Just came back from a meeting with an Architect. Thought, instead of taking it out on my crew, I would share with you all. Scene: Project Bidding Process. The A has over designed and we need to bring the cost of the job down by 15%.
1. It’s a small job so I did not include a line item for General Conditions. This usually applies to jobs which will last over 4 months. It customarily includes variables such as dumpster costs, site protection, snow removal, etc. The A proceeds to tell me that my P&O is equal to the other GC’s Gen. Cond. plus P&O. Did he expect me to calculate a line item and then subtract it from the contract price? No matter how you dress it up it’s still there.
2. The A thought that it would also be a nice “gesture” to lower my P&O. “After all, the Client is willing to not do a few of the things she originally wanted. It’s only reasonable that I give in a bit too.” I would like to use this logic whan I am buying a car or at a restaurant – “Since I can’t afford to order everything I like on the menu how about a discount?”
3. I was then told to revise my bid, showing ingeneous ways, clever tricks, and names of other supply sources offering same materials at a discount, to lower the final cost. Yeah, right. How about if provide free consultation on a continuing basis while another cheaper/ less experience GC does the job. I told the A that I could trim the price proportional to how they decided to trim the Scope of Work. Sign me on as the GC by giving me a non-refundable deposit (10%). This reserves my “time window” for the project, in 3 months, and insures that I am compensated for my efforts involved in cost cutting. The Client can still go to another contractor if we can’t agree on a price but with a 10% cost. I customarily only submit one Bid Proposal and will do some slight revision to one or two items. People have suggested that I charge $X for a second and third Proposal but I am in the buisiness of building, not estimating jobs and dispensing cost cutting ideas to anyone who asks.
4. What do you think? When a Client or Arch is comparing your bid proposal with another GC’s, is it improper for you to only engage in this comparison discussion if you have the other GC’s Bid Proposal in front of you? At the last 5 Bid Proposal reviews I went to, they were so bold as to actually have the other GC’s proposals in front of them for the comparison. So many times they are looking at the bottom line and not reading what is in the text of the Scope of Work.
5. I understand that it’s the Client’s role to get the lowest price possible. Hey, if you knew that you might be able to save $$ by just asking you would be a fool not to. It might be the most profitable 5 seconds of your life. But having written all this I further realize that Client Management begins with the first telephone call. How the Agreement is negotiated sets the precident for future negotiations.
6. I was highly recomended by another A but the Client still wants more referances. If it was a million $ job I would say sure, fine. But for something this small I try not to ask for another referal (arch or Client) preferring to ration them to the larger jobs. I have found referrals have a cost (Oh I’m so glad you called. Would you be a dear and fix XYZ? I have guests coming and…) and as a rule my Clients have never let anyone walk through their homes (very private people – sometimes confidentiality agreements are required) and I am not permitted to give out their tel. #. Having the old Client call the new one is a coordination nightmare and only worth it on larger projects.
Glad to get this off my chest. Please comment and offer alternatives.
Replies
Here's how it works....
You spend valuable time putting together a bid, as do the other contractors and whoever is lowest of the qualified bidders gets the job.
This unethical practice of playing two or more contractors against one another is only possible if the contractors are dumb enough to play.
Call the architect and tell him you put in an honest bid and if the architect or owner wants to delete or change items to lower the costs then you will look at that with them but your costs are your costs.
Agreeing to lower them is the same as saying my original bid was inflated.
Gabe
--------we need to bring the cost of the job down by 15%.---------
And your response is: "You mean you (the Architect) and the Owner need to work on this. Why am I here?"
-------a nice "gesture" to lower my P&O.----------
Time to "remember" that you have other, more profitable places to be..
---------------- told to revise my bid,------------
hilarious, And what's the point of a bid?
----------------other GC's proposals in front of them for the comparison-----------
Time to run! You'll never win, make a profit or sleep well again.
What a lowlife of an Architect to engage and encourage this kind of behavour. Toss that dude from your rolladex........
