Bidding on Big Commercial Jobs
Advice about organization, level of detail, and covering yourself in working up and submitting a bid for a large commercial project.September 17, 2014
Question
We've been doing small to medium sized commercial jobs over the last few years in addition to our residential cabinetry. I've gotten away with a pretty simple quote presentation to this point. Now we're quoting a larger job that would be nice to land. My question/request/favor to ask is; does anyone have a template or an old quote that I could use as a guideline or any direction/advice in this? I know that many would not want to aid your competition. I am in Washington state.
Forum Responses
(Business and Management Forum)
From contributor J:
It sounds like you're not prepared for a large commercial job. Stick to the smaller jobs and residential jobs. You'll only lose money on the large commercial jobs. Think about your family and don't be greedy.
From Contributor W:
I study my bids just like I am doing the take-off to pre-form the job, per elevation, list of lin feet of mouldings, cabinets and list any non-common details. Once the take-off is done and prices are established for each I do a schedule of values for each section (room or elevation) and list this on my bid. This comes in real handy should additions or deletions be needed. Many just give bulk bid price. I have had many a GC and owner compliment that my bid made them feel comfortable that I had read their plans and had come to do business. Yes sometimes I do a bulk bid but far more often than not I am still listing as this helps smooth payment and completion draws.
From Contributor W:
Each line item should have room number from floor plan, elevation number and page and price (and/or special notations). This will cause the GC to double check and if you or he miss something this is where it will be caught.
From Contributor S:
Contributor W has the correct style to create an accurate bid, both for your shop and for your potential client. Pay attention to the little details, especially on a large job because what looks little can be magnified 100 fold in the overall picture. Also pay attention to the finish plans and the reflected ceiling plans for information not always listed on the architectural drawings.
From Contributor E:
Be sure to cover yourself - and them - by qualifying all areas that are not clearly specified. For example if the plans or specs call for a Corian countertop and no specific color is given qualify it by saying that "such-and-such countertop bid in Group A Corian". If there is a shape on the plan view that looks like a cabinet with no other information you either exclude it and say you excluded it, or include and say what you included it as.
From Contributor W:
As the jobs get larger and more complex the specs can get a lot less negotiable, as has been noted a list of inclusions and exclusions is needed.
From Contributor S:
Another thing to factor into your bid, especially if it's a large bid/project, is escalation. If it's a large ground-up project like a new school or hospital it might be two years before your part of the project comes due and if you bid without factoring that in then you might be profitable on paper now but in the negative when the job actually starts.
From contributor Y:
If you are bidding commercial work you must have some good GC's as contacts. Ask them what they expect/need from you on a quote. After all they are the customers. Keep it simple is my understanding since at time of closing they get very busy and don't always have time to read and break down detailed quotes. My style is lump sum base price followed by list of inclusions and details of material grades if not included in spec. Always include which addendums you have seen to make it clear you are up to date with your price.
From contributor R:
Which one would you rather buy from? Company A is financially healthy and makes an excellent profit. The owner is regarded as successful and has earned good money, thus having personal assets to back the business. They pre-form well, deliver, and charge accordingly.
Company B is often the low bidder, and borderline profitable with low cash reserves. The owner is just scraping by and does not have substantial personal savings. They do good work and have delivered in the past, but what happens when they have a job go south for the first time? No one knows. You might recover money from their insurance, or bonding but the work will have never been completed when you needed it.
Whenever you take on risk you are backing yourself with either your personal or business assets. In addition to whatever insurance policies you buy, you are also your own insurance provider. This is certainly something to account, and charge for. Having my personal credit line/cash reserves available to complete a contract if needed is something I am not going to do for free. Bottom line, when I am the buyer, I want to purchase from a company that is making enough money that they are very healthy from a financial standpoint. I want to buy from successful businesses - nothing less.
I would rather buy from a business that is charging enough that they can keep the job going smoothly if something starts to go wrong, than one that is going to close their doors and shut down the first time something bad happens. Anybody who has actually been in this business long enough knows full well that you are very fortunate for stuff to actually happen the way you want it to. Anybody who claims that they never run into problems or makes mistakes is lying through their teeth. It’s all a part of the process. If everything works as planned, great! Otherwise welcome to reality. We all have that one project, eventually if it hasn't happened already. Best to prepare so that you can keep your word and deliver, and charge for the fact that you are backing yourself 100%.
From contributor F:
Put a clarification in your quote, "by accepting this proposal the contractor agrees to call us if our bid is more than 10% below any other bid so we may review and see if there are errors or omissions and have the opportunity to withdraw our bid." Most contractors will call if you are too low because they don't want to pay you 50% and someone else 100% to finish but some don't. Big jobs can be very efficient in the shop, the same efficiencies don't always translate to the field and you may have higher field costs based on coordination, schedules, where they want you to work and a lot of things beyond your control. Many GC's do projected schedules prior to the bid, if there is a schedule think it through, you may have two-three weeks to prepare submittals. The GC may require a full time on site PM. Make sure you know the rules and understand them, don't assume anything.
From Contributor H:
There's no end to the ways estimators bid jobs. When jobs get big enough to threaten the enterprise, you had better get damn serious about how you go about it. I have seen lots and lots of great companies go down the tubes, even in good times, from reckless bidding and selling. I implore you to think of bidding like this - bidding is an engineering exercise to determine how you will make money on the job. It's not for your contractor, it's for you! If you keep bidding bigger and bigger work someday someone else will be doing the bidding for your company. When that happens will you have sleepless nights or will you sleep well? Will your business continue to make money for you? Develop a system - something that you would trust others to use, something accurate, something quick. Make it the blueprint for how you want to organize your office. Invest in this and you won't regret it.
From contributor Y:
If you bid to reputable GC's they will let you know if your bid is questionably low. By adding the line about the 10% I think that could be considered bid tampering, giving you an unfair chance to correct your bid up to be just lower than the competition. It is also not the GC's job to be your safety net. If your bid process is so questionable you need this line for all your bids you should look back at your system. We have all made mistakes and in my case a GC has always given me a call.
From contributor F:
Most bonding companies are wary of bids that are more than 10% low unless the sub has a proven history in projects of this size and scope. The subs only option in the way I wrote it is to bid at less than 10% of the competition or withdraw. A responsible GC would question a low bidder to make sure everything was covered, all we are trying to do is make sure they call and go over scope, not change our number based on where the market is.
