A peer-reviewed study recently demonstrated the value to be gained by opening up bidding. The simple expansion in the number of bidders from 3 to 5 can yield as much as an 11.6% drop in the low bid.
Competitive bidding has evolved
You don’t need to spend more in terms of time and resources going through the process of bidding than you’ll save in getting a lower proposal. You do need to have good process in place to run an efficient bidding process, but that process should only need to be created once.
You need a few basic things in place to start building a strong competitive bidding process:
• A shared directory of up-to-date vendor contact information.
• A standardized bid template.
• A centralized way for everyone on the team to access the most up-to-date documents from any device.
• A clear scope of work.
• Access to your Department of Buildings permit information.
If you’re manually leveling bids, it’s no surprise that your team is disincentivized to invite multiple bidders. With an automated bid leveling tool, you will align your cost-savings goals with the limited amount of time that your team has to manage the process. The software does the administrative work, freeing your team to spent their time on critical business challenges.
The real estate industry is built on relationships. You probably assume the service providers you’ve worked with for years are the best for your projects, and you may very well be right. Familiarity with process, company culture and mutual expectations are strong factors in favor of maintaining a go-to team.