THE LOW BID ENVIRONMENT: Is determining best value realistic?
THE LOW BID ENVIRONMENT: Is determining best value realistic?
September 11, 2009 by Taylor Studios
How much is a dollar worth? Seems like a straightforward question at first glance doesn’t it?
Given the times, we’re all looking to stretch our pennies just a bit further. Everyone wants the best value for their dollar. Understandably, people seem to want the most ‘stuff’ for the lowest price. Unfortunately, the concept of value sometimes gets overshadowed by the price tag.
As a design-build contractor, we are constantly competing in low-bid environments. A low-bid scenario occurs when a purchasing agent tries to simplify proposals into nothing but a numbers game in search of the lowest cost and the best ‘perceived’ value. They try and make it an objective process. They will take a list of broad specifications, see which proposals somewhat match those, then simply award a contract to the one with the lowest price.
While this approach may work when buying jugs of coffee or office supplies, it doesn’t work particularly well in our industry. How do you realistically put a price on something that hasn’t even been designed yet?
We propose on jobs that fit us and, for the most part, we have a strong track record of success. We strive to give our customers the best value for their dollar. When bidding jobs, we do our best to give an honest assessment of what we think it will take to provide the client what they want – and we don’t necessarily consider price in doing so. This tends to cause us headaches in the aforementioned low-bid arena.
Oftentimes, in design-build jobs, we may not be given the overall project budget and our proposal simply becomes an educated guess on how much we think it’s going to cost. However, we are ALWAYS willing to design to ANY budget. The value we offer is sometimes overlooked behind our price tag. Here’s a sampling of some of the value you get when selecting Taylor Studios:
– Experience: Nearly 20 years in the industry has given us a strong base of best practices. We know what works, we know what things cost, we know how long it takes to build them. Trust us.
– Planning: Good, up front planning leads to increased productivity and efficiency. We identify potential risks within the first two weeks of every project and begin planning ways to minimize them. This helps to keep schedules on track and reduces costly change orders in the future.
– Under one Roof: We have a full staff of designers AND fabricators. Sometimes as much as 10% of an entire project is tied up in shipping and travel expenses. As an owner, why pay that 10% to a design firm, then another 10% to a fabrication firm during their work durations? The client WILL save money by selecting a firm capable of designing and fabricating everything in house.
In many cases, by accepting a low-bid on a job that hasn’t been designed, the client is assuming a significant amount of risk. Risk that they won’t get quite as much as they expected on their money, risk that the contractor doesn’t fully understand their needs, risk that the job won’t get done on time…and the list goes on.
As an owner, ask yourself, “do I really need that much risk?”
As a contractor, who knows how to do the job well, and do it right the first time, I ask, “how much is your dollar worth to you?”
Posted by: John