Why Hiring the Lowest Bidder is a Terrible Idea

Adapted from our friends at Dow Smith

 

We often see owners hiring architects to design a building or a specialized facility, then choosing the least expensive builder to construct it.

If you needed heart surgery, would you ask your friends who the least expensive surgeon is? Of course not! You would want to find the best qualified surgeon to ensure the best outcome—the one who has performed that same surgery time and time again with positive results.

Choosing a commercial building contractor is no different. But, we often see owners hiring architects to design a building or a specialized facility, then choosing the least expensive builder to construct it.

Here are 5 reasons why choosing the lowest bidder can actually end up costing you more time and money:

1. Choosing the lowest bidder does not ensure you have chosen the contractor with the most experience or the highest standards to build your type of project.

2. To keep costs low in an effort to win the bid, some contractors will “squeeze” their subcontractors to force their numbers lower. You have heard the saying, “You get what you pay for.” Subcontractors forced to reduce their numbers to win the contract and remain in the good graces of the general contractor may cut corners to remain profitable.

3. Contractors, subcontractors and materials suppliers can interpret the architect’s specifications and drawings very differently. So, one bidder can be significantly lower than another. The owner believes they are comparing apples-to-apples, but in reality, the lowest bidder may not be accurately estimating the project. Sadly, the owner usually discovers this much later in the process through change orders, which leads me to my next point…

4. Choosing the lowest bidder can often end up in disputes, which can cause litigation, delayed schedules, increased costs and shoddy workmanship.

5. Without the contractor’s input during the design phase, the actual bid can’t be determined until the design phase is complete and the project has been sent out to bid. This is typically where the owner is shocked to find out that the project cannot be constructed within their budget. This can result in the project being scrapped altogether, or having to go back to the architect to redesign the project to bring it back into budget. Again, more time and money lost and lots of headaches for the owner.

How should you choose your contractor?

Ideally, we highly recommend that the owner contract with their builder early during the design phase. In the best case scenario, we recommend that the owner hire a design build firm that will understand the owners goals and objectives and implement both design and budget goals early in the process.

You should choose your contractor based upon capabilities, experience, honesty and reputation within the community. You should also research who the best contractors are for the type of project you plan to build and interview those contractors BEFORE the design stage. Why? A competent general contractor will provide accurate cost estimating, value-engineering and other technical construction expertise through the concept and design stages that can help ensure the success of the project from the very beginning.

A Design Build contractor will work to achieve the design you want…one that can actually be built on the chosen site and within your budget. A contractor who knows that their future (and repeat client) work can be earned based upon quality workmanship, effective communication and top performance rather than their skill at low-balling an estimate is a contractor who will deliver a successful project for you on time and within your budget. When you follow this path, you gain a partner who is just as much interested in your success as their own. Have a project in mind? PBS can help you. If you have any questions please contact our design-build team at 855.672.4010 or click here. We look forward to serving you!