We use a professional services agreement that states to the owner that we will work on budget design with them and the architects for an hourly fee, refundable if we end up building, if not they pay for our time cause it is of some value to them in the end anyway.
This is yet another reason we don't do competitive bidding. The Architects get paid, but what about us? We're just a number. It's rare we ever meet the prospects. I'm not doing anything until I meet all parties involved. If a prospect feels the need to bid it out, than they should pay for each one. This isn't like buying a car. Everybody does things differently.
If this prospect is going to choose the lowest bid, this should be a warning flag in itself. Do you know of an architect design project yet where something didn't get overlooked. They're not going to put out any more than what you have agreed to in the contract. RUN WHILE YOU STILL CAN!
Here's my instinct.
The archy has told the client, "I think we shoiuld use Frankie but let me see if i can whittle him down a little for you"
That way, even tho he overdesigned for the budget, he can still come out smelling like a rose. He is the source of the problem. Leave it in his lap.
I might say that the solution is to get in direct contact with the client without him in the way so you can sell yourself to them but as you describe the "small job" aspect, it probably isn't worth the hassle.
You told him the right thing, now stick to it.
Excellence is its own reward!
"The first rule is to keep an untroubled spirit. The second is to look things in the face and know them for what they are." --Marcus Aurelius
this is of the class of architects known as "scumbags"... anything to bring the project price down without cutting the costs..
a good building team is a knowledgeable contractor, a good architect , and an owner with a realistic budget..
hey, one out of three ain't badMike Smith Rhode Island : Design / Build / Repair / Restore
Frank
grab the architect where it hurts most and squeeze real hard.
The process you describe is the top of the slippery slope, the next request from this bozo will be "I can garantee you the job so long as you sling me 10% of the final cost, with $500 up front". Walk away now. Protect your reputation, it's your most valuable asset. It's only ever OK to negotiate your price in the context of a change to the project scope, never in comparision with another contractor's bid.
Ian
I've seen so many contractors give a bid then back peddle on the price once there is a hint that they may not get the job. This rampant practice has everybody trying to beat us down on price like we're selling a used car.
Mike makes a good point that was on my mind as I was in the field yesterday and that is:
Every story of success in the Design/build business always talks about the "team concept" -------the Architect,--- the Builder/G.C.-----the Owner---------The idea that the success of the project is due solely on the willingness of ALL parties working together to insuring everyone one comes out a winner.
Ya feel like a team player on this one?
If an Architect doesn't convey to me a sense of dependance on MY expertice, I walk. Plenty of Architects out there..............
Rah, Rah... Go Team Go!
Just came back from a breakfast meeting. Scene: Submitted a Bid last week. The Arch and Client wanted to meet and go over the Proposal. 2 1/2 hrs!!!!! I priced the job at $375K and they tell me I am double one contractors price and significantly higher than a second's. So I ask them why am I here. "We wanted to give you an oppertunity to 'Explain' your Bid." As it turns out I bid the specs and the other GC's bid cheaper alt. specs. (EX: 24" x 24" x 3/4" sandstone $48/sf vs 12" x 12" x 1/4" sandstone tiles from a discount store$8.50/sf.) Sometimes I think I know more about the project when bidding than the Arch who designed it. This is always true in regards to the Client.
I did bid on allowances for custon Teak and Cherry closet doors and interiors. The others did not even price cabinetry or other woodwork unless they had detailed drawings. But the Arch asked me to submit a best guess number so the bid would look more comprehensive. Today he asked if we could bring that number down. I explained that's why we refer to it as an "allowance".
Once again, the A&C had my competitions' bids in front of them, but would not let me take a look. Instead they recited from their notes. I sat through the meeting fluctuating between anger-fustration-disbelief-concern. That's when the Arch let it slip that the other two GC were commercial GC's. No offense to you commercial guys but commercial and residential work are two completely different worlds. They have about as much in common as do electricians and plumbers.
