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January 2015   

Pick or Pass?

By: Vince Bailey

"Did you ever have to make up your mind? Pick up on one and leave the other behind …”—John Sebastian

It’s been a long, agonizing trudge through the badlands of the downturn, but I think it is now relatively safe to say that we’ve finally turned the page on that grueling chapter in our professional lives, in spite of all the help from our government. Here in the Southwest, construction opportunity has seen a steady increase for well over two years now—a good sign by anybody’s reckoning. In our region, health care, gaming and hospitality are feeding the revival, with an unexpected jolt from office TIs—a diverse combination forming the remarkable recovery that has graced the Valley of the Sun. And judging from the articles I’ve been reading in AWCI’s Construction Dimensions, that welcome phenomenon is not limited to our region by any means. Backlog is burgeoning everywhere and, while margins are not yet at their pre-recession levels, they are enjoying a healthy uptick from the doldrums of yesterday.

With all of this encouragement in the environment, I’m sure I run the risk of earning the condemnation of my cohorts in the industry if I raise a complaint (Vince, you’d bitch if they hung you with a new rope!). But I’d be remiss in my debt to our readership if I did not cite the conspicuous creation of a serious dilemma in all of this newfound prosperity: too much work, not enough estimators. Cautious contractors have taken a wait-and-see approach to the upturn and have tried to bid more work with a smaller staff. Good plan for tougher times, but it must now be apparent to these gun-shy drywall subs that there is more opportunity than can be covered by current resources.

Of course, the reflex reaction to this dearth is to hire or train more bidmeisters, right? Maybe, but there is an alternative response that many clever subs have seized upon: They are simply being more selective about what jobs they bid. They’ve abandoned the tactic of bidding everything on the radar screen that was the popular approach to the downturn, and have adapted to the greater volume by putting a finer filter on what comes through the pipeline. The following is a recap of the criteria they use in their discriminating approach.

Size. Clearly, the job should fit with the current operational capacity of the sub that’s bidding it. If the backlog already carries one or more multimillion-dollar anchor jobs, it might be wise to consider a pass on bidding that other monster project that shares a schedule overlap with the bird in the hand. Sudden expansion can turn a promising project into a losing proposition overnight. Conversely, it might be a waste of time for a larger commercial outfit to bid on small retail TIs that are notoriously open to low-balling trunk-slammers. Size factors almost always enter into a decision whether to carry or punt, one way or another.

Scope. Similarly, the job should conform to the capabilities of the bidder. A drywall/paint/acoustical outfit that specializes in tenant interiors might be at a disadvantage bidding a core/shell job against a drywall/EIFS firm that can offer a broader package. By the same token, that same exterior-leaning contractor might do well to steer clear of buildouts that are heavy in acoustics.

Distance. Disadvantages to bidding out-of-town work are manifold. Difficulties in managing from afar and added expenses such as travel time, fuel, lodging and per diem are all significant disincentives when considering jobs to bid in the hinterlands. I know of a number of wise drywall contractors who refuse to bid anything outside their city limits.

Bad bid docs. OK, I should say really bad bid docs, because most of the plan sets that design teams are turning out these days are pretty bad, and a sub who opted out on all poor plan sets would bid precious little work. Some drawings, however, are absurdly sketchy and their degree of ambiguity is good cause for rejection. Most contractors and estimators recognize that contradictions and errors on the plan pages present a greater risk to the bidder, and risk is a cost factor that may not be recognized by the competition. Why waste the time? The best policy is to take a pass on the cloudiest docs.

Bad general contractor. I know it’s hard to believe, but certain GCs have a bad reputation on one or more issues. Slow pay, poor coordination, reluctance to issue change orders and unsafe working conditions are just a few of the black marks that these stinkers earn. But bad news rides a fast horse, and a GC with bad rep can find it difficult to raise an acceptable field of qualified subs at bid time. Most good drywall subs have a blacklist for these guys and decline their invitations to bid on a regular basis.

Of course, the degree to which a drywall sub can exercise this kind of discretion also hinges on the type of relationship he shares with his regular clients. He may find it difficult to decline an invitation to bid a nasty job with a preferred GC, but begging off with a little bit of diplomacy is better than wasting time—or worse, taking on a loser.

Overall, selecting the best jobs to bid may reduce total revenue somewhat but should ultimately increase profitability. And profitability—well, that’s the bottom line.

Vince Bailey is an estimator at E&K of Phoenix.

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