Dealing with contractors 5

[s0eebuch]

Hey all,

I'm back! Ok, so here's the deal: My first buried waterline design project for a local county Utility Dept. went out for bid and the response was tremendous (the result of a slow economy, I guess).

So, after doing our due diligence, we accept the lowest bid and award the project. Later, the contractor learned he was the lowest bidder by a significant amount (i.e. He left almost $100K on the table - his bid was that much lower than the next bid).

Now, he's looking to recoup some costs. He is going through my contract documents with a fine-tooth comb, looking to justify a change-order and he hasn't even broke ground yet!

The estimator, "Frank", is a real piece of work too. He's abrupt to the point of rude, confrontational, and gets very defensive at any question/request. In our preconstruction meeting, he demanded the start date of the project get pushed out 14 days. It was (and continues to be) very unpleasant.

Any others notice a trend in how contractors are responding to the engineers? Any tips on how to handle them? Every time Frank calls me, I get tense and find myself at a loss for words. Logic has always served me well and I have a hard time dealing with angry people that will not listen to logic.

Thanks in advance.

 

[apsix]

"Variation in bids is usually due to uncertainty in the tender."

Not in my world.

 

[jmw]

It isn't necessarily poorly written tenders that produce a wide range of bids but understanding the response.

There can be some surprises with high bids.

I remember well an example from my very early days when I worked for a flow measurement company, and we received a ender request from Sri Lanka for 40,000 water meters.

The Metropolitan Water Board had said of the company that its meters were the "Rolls Royce" of water meters. This pleased the engineering department, though it shouldn't have as it was shorthand for "too expensive" (by sixpence, in old money) and they only ever sold in very small numbers.

But this, some years later, was the opportunity to finally put them in the market they were intended for now that all those added features were valued.

The problem was purchasing who went into deep discussion with the suppliers and who then determined that volume production would require that we increase the unit price quite significantly. They had their reasons.

It was probably the first bid to be vertically filed by the client.

Then too, beware the "contingency".
I've seen bids where each contributing party has included a "hidden" 10% contingency in case anything goes wrong and where whoever put the final costs together from its component parts added his own 10% on top.
Now add margins to compound the problem.
Thus, the final bid assumed everything that could go wrong would go wrong and with every part of the project, and then some.
Also vertically filed.

Then too, some of the bids will be there just to make up the numbers and will have had no real effort put into them.
For example, in cases where clients are obliged to obtain at least three bids. The tender is carefully written to favour the preferred bidder and the others are just there to satisfy the legal obligations and some of them know it.





JMW

http://www.ViscoAnalyser.com

 

[HgTX]

Another twist: Someone who's done exactly this thing before knows all the pitfalls and bids accordingly. Someone who hasn't done it before (but yet has enough relevant experience to be qualified) has a rosy view and bids low. There's no way to evaluate that aspect of it with just a list of per-item dollar amounts.

Hg

Eng-Tips policies: faq731-376

 

[Drumchaser]

sOeebuch

We operate under the low bid system. The contractors that are certified to bid have to meet certain criteria in order to qualify for bidding. The most important of these is their Bonding/Surety Insurance.

Our specifications are pretty sound/detailed and based on industry standards. In order to bid on our projects a certified check (% amount based on the contract) from the contr. is submitted with the bid documentation. After the bids are opened the contr. has the right to withdraw his/her bid and forfeit the check if they are the apparent lowest bidder, and are having issues with being significantly lower than the others. This appears to be a good practice.
If the contr. really screwed the pooch on the bid and cannot complete the work according to spec.s and drawings then his Surety takes over and retains another contractor to finish the work. This appears to be a good thing, have seen it executed. Our spec.s/contract language allows us to default the contractor under several situations. We also install a contract time amount that includes an amount of Liquidated Damages for every day the contract is not completed. We have detailed outline/format procedures that the contr.'s bid document has to meet, and if we find an error in his bid package it will be disqualified and not included in the process.

It has been my experience, municipalities, counties, cities, and private construction PS&E packages "can be" substandard and rife with potential areas of concern regarding many issues such as: no penalties for exceeding contract time, unclear sequence of work, material spec. issues, omitted bid items, etc. and so on.

