Factors to Consider During the Bidding Process Part 1
The bidding process can present some challenges for construction owners, general contractors, and subcontractors alike. The key to increasing profits is about accurately weighing the risks of the project. As Sarasota construction attorneys, we know that assessing risks incorrectly can cost all involved in a construction project. In this article, we present factors that owners and contractors should be concerned with during the bidding process. Visit Part 2 for the remainder of the article.
The contractor’s concern revolves around deciding whether a project is worth bidding on. For one, contractors may feel the need to bid low on projects because of the competition they face with bidding for projects. Bidding low may seem to keep costs down initially; however, down the road can come with a hefty price tag that many owners are warned to avoid. This also puts contractors at risk for insufficient profit. It is in the best interest of the contractor to submit a bid at a flat fee to protect against fluctuating cost changes over the course of a project. When bidding, contractors should be aware of the following:
- Current work responsibilities to determine ability to handle a new bid
- Expenses of a new project
- If the bid is realistic and secure financially
- If the final profit is worth the time and effort needed to invest
- Compatibility with design professionals
- If the project is located in a convenient place that will not impose undue hardship
- The contractor’s own skill and expertise level to complete the project
- An awareness of bidding competition and bidders’ list
Owners tend to be at the mercy of everyone around them in regard to their reliance on the skill and expertise of contractors, engineers, suppliers, and all others directly involved in the success of the operation. Nevertheless, owners are ultimately concerned with choosing the most effective bidding method and building process so that the finished project is executed within budget and exactly (or as close to) the pre-bidding plans as possible. To do so, owners must have clear plans and goals for the project from start to finish which includes developing and sticking with design plans and specifications. Owners should review and thoroughly assess bid compatibility, avoid low bids, and be sure that financing is secure. When examining a bid, carefully assessing a bidder’s financial stability, experience, and reputation is of the utmost importance.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.