Bid day is exciting to some of us. The prospect of a new opportunity that will create a better future for ourselves is almost addicting. This is gambling in its highest form. You lay down your dollar and place your bet, the wheel spins and lands on your number. You've won! Or have you?
Being low bidder these days feels more like just another step in what has become 'a drawn out to the extreme' process in the world of contracting.
Most likely the successful low bidder will end up bidding the job again as the owner directs the contractor to do value engineering to bring the pricing down even lower. Oh and by the way? This task also ends up being a race between the low bidder and the next number or two above that just to make it fair. The thought behind this is that relying on ONE price for the value engineering doesn't give the full spectrum view of the revised pricing to the owner.
While we understand that this practice of creating economy may enable the job to move forward, it still feels like we are continually in competition with who will do the job for less than low number on bid day. One becomes suspicious of the motives behind the offer of fair pricing to the owner when we have already given our best and final without having to compete again with everyone else's best and final as well. Who is really pocketing the difference anyway?
If the contractor isn't using the expertise of the trades in creating the values, they are guessing based on a thumbnail assumption of their own. After the contractor secures the notice to proceed based on this guess - THEN the fabricators get to play again, placing their bets on who will meet or beat the guess made by the contractor. The original low bidder will have to be low bidder a second time to be able to get the job.
This practice, of course, is thought to keep the fabrication numbers honest. But what happens when the contractor has guessed wrong? Does the auction continue until they achieve their bargain pricing? Now that everyone knows just how much of a margin they need to cut to get this one away from the original low bid fabricator, is this value engineering adjustment competition extending an honest and fair opportunity to the steel fabricator? Why did the contractor not ask for price adjustment from their low bid fabricator to begin with?
Who is responsible for making up the rules to this game, anyway?
You are low Bidder.............................Now What?
Steel Advice - The Fabricator's Resource - July 2011