May 12, 2010
The idea for this Blog comes from one of our consistent readers, Matt Ford of Universe Corporation. Matt and I think many of us are bewildered and irritated by the fact that many times the Scope Proposals that we spend a great deal of time developing seem to not be read, or read fully, by the people to which we submit our bids.
The way we put together a Scope Proposal goes something like this:
- Documents upon which the proposal is based – We go to great trouble to list out all of the sheets of contract drawings, the latest addendum, and the specific specification section upon which the proposal is based.
- Scope of Work – In this section we explain the items that we are including, plus our weather area square feet and the number of panels included. This is not meant to limit our scope because we are bidding upon the specified section in its entirety. It is just offered as an aid to compare our view of the project to another bidder’s. We also include our bid price and any relevant alternate bid prices in this section.
- Notes of Clarification – As we all know, not all contract documents are definitive in all respects. Therefore, we list as specifically as practicality will allow all elements that are included and all elements that are not included. We feel that this is essential in order for a general contractor to know how to align our proposal with proposals from other trades and to be able to compare our offering to another bidder’s.
- General Terms of Sale – This section outlines things like acceptance period, terms of payment, schedule, whether bond premiums are included or not, etc.
We feel that this is the appropriate way to present our bid. If you read the proposal, it is comprehensive and informative.
However, we have found that a significant group of bidders read two things only: our company name and the lowest price on the sheet of paper.
How can that be?
People have a tendency to hear what they want to hear and to read what they want to read. When you align that tendency with the fact that in today’s market many general contracts work under the assumption that if Bidder A will not “eat” the extra work at the lowest bid price (regardless of scope), then Bidder B, or C, or … Bidder Z will.
Our approach has always been to list the price for the most inclusive scope of work to avoid being placed in a situation where we would be forced to “eat” the “left out” scope of work. We are not considering (and never will) listing the absolute lowest price based upon not including some things (and listing them in the clarifications) because of the competitiveness of the marketplace.
The alternative to the lengths and effort we expend to write thorough scope proposals is to spend a great deal more time forcing out issues with general contractors prior to bid. Unfortunately, this would require preparing estimates and proposals much earlier, and that is not practical in many instances.
So, my plea to our general contractor associates is to “Read the Proposal Thoroughly” so that you can determine the “real” low price. And for us subcontractors, we must somehow force the issue of scope to make our proposals more helpful in obtaining work.
That is it for this week. Post your comments on the Blog and let us stimulate the discussion.
Thanks,
Ted S. Miller