Oh, By The Way…

 My ENR View Point http://enr.construction.com/opinions/viewpoint/2009/0916-WhenBiddersBomb.asp  on qualified contractors losing work to unqualified contractors really struck a chord with numerous readers.

 A couple of the responses suggested tightening up the bidding process by requiring prime contractors to name subcontractors.  This is already a requirement, and has been for many years, in various locations around the country.  It does nothing to solve the problem. 

•  The unqualified bidders will still squeeze or shop the subcontractors and/or vendors for every last dollar they can to cover their own mistakes and poor business practices.  This will not stop by naming subcontractors at bid time or within 24 hours after bid time.  If anything it encourages the unqualified bidders to ramp up these efforts at bid time with unqualified subcontractors.  The unqualified contractors will not even stop shopping bids with only some of the subcontractors refusing to bid to them.
•  The unqualified bidders will still get work by the owners and developers that are fixated on low dollars at bid time.  If all they are concerned about is that the contractor has a performance bond, they will not change.  Tossing out the low and high bidders then going through financial gymnastics will not solve the problem of unqualified bidders.

 Nothing will be done until the bonding companies take a look at their how their own practices support the unqualified contractors taking work away from the qualified contractors.

 The unqualified bidders, and there are lots out there, are not interested in becoming better business managers, otherwise they would have gotten better training and education by now.  A contractor’s license does not cure this problem.  The unqualified bidder will still take a dive or bomb the project until it costs them money or affects them personally by putting them out of business.

 The problem of the unqualified bidders winning work from the qualified bidders will not go away until the industry, as a whole, decides it wants to change.  The funny thing is the qualified contractors use the same vendors as the unqualified contractors.   They use many of the same subcontractors.  They may even have the same bonding company as the unqualified contractors. 

 In each city and state, in each market segment, the qualified know who are unqualified.  They know which firms will bomb the job.  It is no secret.  Perhaps the qualified contractors should start by taking their business elsewhere with the vendors, subcontractors and bonding companies.  What would happen to the industry if vendors were only doing business with firms that would not or could not pay them?  What if the subcontractors had the same problem?  What would happen to bonding companies if their only business was with the companies that were very susceptible to defaulting?  What if the owners and developers only received bids from the unqualified bidders?  It is a two way street the qualified contractors, subcontractors and vendors may just want to explore. 

 Oh By the Way… Even though I prequalified the bidders on my own building, the low bidder made a substantial error at bid time.  I alerted them that a mistake had been made, but not the amount of the error.  They “corrected” their bid amount but were still quite low.  Bidders two, three and four were exceptionally close together.  I ended up awarding the contract to the third bidder.  There was only one change order on the project that I instituted for less than 1% of the contract value.  There were no disputes over the scope and quality of the construction effort.  The building was completed on time.  It doesn’t get much better for all parties than this.