I considered calling this column How Those Incidental Pre-Contract Changes Always Seem to Go Fuzzy—Part One, but there just wasn’t enough room. Similarly, one page doesn’t allow me everything I want to say, so this subject will be covered in two issues of this magazine.
It’s been more than a few times now that I’ve touched on, just in passing, the subject of post-proposal/pre-contract changes in the course of writing on some broader, related topic. But this issue of adding a laundry list of questionable items to a proposal as an afterthought is so prevalent and so critical, it easily merits its own column—even two! Assuming that a subcontractor’s estimating department is typically going to handle such interim changes and will probably be trying to communicate them to an operations team, I feel it is necessary and proper to share my take on this charade here and now.
Of course, it’s perfectly reasonable to expect that a general contractor’s estimating department is going to approach the heir-apparent subcontractor with a proposition to add items that were not included in the original bid proposal in order to close the gaps in their buyout process. And it is true that this can be a sweet opportunity for the estimator on the subcontracting side to feather his nest a bit. However, more often than not, the sub ends up on the losing end of an ambiguous or inferred agreement. And it should come as no shock that the GC wants to fill those (perhaps unanticipated) holes in his program without adding any undue burden to his budget. But let the subcontractor beware: Many GCs are quite adept at beguiling an unassuming sub into accepting some rather nebulous "informal” agreements that are usually neither incidental nor insignificant.
The reasons why this can occur in the first place are several, but most of the causes are related, at least indirectly, to the setting—that is, the time and the tone. I’m referring to that tentative window between bid day and formal award in which the subcontractor has received encouraging verbal notices, but isn’t quite there yet. This period of backlog limbo tends to engender a sense of estimator angst, when many faint-hearted quotesmiths feel inclined to ingratiate themselves to their prospective clients. Then too, there is the sense of urgency created by the real or perceived notion that the completion of a contract package is subject to time limits, usually suggested or self-imposed by the GC. It’s plain to see that conditions are ripe for the nefarious GC to set his insidious plans of enticement into motion.
The means and methods that your prospective client will use are invariably conveyed in casual and friendly tones. It is to the GC’s advantage to gain as much ground as possible without the annoying encumbrance of a paper trail. And so the unexpected phone call is the instrument of choice in his arsenal. He’ll call, and amid some friendly small-talk, he’ll ask a casual question or make a verbal request. "Oh, by the way,” he’ll mention off-handedly, "you included such-and-such in your bid, right?” He knows full well that you specifically excluded such-and-such in your original proposal, but you’re unprepared and unable to defend against the strong suggestion that your competition had included it and it may be a deal-breaker. Or he may ask for a quick-and-dirty price "just off the top of your head” on what so-and-so would cost to add to your scope. He’ll call and ask for some shoot-from-the-hip pricing on some installation that you don’t have a comfortable feel for, or for a product that you’re not terribly familiar with, and you want to appear knowledgeable and obliging. Oh, and then there’s the notorious "just give me some unit pricing to plug into my budget” line that’s sure to resurface somewhere down the road as a hard number.
So, are you ready to give up the farm and chalk it up to good customer relations, or are you ready to use pre-contract adds as an opportunity to maximize potential profit?
If you are the stout-hearted bean-counter that I think you are, and you’ve chosen the latter path, then keeping a couple of simple principles in mind will ultimately lead you to more specific ways to guard against the pitfalls being devised for you by your GC counterpart.
First and foremost, in spite of all friendly overtures made by your prospective customer, your objectives and his, at this juncture, are by no means mutual. I’ve tried to underscore what should be obvious by portraying your counterpart in caricature as a mustache-stroking villain. But many a valiant price-peddler has been led astray by a few friendly and encouraging words spoken over the phone and lost sight of the fact that the relationship is fundamentally adversarial at this point. The two of you are competing for a limited resource—never forget it.
This will lead you to the next self-evident axiom: Ambiguity is his ally, and informality is your enemy. Your post-proposal agreements should be just as clear and concrete as your original bid.
Next month’s column will present more specific "dos and don’ts” in eliminating ambiguity, and putting you, the subcontractor, back in the lead role of the post-proposal/pre-contract dance.
Vince Bailey is an estimator and project director for MKB Construction, a Phoenix, Ariz.–based wall and ceiling contractor.