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Sep 15

Subcontractor Bidding Tips

TBoYB1

Subcontractor Bidding Tips

George Hedley is owner of Hedley Construction and Development, Inc. He started his construction company in 1977 with a pick-up truck and $500 in the bank. He grew his business to $50 million in revenue in seven years. He is one of the top 10 contractors in Southern California.

He now shares his business expertise and leadership style through his writing, speaking and coaching services.

I ran across his website, Hard Hat Presentations, while doing an internet search for tips to help sub-contractors and suppliers land more work.

When I read the statement…”most contracts are awarded to the lowest qualified bidder based on price. The bidder who offers better service for more money rarely gets the contract” I knew he understood the problem, the fact that he had more to say after that intrigued me.

WOWHere is an excerpt from his article “7 Ways Subcontractors & Suppliers Can “WOW” General Contractors”, click the link to read it in its entirety.

I am a general contractor & developer of commercial and industrial projects from $2,000,000 to $15,000,000 in size. On every project we select from our database of over 3,000 companies to eventually hire at least 35 subcontractors and buy from 5 to 10 suppliers. The bottom-line when choosing subcontractors and suppliers is all of them are almost the same except for price. Very few contracting companies do anything different than the others. They give you what you pay for, the minimum, no more and no less. Because of this, sadly, we usually award based on price.

If you don’t wish to read the entire article, at least take away these tips George shares to better your chances with being awarded a contract. Probably 95% of you will discard them thinking they are a waste of time. What if your competition is in the other 5% that will implement even just of few of these tips.

I mean seriously, how much cost and effort is involved with writing a thank-you note? How many of you have ever written one? If you would like to treat your best contractor customer to dinner, schedule it next time I’m visiting and I will treat you both!

7. More WOW ideas

-         Send me a thank-you note

-         Bring me leads

-         Get bids in on time

-         Give me value-engineering ideas

-         Don’t overcharge on change orders

-         Send me product literature

-         Keep me informed of new ideas

-         Help me make a profit

-         Give me a referral

-         Train my superintendents

-         Get an email account

-         Carry a handheld email device

-         Use email

-         Carry a digital camera

-         Use your digital camera

-         Take me to dinner

-         Ask me: “how can we improve?”

Have an awesome week!

1 comment

  1. larry

    Here is my response:

    7 ways for general contractors and suppliers can wow subcontractors
    I write this in response to an article entitled “7 Ways Subcontractors & Suppliers Can ‘WOW’ General Contractors!” I felt it was important to emphasize that its a two way street. Only a few months ago in our market there was a general contractor who lost a $103 million project by $17,000. They were politely reminded sometimes not everyone gets the same price and that one subcontactor bid them $20,000 higher. The look on that general contractors face was priceless as his jaw hit the ground.

    1. Man the job
    It is easy to get jobs you can’t handle – bid them cheap! When bidding, be prepared to properly man projects with experienced superintendents that fully understand the project. Don’t for example, put a bridge superintendent on a college building with detailed finishes he doesn’t understand. If you only have junior superintendents who only have completed $1-2 million jobs, don’t expect them to run a $20 million job, I want trained superintendents who:
    - Have ongoing training and understand the project
    - Are always thinking 2 weeks ahead, not 2 hours ahead
    - Can make decisions
    - Can read the plans
    - Understands codes and my scope
    - Knows the contract
    - Lives by their word and I can trust them
    - Understands that it takes a team to complete a job successfully

    2. Be well financed
    I’ve heard many a time, “We haven’t gotten paid by the owner so we aren’t paying you” This is not the subcontractor’s problem. Standard procedure is that subcontractors and suppliers get paid on the last working day of the following month. It has become very evident that general contractors do not have sufficient funds to properly complete a project. When I bid a project, I make sure I either have or have access to sufficient capital to properly complete the project and so should the general contractor
    I am not your bank Mr. General Contractor, be properly financed. If you are bidding a $10 million job, you should have at least $5 million to available financing just for that job!

