I suppose it’s a sign of the competitive times but the list of bidders on privately-funded projects have become longer & less logical than the crazy public market. At the bottom of the downturn in 2009 it was common to see 15-20 contractors chasing even small public jobs but that returned to the ‘normal’ 10-12 after a year or so. Now the demand for opportunities from contractors seems to have given owners (maybe their architects too?) the idea that having 10 bidders on a so-called ‘select list’ of bidders is good for them. Two projects out this wee illustrate just how questionable that strategy is.

The $7 million East Suburban YMCA job in Penn Hills has 10 contactors on it, ranging in size from PJ Dick & Mascaro to Kacin Construction, with a handful of $10-30 million/year contractors sprinkled in. The bidders are mostly union contractors but there are a few non-union generals so the range of subcontractors who will bid is going to be broad.

An even more illogical list is the group invited to re-bid the $3.5 million Aquinas Academy job in Hampton Township. This project bid a year or so ago & was awarded to Graziano but never started. Now it bids again to 10 contractors, including Graziano. The list also includes BRIDGES, Busse, Franjo, Landau, TEDCO, Just-Mark, W. K. Thomas, Nello & Turner Construction. If you worked all day to come up with a group of contractors that is more dissimilar I doubt you could do so. Turner is a $6 billion global contractor. Just-Mark & Thomas are almost never in a hard bid situation. According to the Builders Exchange this is the 2nd job in two years that Just-Mark has appeared on.

What owners don’t seem to realize is that extending the lists like this only creates an environment that hurts them once construction starts. It’s not just that the generals can’t reliably judge how their competition is going to approach the job, it’s that putting together such different kinds of contractors with radically different rosters of subcontractors means that numbers will be out on the street that are not actually competitive. In a reasonable market, the smart generals (and subs) who have some work will just walk away from this job (and still may), meaning the owner is left with a much better chance of getting a low bidder that has bad sub numbers, is counting on buying out the job hard & taking advantage of any weakness in the documents to extract money as the job progresses.

The problem with bidding in general is that it tends to reward the least understanding of the project at hand. If a bad number is on the street, the price (and performance) for that category slips to that level. It only takes a few of those to make a competitive job become a bad job. History had shown that putting together a list with 3-4 contractors of similar size & approach provides enough competitive incentives to get to the best price for the project. That price may not be the one the owner wants to hear but it’s almost always the right price. Asking more contractors to bid until you can hear the number you want isn’t going to change the right number.