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Getting to the Right Idea First: 4 Tips to Help Compare Bids

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When you go out to bid on a project, every contractor gets the same questions. But the answers you will receive – and the costs on each line item – may vary.

It’s important to understand how to properly compare bids between each contractor. “Bid scoping” helps you better evaluate the purchase, and when done properly, helps avoid future change orders, higher costs in the field, and potentially expensive fixes down the road.

While it may be tempting to select the lowest price, bid comparison can uncover reasons why the lowest bids are so low (perhaps the contractor overlooked a step, or didn’t have a full understanding of the project scope). Comparing bids could also help clarify why higher bids may justify the price tag.

Contractors often have different interpretations of the needs for a project, varying levels of service, or may combine line items. We find common scope gaps and exclusions in items that weren’t considered. These gaps typically include furniture, fixtures and equipment (FF&E), appliances (particularly in residences), cost ramifications of full height walls (potential need to relocate VAV boxes or redesign return air plenum space) (far more expensive than drywall), rough-ins of low voltage access control, mechanical and IT infrastructure (including server rooms/closets), fire alarms, and building automation systems (BAS).

To gain a clearer understanding of the project’s true costs, we recommend following four key steps to properly scope the bid.

1.     Establish a required bid form, a uniform sheet that the general contractor/construction management company can fill out to help break down the scoped items and related costs.

2.     Create an analysis sheet, that compares each bidder, side-by-side, and the cost of each line item. Down the left column, list all the materials and labor. Across the top, one column for each bid/contractor. Using a uniform format to plug in each data point can help gain a clear picture of the numbers for easier comparison.

3.     Highlight consistencies and inconsistencies. All items, products, and services aren’t created equal. Identify major cost anomalies between bids. A significantly low number may not have accounted for all the work to be done – and the final true cost could vary greatly (and lead to headaches and change orders). A comparatively high bid may also signal an unnecessary level of work.

4.     Develop questions. Comparing and contrasting will help inform your follow-up questions. Be sure to ask questions to ensure that the scope is fully addressed and that the assumed approach of each bid is understood.

Proper bid scoping not only removes uncertainties and manages expectations for both owners and contractors; it also helps avoid any cumbersome change orders – by getting to the right number from the start.

 

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