The meeting ended with me declining to "rebid" the project with a new Scope of Work unless they were willing to retain me as the GC of their Team with a non-refundable10% deposit. For that, I would consult on what the various costs of the job are, and make recommendations on how to trim the design while maintaining its feeling. I get the Team concept and run my co. as a Team unit. I try to act as a Team Player with my Clients but recently am not getting team players. All parties working together ... I have a Dream...
I know there are a lot of GC's and Subs on this site but I want to hear from Archs (as if)/Clients/ DIY'rs. What do you look for when negotiating an Agreement with a GC or Tradesperson?
This type of situation has not happened too often in the recent past. People who hire me are already familiar with my Service. However, having no less than 5 miserable prospects in a row caught me by surprise me. I guess we all hit a bad patch now and then.
I come from a gov't procurement background and if memory serves, what you described is called auctioning. for this post call me a HO.
Bad, bad
the architect (who seems to be acting as the buyer (yea I know, often done) doesn't appear to know what (s)he is doing. or if they are doing that purposely, I wouldn't want to use them, they would cost me money.
Unwritten rule for contractees, contractors who enter an agreement and are going to lose money spells trouble (yes, there are exceptions in the world of business where you intentially are not going to make money on a particular contract)
this sounds like a lose-win-lose propsition (HO-Arch-GC)
it doesn't sound to me like you're bidding on the same job as everyone else
"The meeting ended with me declining to "rebid" the project with a new Scope of Work unless they were willing to retain me as the GC of their Team with a non-refundable10% deposit. For that, I would consult on what the various costs of the job are, and make recommendations on how to trim the design while maintaining its feeling. I get the Team concept and run my co. as a Team unit. I try to act as a Team Player with my Clients but recently am not getting team players. All parties working together ... I have a Dream... "
sounds to me you did the right thing.
bobl Volo Non Voleo Joe's cheat sheet
---------------"what you described is called auctioning."--------------
Perfect Bob, just perfect. Mind if I carry that one around in my hat?
---------------"sounds to me you did the right thing"-------------
Again, couldn't agree more, your right on...............
Mark,
be my guest
I didn't make it up, it's what I was taught NOT to do.bobl Volo Non Voleo Joe's cheat sheet
Good for you Frankie.We have all been there to some degree.Let us know how it turns out.
Bill
Commercial contractors bid to plan/spec only. Leave something off the drawings and it doesn't get put in the bid. You also have to be careful how you spec. out materials/methods. If there is a loop hole for something cheaper it gets put in by the contractor.
I spent a few years in design/project management of tenant improvements for office/manufacturing buildings (100k+ sqft). Constant grinding of the contractor by the architect, project manager & clients project manager is the norm in commercial so they do what anyone would do, just bid the plan/spec. to the T. Puts the pressure on the architect. During the bid process, contractors spend lots of hours in meetings going over their bids as well as all the time just generating the bid itself and all this is done for free if you don't get the job.
Ditto your comments ....finished a stint this summer as an estimator for a commercial gc ........... Pepto Bismol was my drink of choice ........
that's right.. but Frankie says the other bids were non-responsive ( they didn't bid the same specs and left out allowances )...
my response to the architect would have been for him to get new CORRECT prices from the other bidders OR give me a new scope of work ... with new specs...
some of the "scumbag architects " i've bid for ( when i was young and foolish ) had no intention of hiring me.. they were using me to prove up a price for their favored contractor.. who was going to get the job and make his profit in Change Orders...
other architects i've worked for were great... they designed the project to the client's wish-list.. and then worked with the bidder to reduce the scope to meet the Owner's Reality budget...
bidding is a crap shoot at best.... better to negotiate than bid... how about the old.. get three bids and pick the middle one ? as if that had any better chance of being the true price picture than the low or the high ?
the architect has a reputation.. either he / she is a square shooter or they are not..
in the General conditions, what are the requirements for Insurance ? will he be checking for WC, GL , will the HO add a Builder's Risk addendum ? what other indications is the Architect exhibiting that says he/she is on the up & up ?Mike Smith Rhode Island : Design / Build / Repair / Restore
I couldn't agree more.
