Where capital, construction, and tenant improvement projects are concerned, bidding is a necessary but complex process for commercial real estate owners and their teams. It is also critical in optimizing project and portfolio returns and growing maximum value.
Plan for Success
Commercial real estate owners don’t need to spend more time and resources optimizing bidding. What they need are good processes in place to run efficiently.
When construction projects open for bids, plenty of vendors will likely respond. However, in the absence of a process and clear expectations, the quality of those bids may vary wildly. Teams could find themselves losing valuable time searching for missing information, reworking line items to facilitate leveling, or untangling crossed lines of communication.
Good processes turn imperfect bid proposals into great construction estimates.
Great Construction Estimates
Great construction estimates do not necessarily mean the lowest-priced bids. Low bids do not always predict the best vendors and best work; a low price could mean that the vendor failed to properly estimate the scope, costs and deadlines of the project. An ostensibly low bid may actually lead to unexpected, costly change orders and schedule mishaps, clawing back any money a low price suggested that you’d save.
Getting the right bids means proactively eliminating, or at least minimizing confusion, misunderstandings and inconsistencies. Here are our recommendations for getting the most complete and accurate construction bids.
Get your RFP Right.
If a request for proposal (RFP) doesn’t clearly outline exactly what needs to be priced, how and when it should be delivered, and how to format and submit bids, expect confusion, questions, and potential problems.
Drill down into as much detail as possible. Get descriptive — detailed RFPs make things clear. Include a roster of the project team, along with key contacts, such as the project manager, architects, engineers, approved subcontractors and any consultants. Having access to the right resources makes providing details and answering technical questions straightforward in the RFI (request for information) process.
Construction projects are the end result of plans continually evolving over time. The benefit of relying upon PropTech rather than a series of outdated spreadsheets helps ensure that all bidders are working on the latest version of project documents.
Get Granular with Bids
When creating bid forms, find the balance between being too general and overcomplicating communications by providing too much detail. Consider separate RFPs for separate projects. For example, if a project includes both an office redesign as well as bathroom renovations, send separate bid forms for each project. This better ensures focus on individual jobs, and provides the opportunity to analyze bids with greater accurately.
CSI codes, as developed by the Construction Specifications Institute yield more consistent bids. Because everyone is speaking the same language, entries across vendor proposals line up, facilitating easier bid leveling. Architects, among others, rely upon these codes because they help eliminate confusion about the scope of each trade. For all parties, they help avoid misunderstandings, as tasks are precisely defined.
When reviewing bids, ask “why?”:
- Why is this cost so high?
- Why is this delivery date so far away?
- Why is this material so inexpensive?
The answers might require further discussion, but decision-makers will be fully informed before the project begins.
Bid management is increasingly collaborative; static spreadsheets are insufficient to effectively track and manage information in real-time. PropTech automates manual work like bid leveling while providing richer historical insights into pricing trends and vendor performance.
Another benefit to effective bid leveling: it provides insight into the mindset of potential contractor, learning what’s important to them and the time and skill they are going to need to deliver. Organizational and presentation skills are likely predictors of attractive, easy-to-understand bids.
Lastly, pay special attention to bidders who communicate well. These are bidders wanting to stay top of mind, contributing greater effort in establishing relationships. Vendors asking well-formed, thoughtful questions during the RFI process are likely to submit more accurate bids. Participants who follow up, professionally keeping in touch while waiting may have an edge in the competitive bidding process.
Use resources purpose-built for commercial real estate owners.
Centralize communications and supporting documentation. Check relevant government’s rules and regulations for prequalification forms, work histories, certifications and license details. Centralized data help assure all interested parties that bidders meet the requirements needed to perform the job on which they are bidding.
Technology also retains historical data, allowing you to access the project records with each return bidder. Referencing a vendor’s past bids and performance may make arriving at final pricing and more confident decisions sooner. As part of best practices, make it a policy to track whether vendors submit their bids on time, whether the spread between their original bid and final price is acceptable and, how well your teams collaborate.
Centrally located, transparent, best-in-class, purpose-built technology provides accessible aggregated data to all stakeholders and decision-makers. Owners benefit from real-time information, greater capacity to understand the bidding pool, costs, historical data, setting the stage for the best construction bids for every project.
IMAGINE NEVER MISSING ANOTHER PIECE OF HONEST BUILDINGS CONTENT.