Choosing the lowest bid submitted by a construction company instead of choosing an experienced construction contractor could compromise your construction project.
We know that thoroughly investigating the merits of each bid is a time-consuming chore. Still, it must be done to avoid spending more on the construction project than you planned.
WHY GETTING MULTIPLE BIDS FOR YOUR CONSTRUCTION-BUILD PROJECT IS A GOOD IDEA?
Getting multiple bids for your construction project is a good idea whether you are planning a small or large project, and whether you are a single employee business, or your business employs thousands.
When you get multiple bids, there will always be a lowest bidder, and there will always be a highest bidder. A person’s natural tendency is to discard the rest and hire the construction company that provided the lowest price in order to save a few bucks. Unfortunately, this often has unintended consequences.
Benjamin Franklin said, “The bitterness of poor quality remains long after the sweetness of low price is forgotten.” Could he have been referring to the construction of a commercial design build project? Maybe he was and maybe he wasn’t, but either way, the sentiment applies.
REASONS A CONSTRUCTION COMPANY MIGHT BE THE LOWEST BIDDER
There are a number of reasons that a company could be the low bidder on your project. These reasons should be carefully considered before you move forward with an award to a contractor for the job.
Before you choose a construction contractor with the lowest bid, let us offer you a bit of advice:
- The low bidder has lower overhead
- Something important was left out of their bid
- The subcontractors they selected gave better pricing
- The materials they quoted are cheap / low quality
Some of these reasons, like having a lower overhead, aren’t a problem at all. If you have found an honest and reputable company that is able to give lower pricing because they have kept their operation lean, meaning they don’t spend a lot of money to operate a large office, fleet or crew, then you may have found the perfect company to work with.
However, if that company was low bidder because they left important items out of their bid, weather it was accidental or on purpose, and they end up coming back to you midway through the project to ask for more money to make up for their lack of estimating skill, then you are not really saving money and could end up spending much more in the long run.
DON’T CHOOSE LOWEST BID OVER SAFETY
Often, safety is one of the first thing that gets cut for a contractor to provide a very low bid. Minimal dust protection, cheap scaffolding, or poor lead paint practices. The scope of work often says how things are to be built and what materials are to be used but doesn’t often give detail or instruction about safe, clean work-spaces.
Let’s take a look at a quote from John Ruskin:
It is unwise to pay too much, but it is worse to pay too little. When you pay too much, you lose a little money … that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the things it was bought to do.
The common law of business balance prohibits paying a little and getting a lot … it cannot be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better.
There is hardly anything in the world that someone can’t make a little worse and sell a little cheaper – and people who consider price alone are this man’s prey.
DESCCO’s CONSTRUCTION COMES WITH FAIR PRICING, SAFETY, AND QUALITY WORKMANSHIP
Of course, no one wants to pay too much for the work, and we don’t want you to either! What we want for you and anyone who receives construction work from DESCCO or any other company for that matter is fair pricing, quality workmanship and a completed project, on time and on budget, that you can be proud of.
So, what is the solution?
The first thing you must do is make sure you are getting apples to apples bids from each contractor. Make sure all parties are quoting the same scope of work with the same materials.
Next, do your research! Look into each bidder and see what kind of reviews they are getting. Ask people you know or their former clients what their experience was like with the company.
Which company makes you feel the most at ease and has the best communication with you. If one company returns phone calls and emails more promptly than others, the chances are, they will be the most attentive during the project as well.
The bottom line is that you should be using the prices provided to you as a guide but should not be solely used for the making your final determination.
There are a number of different models where the project can be put out to bid and then the bids are discussed based on criteria other than just price. Those criteria include:
- OSHA (Occupational Safety and Health Administration) records of injuries and site visits
- Loss Runs from the contractor’s insurance and worker’s comp companies
- Checking the Better Business Bureau (BBB) complaints or other references
These are things that you can ask for along with the submittal of your bid and will help to flush out companies that it is not in your best interest to work with.
Maybe the cheapest company has a sky-high rate of injuries. Is that who you want running your project?
References should always be check but rarely are. If a company has a terrible reputation for shoddy work, but you haven’t don’t the due diligence and discovered this prior to selecting them because they have submitted the lowest bid, you could be shooting yourself in the foot, as they say.
At DESCCO Design & Construction, are we bitter about losing jobs to lower bidders? Not really. We don’t like to lose out on projects we bid on, but we understand that that is the way of bidding commercial construction work. We win some and we lose some.
What we don’t like, and what we really want to steer our potential clients away from are the hacks doing shoddy work on the cheap to make a buck and giving construction industry professionals a bad name.
At DESCCO, we have a high expectation of quality and we do our best to be fair when pricing jobs. We may not always be the lowest bidder but in many cases, that is not necessarily a bad thing. We have built our business on integrity, trust, quality workmanship, a safe and clean job site and an project outcome that our customers can be proud of.
Whether you choose DESCCO Design and Construction or another local contractor for your next construction build, we want you to do your research and always make an informed decision!