Three Bidding Steps that Help Avoid Costly Change Orders
Posted: July 2, 2021 | Estimating
It’s a fact: Estimators who invest the extra time tabulating and leveling their bids save time and money in the long run by catching scope discrepancies before awarding contracts. Scope discrepancies and gray areas during the bidding process can lead to construction delays and change order nightmares during construction.
The common steps to making the best subcontractor award choices are:
1. Bid Tabulation
2. Bid Leveling
3. Bid Evaluation
Bid Tabulation: The process of tabulating line items for the purpose of comparing bids side-by-side.
A bid tabulation (“bid tab”) is a specific trade scope of work generated (written) by the estimator upon review of the drawings. Items are gathered throughout the drawing sheets to assemble a reasonable list of scope items that will represent the scope of work. This scope can also come directly from the trade partner (subcontractor) when working as a team.
Bid Leveling: The process of comparing the bid tabulation sheets side-by-side to identify any glaring differences. Insert plug numbers or overrides in order to provide an equivalent value for each bid that covers the required scope of work.
As the estimator receives multiple bids, they align them side-by-side in a spreadsheet format. The subcontractor’s proposal may have written inclusions/exclusions that were not listed or considered in the estimator’s bid tabulation sheet. The estimator can then add that line item to the Bid Leveling sheet, and make sure the other subs have also included or excluded the same item, entering plug numbers as needed and essentially “leveling” the bid.
Bid Evaluation: The process of evaluating and selecting subcontractors to award contracts. This step is more subjective, involving an added human element that considers more of an overall value approach instead of automatically selecting the lowest bid when awarding contracts. For example, if the lowest bidder has a history of poor performance on prior projects, or the project involves an element of risk, the estimator should weigh whether or not the cost savings is worth the risk.
Bid leveling and bid tabulation, gained through a Scope of Work process, are all tools in an estimator’s toolbox to evaluate a sub based purely on the information received during the bid process, but Bid Evaluation is the tool that is used to look at other things that can determine whom to recommend for each trade: A good bid evaluation will look at past history of completed projects, current workload, size of project by dollar value or duration, and proposed team. In other words, finding the most qualified bidder is the main goal of the bid evaluation process.
I asked a 30-year veteran estimator, Kevin Pombriant, to give me an example of a project where he avoided a major problem during construction by using the above process.
Here is one of his notable examples:
“A new restaurant concept was being built inside a large brand retailer, and featured really high-end millwork, custom seating, booths and banquettes …this would have been a challenge for any one of our core subcontractors. While the scope of work process proved to be lengthy and very detailed, it was through this process that a small note was found on the drawings that indicated, “All Glass by Owner Vendor”. This was a typo, but since our team all knew the glass was part of the millwork package, and the subs didn’t even comment when we had it on our scope sheet, we saw a potential issue. Through the bid evaluation process, we wanted to know the price of the glass to report back to the client, and when we broke out the glass scope, we found that none of the millwork subs included the glass because of that tiny note … this would have been a big mistake–potentially losing over $45,000.”
The bid tabulation, bid leveling, and bid evaluation process typically takes place in a spreadsheet such as Excel® or using bid tabulation software. PipelineSuite® is a bid solicitation and bid management software platform that offers a bid tabulation and bid leveling module called PipelineTabs™. The advantage of using a bid tab program integrated into your bid solicitation program is that users have the option of allowing their subs to enter the line items and comments directly in the Scope Sheets. Another advantage is the time savings of not having to type all the subcontractor company names into a spreadsheet — all the bidders automatically show in the bid leveling screen, with bids sorted automatically low to high, left to right.
Whether using a spreadsheet or a software program, the key point is that estimators who invest the extra time trying to find scope discrepancies during the bidding process can avoid construction delays and costly change orders.
About the Authors: Kevin Pombriant is a 30-year veteran estimator who has written his own extensive bid evaluation program in Excel®, and owns the construction and estimating consulting firm, Inc.build™.
Rick Dill is a 35-year veteran in the construction industry, and also the founder and CEO of PipelineSuite® bid management software. For more information, visit www.PipelineSuite.com or email [email protected].