    3. Manage the contract
    Step one: READ MY QUOTE ! Most general contractors never read their subcontractors quotes. Like a dog in heat, they are so excited to sign up all their subcontractors, they throw in many items I have specifically excluded or miss including any of my exclusions in the contract. I take care to write a detailed quote including all my inclusions and exclusions. Don’t insult me by not including every aspect of my quote in our contract. Also use industry standard contracts, custom contracts are simply disgarded in my recycle bin as I have no intention of paying my lawyer $2000 to review them, or spending 4+ hours reading them. Do not include clauses that are unacceptable such as:
    - Paid when paid
    - Overtime at no extra cost should the project be behind schedule
    - Handle disputes

    4. Be Pro-Active
    Too many times the general contractor’s field superintendent will phone me on Wednesday afternoon, “I need you here Friday morning” to which my response is “you should have called 2 weeks ago, my crews are busy for the next week, and I need at least 1 week to mobilize”. Further I will usually tell them “your schedule had me starting 3 weeks ago and you weren’t ready so I moved on”
    A pro-active general contractor is on top of every job they have a contract to build. They don’t wait for customers to call. They take responsibility for monitoring all their projects and ensuring notifying the subcontractors with lots of lead time. Its not the subcontractors responsibility to wait for the phone call to start. Some of my best general contractors send out detailed 2 week schedules in advance so I know what I can expect and what they expect.
    Referring back to item #2, I often think to tell the general contractor “you were 2 weeks late in payment last month, so if that is how you treat payment schedules, that is how I will treat the project schedule”
    5. Manage the jobsite
    It would be nice if general contractors to supply sufficient services to the site so that we can operate properly. Too many times the power panel is small with not enough power outlets to supply the site with power so there just isn’t enough power to run equipment properly. If I am running saws, compressors and other tools that need at least 80 amps, then obviously 100amps is not good enough for the site. Also supply power panels within the reasonable distance of the work area, don’t expect me to have to provide 300 feet of extension cord.
    Also, if I exclude garbage disposal don’t be surprised when I just pile my garbage in a corner and leave it. Too many times the superintendent tells me to get rid of my garbage and I tell them to read my quote and they often tell me to read my contract which my response is “sure, I crossed that out and initialed it as per my quote”.
    If I exclude dust control, don’t come up to me and tell me why I am not putting poly up and protecting things. Read my quote and contract ahead of time and be prepared
    6. Help me!
    My working relationship with general contractors and suppliers is a continuous ongoing push and pull versus give and take. If you have a job that needs quoting, don’t send me the invite a couple of days before it closes and well after the site walk thru
    Understand that for every job a general contractor bids, I bid at least 5. Don’t try sending me a detailed scope of work when there are 6 other general contractors bidding, I am not going to bid the same job 7 times just for your convenience. I will usually on a complicated job send out my detailed scope of work a few business days before the closing date so the general contractor can make allowances as required and then on the day of closing simply send out the quoted price on closing day.
    One of my fondly remembered conversations with a general contractor was when he told me “Don’t bite the hand that feeds you” to which I responded “I agree don’t bite the hand that feeds you, you need me more than I need you, I have 6 other general contractors bidding this job and I can just skip your number on the fax machine, it won’t bother me at all”. He quickly understood what I meant and apologized.
    I have also learned enough that while there are give and takes on every job and we all must work together. There is rarely any point in doing large extras and favors on the job for free expecting the general contractor to remember that on the next job when you are $1000 high on $100,000 contract, they won’t remember your name.
    Bottom line, respect the fact that we are equals and are working to a common goal, to complete a successful project and make a profit
    7. Misc
    - Bring me leads, send out invitations at least 2 weeks before tender close
    - Don’t shop bids
    - Don’t take my value-engineering ideas and send them to my competition
    - Help me make a profit
    - Don’t ask me to reduce my price after bid close
    - Return my calls after bid close and within a few days tell me that I am low, don’t string me along for 1-2 months after.

    Contractors who generally disrespect the above usually find themselves with higher quotes from subcontractors and as the story goes in my first paragraph of this article, $17,000 high on a $103 million project.

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