It is my opinion that it is hard to be objective and open minded when you are dealing with a contractor that does not have good people skills. (to be nice)
It is always good to keep in mind that in a low bid system the work is being done at a pretty good savings to the owner, this being said if change orders are merited they should be executed without delay. For instance, your PS&E did not include a pay item or language about the hydro testing of the new water line. (C.O. no.1)

Documentation is always a good policy. If your contractor feels strongly about something (error in plans/spec.s) have him put it in writing to you or your org. This practice usually eliminates fishing expeditions, as well as gives a good trail after the work is completed. Be sure and respond to such letters in a reasonable time period.
Having qualified/experienced inspection is a must. Daily documentation (weather, conditions, matl.s delays, non conformance to spec.s, time work began, time work stopped, equipment on the project, etc.)
If no one (on your end) is watching the work being prosecuted/installed you will more than likely be at a severe disadvantage to say the least.

Sounds like Frank may be used to dealing with Engineers that have no fortitude/experience. Maybe you should show him you have both (may include hours other than 8-5).

Their are things to learn from every contractor, I am certain Frank's bunch is no different.

Good Luck

 

[nuche1973]

s0eebunch,
I have several years experience on the construction side as an esitmator and project manager. Now I'm one of those "damn engineers". I agree with Drumchaser: you have to be stern and documentation is the key. This is just a dog and pony show that is commonly done when a company relizes it screwed-up the estimate. $100k left on the table is a major mess-up. Don't forget that you wield a very big stick, the contract. It can be used as a nice "reminder" for the contractor on what can be defined as a change order or not, especially if you have performance clauses or liquidated damages in it. And remember there's nothing more unnverving to a contractor than having the project engineer show up, un-annouced at the site with a clip-board and a camera.

 

[JTMcC]

CCB1 says "there's nothing more unnerving to a contractor than having the project engineer show up, un-announced at the site with a clip board and a camera".

I say that's a good thing. The greatest compliments, the best advertising our little company (usually a sub) has ever recieved was under those exact circumstanses. The end result is a reputation with prime contractors and owners that you could'nt pay for even if you tried.
There are companies out there doing the work right, to spec, who welcome close scrutiny as it ALWAYS works in thier favor.
We've had some very good years, as the result of a few simple comments on our work by project engineers and others in positions where thier opinion carried significant weight with the people who actually hire us.
But then of course we are very rarely the lowest price available either.
We welcome close inspection as it quickly weeds out the low bidder hacks for consideration on future projects.

JTMcC.

http://www.firstratefabricators.com

 

[swivel63]

used to deal with that all the time. guy named eddie. shell contractor who was mean as the day is long. if you're not a confrontational person, just walk away and hang up the phone when he begins to yell and be rude. not that i did that. but i'm a confrontational person, too. and that didn't always work out well for me. CCB1 has it right. you're the customer.

 

[controlsdude]

I have dealt with low bid people and they hit you with every change order possible.

Usually if they come back with a low bid I think its the responsibility of the engineer to ask do they understand the requirements? Usually low bids are missing something.

If your the management type that takes the low bid and then laughs at the construction company for there bad understanding, then you got what you deserve. YOu picked their low bid and probably knew that they were missing something. Would not it of been more benefical to you before you accepted their bid to go over the requirments to see if they were meeting them?

 

[s0eebuch]

FOLLOW-UP

So, the work was progressing and there was only one change order to the project. The change order was less than 5% of the total bid amount - not a big deal.

However, we (the client and myself) noticed that even the change order was low. We inquired of the contractor and were told that the estimator (the rude guy I'd been dealing with) had been fired the previous week.

Apparently our project wasn't the only project on which he bid extremely low.

I'm now dealing with the vice president of the contracting firm until they can get a new estimator.

...and Mr. VP is absolutely great to deal with!

Thanks for everyone's advice.

 

[jmw]

Damn, now I know why being an agnostic is a safe bet; seems there might be a God after all.
You don't often hear of one of the "Franks" in this world getting found out and canned... usually the rest of us have to pick up the pieces around them.

