Contractor Selection: Qualifications Based vs. Low Bidder
R. Scott Sandquist, AIA
Understanding that there are at least these two basic methods of selecting a general contractor can be absolutely vital information for an architect to convey to an owner. Why? Because the owner typically depends upon the architect for such practical recommendations. And the two most common contractor selection methods differ so significantly in process for the owner. But more important, they can also be expected to generate quite different results. So it is crucial for every owner to recognize that he or she always has the option of selecting a contractor based upon either a bidding process or low bid, or a contractor’s qualifications, experience, reputation, and related recommendations. | continue below...
Author Spotlight
R. Scott Sandquist, AIA, is co-owner of Construction Group Inc., general contracting firm in Lincoln, Nebr. The firm focuses primarily on private commercial work in both negotiated and select competitive-bid methods. Mr. Sandquist has also worked as an architect for private architecture firms and as an owner’s representative for the University of Nebraska and state government agencies.
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Contractor Selection: LOW BID
When an owner allows the contractor to be selected by awarding work to the low bidder, the owner should always be aware of several probable consequences. First, the competitive bidding process absolutely mandates that all successful bidders (including contractors, subcontractors, and material suppliers) must bid the work as cheaply as the designer’s drawings and specifications can be interpreted because every bidder can only assume that all other competing bidders will do likewise. This seldom recognized fact has a tremendous influence upon final construction results.
Unfortunately, some bidders may actually assess possible flaws or discrepancies in the drawings and specifications that can expectantly result in future change orders—less reputable bidders may attempt to make up lost costs resulting from being the low bidder. Remember, no one else was willing to perform the work as cheaply as the low-bidder! And that attitude can manifest in workmanship, indefinite materials, and change orders. Often, this process inherently positions the contractor in an adversarial role with the owner and the architect as soon as construction begins. So regardless of delivery method, the contractor’s integrity and reputation are critical.
Second, it is a common misconception among laymen that professional drawings and specifications automatically guarantee that each contractor must or will provide the same, identical end-results as every other bidder, and that those eventual results will be according to the owner and architect’s expectations. All too often, architects are reluctant to admit that nothing could be further from reality. First-rate drawings are still only representational at best! Yes, on very small and extremely simple projects that are thoroughly and accurately drawn, detailed and specified, identical results may be almost attainable in theory. But as complexities increase, differing interpretations increase.
So regardless of the accuracy or completeness of the drawings and specifications, the complexities of the project and distinctions between contractors and subcontractors will guarantee that no two contractors will ever provide identical results. Again, reputation and integrity are always crucial.
Finally, without a contractor’s input during design, the eventual low-bid amount remains fully unknown until after the design is completed and bid. So the owner and architect must uneasily wait until the design phase and bidding phases are completed before they know if their project was designed on budget, under budget, or, as is too often the case, considerably over budget. | continue below...
IT IS CRUCIAL FOR EVERY OWNER...
...to recognize ...the option of selecting a contractor based upon a contractor’s qualifications, experience, reputation, and related recommendations.
THE COMPETITIVE BIDDING PROCESS...
...absolutely mandates that all successful bidders must bid the work as cheaply as the designer’s drawings and specifications can be interpreted.
REGARDLESS OF THE ACCURACY...
...or completeness of the drawings and specifications, no two contractors will ever provide identical results.
REMEMBER THAT NO ONE...
...else was willing to perform the work as cheaply as the low-bidder!
Remodeling an existing area?
Adding on?
Contractor Selection: QUALIFICATIONS-BASED
Yes, of course every contractor is in business to make a profit if the firm is to remain in business. But aside from producing the essential earnings, in this method the contractor’s basic motivation is to serve and satisfy the owner and to help realize the owner’s budget and functional needs, rather than simply minimizing the contractor’s costs at almost any expense. Accordingly, selecting a contractor based upon credentials, reputation, and recommendations ultimately allows the owner to have more input and control over costs and the architect to have far more control over project design issues.
The Contractor can be selected to team with the owner and architect to provide accurate cost estimating, value engineering, and other technical construction expertise throughout the entire design phase. The contractor joins the architect as a vital player benefiting the owner’s team, rather than as an adversary resulting from being the low bidder. The contractor can provide value-added technical input during design, and through the construction phase as well. Many architects have learned that this methodology more often results in the lowest final costs to the owner because the contractor’s input can help maximize cost-effective design. And when the design is completed, it is known that the project has been designed on budget, and with maximum value to the owner.
Finally, a contractor who knows that future work may be earned based upon his or her service, performance, reputation, and final results rather than his or her skill at providing the cheapest solution allowed is a contractor that will deliver a successful project to a satisfied owner. Contractors that depend upon reputation and qualifications-based selections are focused upon satisfied customers. | end of article
SELECTING A CONTRACTOR...
...based upon credentials, reputation, and recommendations...allows the owner to have more input and control over costs...
THE CONTRACTOR JOINS...
...the architect as a vital player benefiting the owner’s team, rather than as an adversary resulting from being the low bidder.
THE CONTRACTOR'S INPUT...
...can help maximize cost-effective design.
CONTRACTORS THAT DEPEND...
...upon reputation and qualifications-based selections are focused upon satisfied customers.