This month's article concludes the discussion of the bidding process that we began last month. The process of bidding on construction projects is one of the most unrefined of any industry. It is continually subject to deception and cheating. At times it can be a very scientific process, while at other times it can be one big tumult.
Use a simple quote sheet for writing down any quotations received from suppliers over the telephone on the day of the bid. Fill in all of the information, including the date and time the quote was received.
The figure above shows a simple bid summary, where the final bid tabulations are done. Any quotes will be filled in, along with the costs of the basic wiring materials; labor hours and job costs will be filled in; a certain percentage of the total cost will be added for overhead and profit, and the job will be ready to bid. The simplicity of this form is important. Because the general rule is that the final bid tabulations are done in a big hurry just a few minutes before the deadline, a complex bid summary can cause confusion and mistakes. A simple bid summary such as the one shown makes the entire process easy, should you get a late price from a supplier.
The entire purpose of electrical estimating is to find the lowest price for which you can perform any given project, and yet not lose money. The contractor most successful at the art of bidding is the one who's awarded the project for the highest possible price.
Estimating is focused on the lowest attainable price, and bidding is focused on the highest possible price. When you bid, you must start with a good estimate, so that you know your limits. Without a good estimate, you never know what you can bid and what you cannot. A good estimate is absolutely essential, but it is only a starting point. Once the estimate is done, bidding starts.
Bidding concerns a different set of facts than estimating does. While you are estimating, you are concerned with materials, quantities, man-hours, addenda, etc. When you begin to bid, all of the estimating concerns should be put behind you, and you should have no concerns about the estimate. The only thing from the estimate that should be in your mind is the final bid price, and the only number you need in front of you is the “drop-dead” number. Some estimators define a drop-dead number as the number below which you tell the general contractor to drop dead.
The difference between estimating and bidding is very important. In many ways, they are opposites; so much so that it is very strange that most contractors think of them synonymously.
Reprinted with permission from the NFPA Successful Electrical Contracting. Copyright 2001 National Fire Protection Association. To order go to www.nfpa.org.