Personally, if you are bidding a project and have no relationship with the architect or client then most of the time you are simply there for a reality check against the contractor that they want to hire.
The entire time I worked there I can only remember ONE time that we ended up hiring a GC that we had never worked with before. Most of the time the clients would just go with our reccomendation as long as the cost was reasonable and in-line with the other bids.
Ok, I get what each of the GC in this discussion are saying, so I want to give all interested parties a chance to set an owner straight right from the get go. I will be requesting bids for dry wall (new construction on 3200 sqft home) and founation work (daylight basement) and want to do this right from the start. In an ideal world (e.g. one that protects both the builder and owner) what does the ideal contract look like and what should/should not be in the contract or bid packet? I'm not looking to screw anyone (and I don't want to be screwed) and the lowest bid isn't necssarly the bid I'll go with. I want the job done right and with quality work, period. nothing more, nothing less.
any and all thoughts are appreciated. thank you!
Frankie
Like bobl I also have a government procurement background. Contractors bid at their own expense and expect to win maybe one in 5 bids. For really big jobs bidding costs millions.
In essence a commercial contractor tries to determine where the client will acceopt the cheapest possible outcome or will not force the issue, and where the quantity of work required has been substantially underestimated. These items get loaded up and the main items shaved in order to win the job. So a contractor will plan to loose $1 / yd shifting 500,000 yds of earth, and price another item at $1,000 each, where the client has estimated 500 units, but the contractor expects to have to deliver 1,000. The Net effect on the total bid price is zero, but the contractor if the client needs more than 500 of the $1,000 gizmos, each extra gizmo returns a $950 profit to the contractor. At work our legendary contract is the one where the client knew that the bid price was about 60% of the actual cost of doing the work, the contractor assured the client that he knew he was bidding well below cost and was prepared to take the loss "to keep the construction crew together through a lean patch" You've probably guessed the punch line, the contractor finished the job for the amount bid, then lodged a claim that gave a whole new meaning to "latent conditions". The agreed settlement amount, not the claim, just the final cheque, was about 250% of the contract value.
If you're going to compete with commercial contractors, you can be upfront with the client and explain that you work to a different philosophy or you can play the commercial contract game. Things like "the plans said hardwood, balsa is hardwood - it says so here in this species identification chart - oh, you want something else, I can do any timber you like but I'll have to charge you for it" - now charge the client triple what it costs you as an extra.
keep up your standards
Ian
Dear Frankie:
I feel your pain. You have an accurate idea of what it will take to make this smaller job happen and what you need to make on it. Now you are being placed between the dog and the hydrant on this by the architect. I would stick to my guns unless you feel that you really need this job for publicity or you owe someone. We both have been involved on jobs that we took against our better judgement, only to end up working for considerably less than we would have ordinarily made on something else. Stick to your guns!
Jeff
There are good arch's and there are bad arch's. I don't want to pass judgement on the one you are working here but this is how it works: The client hires the arch to design the work on or under budget and to defend the owner's interest in the process of bidding and construction. It is not ethical to use one contractor's numbers to play the other. It is acceptable to compare and study the bids before they select a g.c. It should all be there on paper how the bid was put together, it does not take a genius to see that one bid is apples, another is oranges. As an architect, I look for these things with the owner. Then there are the interviews with the low bidder(s)before the contract is awarded to be sure everything is there - everyone makes mistakes - not to use one against the other. I do not expect the contractor to insert line items in their competitive bid because the arch missed them and where not included in the drawings, no matter how obvious they are, (they will not be low bidders if items are inserted which are not part of the docs). The base bid should be just that. If items are missed, it is helpful to qualify your bid making everyone aware that such items are missing. This sends a message to the arch and owner that the other g.c.'s may or may not have added the item to their bid and to check. It also tells them you are thorough in your work - attention to detail. If Alternates are requested, those should be on a different sheet of paper, not part of the base bid. The commercial contractors bidding the project you mentioned should now better.
