimate linked to the model progression specification so that every change can be costed, not only in terms of dollar value but also schedule flux.Calculate the cost of the project at a very high level of detail for the parts that are high risk, and leave it at a lower level of detail for those parts that you are subbing out. Use the model’s visual feedback to determine whether you included everything in your cost plan. When an area or element is not highlighted, then it’s not in the cost plan!

RFIs turn into Change Orders which greatly impact the duration and cost of your project. Manage the coordination process to iron out constructability and scheduling issues earlier rather than later. 

 Best practices illustrate that you should also have a BIM database of cost and time elements? This knowledge base permits you to build resource-loaded schedules and cost-loaded estimates. But the question remains: Do you build it or buy it? Communicate the calculated price to management, showing how the bid was developed from the baseline cost plan. This tactic is also useful if the owner allows an open book proposal.

 In the end, it’s all about building trust with the Owner by working in concert, adding value every step of the way. Do it right the first time . Using BIM even in hard-bid situations permits and even encourages this collaborative approach.

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