Good luck with the new arrangement, let's hope Frank hasn't so low bid them they fall by the wayside before they get finished and get a chance to get it all together again.

JMW

http://www.ViscoAnalyser.com

 

[purdue87]

i am an engineer and also own a concrete construction company. we perform millions of dollars of work each year. when we are asked to bid a set of plans, that is what we do. especially in this hard bid / low bid environment. there is no negotiation with the GC's, architects, or engineers. we bid what we see. to get the job, we have to be the low bid. which is moronic from the start. most of the plans we see are pathetic and should never be used for construction. most have been put together by architect / engineer underlings that have used way too much "cut and paste" to get the job done. yet they are permitted. so with that said, we jam the architect, engineer, or GC every chance we get. when we bid the plans we make a complete list of all of the shortcomings of the plans and then someone else can pay for them. that is the "bid" environment. the negotiated environment is much more relaxed where we come in with coffee in hand and sit down and point out all of the problems with the plans from the start. then the owner turns to the engineer/architect and says get back to work....

Thanks,
Scott

 

[nuche1973]

purdue87,
Yup, been there. I've also seen that when bids are extremely low, the exemption/exclusions list is unusually high. It's best to read the entire bid before making a decision, but that is stating the obvious.

 

[cranky108]

Have you seen a bid where the answer to the first item on the short comming list was explaned in the first paragraph of the bid document.

Lets don't be so hastey to beatup on the engineer. I've seen plenty of these where the item was bid on the title, and not on actual bid document. (Apperently it wasen't worth the time of the sales engineer to read).

But you are right about it's not common to have complete drawings either.

 

[MechEng2005]

I typically try to have a conversation with the bidders, face-to-face if possible. Just to review the project and make sure they understand the scope. This can weed out some of the bidders that do the bare minimum and don't actually understand what the functions required are. If I'm talking with them about a water pipe and have a 3" pipe for 3,000,000 cfm, I'm much more confident with the contractor that points it out in the bidding process. If I get a bid from somebody who didn't question it, I assume that they will just put in a 3" line and say, "That's what the spec said."

I see it as buying services in addition to the contracted work. Sometimes it makes sense to go with the bidder that seems very knowledgable and will be able do so some of the checking (typos, ridiculous items that work in theory but not in practice, etc). In a simple system, (i.e. cover existing level slab with grating and anchor), maybe I go with the cheapest because everything should be straight forward.

Hope I made my thoughts clear.

-- MechEng2005

 

[cranky108]

On a recent job bid for civel work we had interest expressed from 33 contractors. With that number it becomes difficult to meet fact to face with all of them.

But in general you are correct, where possible.

For general things, like planting a copper grid in the dirt, a bunch of questions can develop very quickly. However, in general we are required to take low bidder unless there is a very good reason.

 

[purdue87]

90% of the time construction is about finding the dog-ass cheapest price from each sub-contractor. then the gc adding his markup and voila... you have yourself a project. then the co's start flying. have done Millions of $ worth of work and have yet had an engineer ask to meet with the subs. 17 divisions with 3-5 subs each? wow. what a big meeting.

Thanks,
Scott

 

[s0eebuch]

purdue87,

I'm not sure where you are located, but I (and other consulting engineers in my area) regularly meet with sub-contractors. Sometimes the GC or primary contractor doesn't have the time to review all aspects of the project or the competency (some areas of the work are outside thier area of expertise).

Most of my projects do not result in "COs flying". We discuss and approve change orders as the situations warrant. Some change orders are the result of the the client wanting additional work in the area. Only a very few are due to plan or spec errors.

And as far as "jamming it to the engineer" - I have only had the one instance (see this OP) where a contractor was blatantly and maliciously trying to take advantage of what he perceived to be omissions in the scope of work. We try to be as thorough and accurate as possible in our contract documents - to minimize the types of omissions that less honest contractors try to take advantage of. So far, we've had minimal issues.

We have a good relationship with most of our GCs, clients, and even sub-contractors. The good contractors understand that there will be another project - and doing good work and building good relationships are how repeat work is generated and maintained.

I'm sorry you've been burned so bad to have the kind of attitude you now have. Good luck on future projects.

s0eebuch