You are right to stick to your numbers if you feel they are fair. One thing that can be done with owner and arch is to have an open book meeting in which they see what your costs are for the trades and materials. They can then decide what to cut out, what to leave in. This is done only, and only if, you have signed the contract. Can't do this for another contractor's benefit.
The arch's responsibility is to get the job in budget. If it is over designed he/she is to provide means of cutting costs, with the chosen contractor's help. Maybe this arch does not want to redesign 'cause he would have to do it for free since he did not meet the clients goals; that is between the owner and arch. We recently value engineered 3M out of a 24M project - it could not have been done without the g.c.'s help. Sure the arch. can ask you to reduce you OH&P, and sure, you can always say NO, can't do it. Nobody likes change orders - too much paper work, but they will happen if the low bidder is chosen automatically.
The team concept is very important in a successfull job. It is too bad a lot of projects begin with this adversarial tone. It does not accomplish much. The arch has to get at a comfort level with the g.c. and vice versa; trust needs to be established and it will not happen in the first meeting. You are doing the right thing by keeping your integrity in this case.
Marcello
Oh, man, speaking as an architect, I always hate hearing these stories about my own kind. I think Marcello is accurate and I agree completely with his post. I hope you stick to your guns. An architect's job shouldn't be to make the contractor earn less money simply for the benefit of the client.
BTW, I would be very careful about this Owner. I recently decided to try to analyze what the common factors were that my "bad" or "difficult" clients had in common, which might have been an indication at the first meeting. The ONE thing that they ALL have had in common is that after a very strong recommendation from a friend or contractor, after likely seeing some of my work, spending a couple of hours with me, they STILL wanted more references. I suspect that this is an indication that trust is an issue, or that they lack confidence in their own judgement and need validation by others. The prospective clients who were able to make a decision to hire me after the first meeting have all turned out to be wonderful. No exceptions.
Richard
I'm in high-end custom homes & renovations and I never use the word PROFIT in my bids. I've found that if you indicate even one dollar of profit in your bid, some client, architect, consultant, construction expert, etc, etc will interpret profit as unreasonable and undeserved largess for the multi millionaire builder. I only use the words "Overhead & Supervision" , I guess it makes them feel that it is requiring expense and effort on my part as opposed to just going to the Title Company and collecting unearned, unreasonable profit.
I've never understood why clients making $300 to $3,000 an hour begrudge a contractor $25 to $35 an hour for the 3 to 4,000 hours they put in, in their clients interest a year.
Richard, off the subject of the thread, but I was curious what would it cost rough numbers to have an architect design a custom home for a 5000-5500 sq ft home?
I know its not a lot of detail, just looking for a range?
Whoa, yes this is off thread! Probably better to start a new one. But I'll try to be helpful here, which isn't going to be much. This is a little like asking how much would it cost to have a contractor build a 5000-5500 SF house. It depends.
It can vary all over the map due to differences in engineering required (one-story vs. two vs. basement, vs. flat vs. hillside), level of detail drawings required (down to the gnat's _ss?), construction period services included?, reputation level of architect, complexity of local review process, additional consultants required (landscape? interior designer? lighting or AV designer?) etc.
However, around these parts (Bay Area, California), you'll see fees probably in the range of 5%-15% of construction cost when it's all added up, although not implying that architects are all working on a percentage basis. As I said, this probably doesn't help too much. Why don't you start a new thread with more specifics and find out what other folks are paying. (I'd be interested, too.)
Richard
Frankie. Speaking as an owner of a new build project starting next spring...
I did NOT bid my Architect!
And... I am NOT bidding my GC.
They were both chosen to join my team by using referrals, references, interviews, and visits to past/current projects.
The GC is now involved as we finish the construction docs. The TEAM is working on them. I believe that I have picked the correct path to success.
BTW, I am a commercial artist / photographer by trade. I have to BID for most of my jobs and I HATE it! I would prefer to be hired based on my talent and craftsmanship.
I am sorry to hear of your situation.
--B