September 2005

How do you handle knowing that your bid to the winning general contractor was the lowest, but you still didn’t get the work because the GC shopped your numbers to get an even lower price … and then ended up calling you to fix the low quality, lower priced work?

We are fixing problems without giving any warranty to the GC and charging 150 percent to 200 percent of "normal” price. —Anonymous, P.B.S. Plastering, Inc., Des Plaines, Illinois

Two things: (1) Never bid to that GC again, or (2) Give that GC a bid that is 20 percent higher! (You aren’t going to get the bid anyway.) —Marty McNamer, McNamer Construction Systems. Inc., Dubuque, Iowa

First of all, we need to know our contractors and which ones shop our numbers. We will bid them with higher bids and give our best number to our friendly GCs. If it did happen that we got shopped out and then later on during the project the GC called for help, I would politely tell him I was too busy and could not help him. —Larry Cotten, Suncoast Wall & Ceilings Systems, Ocala, Florida

Answer: Unprintable. Mostly comprised of four-letter words. —Jim Keller, Grayhawk LLC, Louisville, Kentucky

Learn from it. Here are some examples of what might have happened: (1) You gave him your bid with too much time to allow him to shop your number. Don’t give him the bid until you are the last one received. (2) You don’t have a good relationship with the GC. Improve that and he will go to you to "shop” and allow you the final look. (3) The GC you are dealing with is just slime. Count your blessings and let your competitor have the project, knowing that he will have a tough project. When they call you in to fix the project, have your hourly rates at the price that you can make a good profit. Since the GC was trying to make more money and shopped you out to the competition, then reward that practice with the added cost of the fix. —Carl Fernald, Precision Plastering, Lake Elsinore, California

I have had contractors use my number to get work and then shop it to put money into their pocket. I usually use this as an opportunity to bring two people together who deserve each other by refusing to bid with the contractor any longer. I have finished work that my competition has started but as far as I can remember, never on a job where I felt like my number had been shopped. I think I would decline the invitation. —Dale A. Arnold, A&K Specialty Contractors, Inc., Marion, Illinois

We do not work for generals who shop pricing; most of our work is negotiated. However, we do receive calls to fix our competitors’ work, and we always elect not to help out with that kind of situation. They should hold the low bidder’s feet to the fire. It’s his problem.—Shaun Patterson, S. Patterson Construction, Inc., Bakersfield, California Charge as much as you possibly can for the repairs, and thank the GC for providing you with such high margin repair work. Advise the GC you will not be sending him competitive bids in the future since they are bid shoppers. But please keep calling you for the high margin repairs that result from the way they do business.—Mike Wilkin, Wilkin Insulation Company, Mount Prospect, Illinois

Sounds like some of the general contractors we know. Here’s how we deal with them:
  First of all, after you’re positive the GC shopped your number and awarded the job to someone else, refuse to bid future work with him. As far as fixing another contractor’s shady work, let him [the GC] know that warranty work should be done by the original installing contractor. If they can’t hire/get him to correct the work, let him know you’re not taking on any warranty/fix-it work that another contractor didn’t install correctly. Let the general contractor figure it out.
  There is plenty of work out there. Turning down the GCs that shop our numbers have proven to actually increase our marketability with the honest GCs. The honest general contractors out there actually respect and value the time you’ve put into an estimate for them and, in turn, won’t shop your number. It is these guys you want to work with. Let them know you value working for them. —Mark Dube, Faribo Stucco & Plastering, Fairbault, Minnesota

As it is said, "If it happens once, shame on them (GC). If it happens twice, shame on you.” There is NO worthwhile way to deal with dishonesty, except not to. —Don Burke, Southmost Drywall, Inc., Winter Park, Florida

This has happened to us and I handle it by going in and doing a great repair job. I refrain from making comments like "I told you so” or "You get what you pay for,” as much as I want to rub the GCs nose in it! I don’t even comment on the low bidder’s shoddy work, I just go in and cheerfully do a good repair and ensure to clean up well after myself and then see what happens. Now that the GC has seen my good attitude and good work, I hope to get his next job. If he shops the work again and goes with another low bidder that does bad work, I either go way up on my repair cost or politely turn down the offer to do another repair job behind a low bidder. No matter what, I never criticize anyone or grumble about losing a bid. I always keep my dignity and ALWAYS act professionally. —Joseph "Mike” Cone, President, Southland Industries Inc., Thibodaux, Louisiana

You get what you pay for … .
We are all guilty of and have been casualties of price shopping and poor quality, either with subcontractors, the tire store or the tree pruner, it is human nature. This behavior is so innate many of us are unaware and would make every effort to correct the practice if made aware.
Some people choose to conduct business this way. You can choose not to work with them. If you choose to work with them, remember they anticipate you will treat them as they treat you. It could be an opportunity to show them how nice an honest business relationship can be.
Whatever you choose I would not enable the practice by continually helping out. If they don’t get it after one or two times, they are not going to get it. —Marc Duncan CEI, Dundee Co., Dundee Falls, Raleigh, North Carolina

I have been in this situation before. I handled it in a very sympathetic manner toward the GC. I walked the job and gave my opinion as to what should be done to make things BETTER for the GC, had employees pull off from other projects, worked through the night and at the very end, submitted an invoice payable upon completion with no warranty, no guarantee and an incredibly inflated rate for the accepted Time and Material Contract. Then again, that’s just me. —Anonymous

This is an everyday occurrence for us! A friend once said, "Quality, service, price … pick two.”
A general contractor or owner who shops your number and finds someone who will do the work cheaper is already showing his cards. If he does so at the beginning of the job, what makes us think he’ll be any more ethical with change orders or your final money? We tend to drop them from our bidders list.
I just got a call from such a contractor this week crying that we won’t bid to him anymore … too bad for him. We all have to live with decisions we make in life and their consequences. Unless you operate in a small town with few customers and have to have them on board to be able to survive, choose your clients to minimize your pain. Where we are, there are many contractors in several jurisdictions.
We occasionally take a poll in the office of who we want to work for and who not. Sometimes the bookkeepers have a different perspective than the project managers or contract administrator or superintendents. Having various perspectives of the desirability of a client does several things for our company. We are forced to consider a bigger picture, we are not blinded by one stupid blunder by an individual person or his decision made by the client, and our employees learn that their opinion is important to the operation of this business.
I have been blinded in times past by the volume of business available from a single general contractor. But upon further reflection, and experience, and the P & L statement over periods of time—sometimes they make a convincing case for dropping that contractor from our client list, especially when the cost of late pay and heartburn are factored in. —Robert A. Aird, President, Robert A. Aird, Inc., Frederick, Maryland

Refuse to bid the general contractor ever again. A leopard does not change its spots. If the GC will cheat you on bid day, just think what he may do to you over the course of a job. Contracting in this century has become a partnership, and you have to trust your partners, owners, subcontractors and general contractors alike. Good luck. —Curtis Yoder, Vice President/CFO, Contemporary Construction Services, Orlando, Florida

Every project manager for a GC is different. Best case scenario: You set the repair rates and [with the understanding that] it’s the GC’s belief that a subcontractor is a commodity you can buy.
This sub feels that his company’s product and service are repeat business and relationship driven. We believe in the future; we cannot rework our competition’s product. It erodes our respected relationship. Please understand that we will do this work only if this helps build a relationship with the GC and the project manager. Ask the project manager if he understands what you’ve said. To build this relationship, ask if he wouldn’t mind [telling you how your numbers compared with those of your competitors, the day after the bidding is done]. His response will set your relationship for the future. —Fred Boeheim, President, Gypsum Systems, Inc., Elma, New York