Vince Bailey / November 2020
… when you’re old enough to repay but young enough to sell.—Neil Young from “Tell Me Why”
Is it an adaption to the dreaded COVID-19? Is it government stimulus? Is it a reluctance to invest in new construction during a period of uncertainty? Whatever the reason (and they’re probably multiple), there seems to be a surge in invitations to bid for remodels, retrofits and renovations. Oh, and let’s not forget their close cousin, the interior buildout—basically just a remodel without the demo. At a time when commercial drywall subs are carefully scrutinizing their many choices in bidding work, they might be well-advised to resist the instinct to turn up their noses, but rather to consider the positive aspects of retro work.
A first positive point resides in light competition. Considering the above-mentioned tendency on the part of many drywall bidmeisters to shy away from remodel work due to the mystery factors, quantifiers who do bid renovations can be comfortable with pricing worst-case scenarios, fat contingencies and healthy markups, knowing that the few (if any) competitors for the work are likely doing the same.
Another upside that stems from this dearth of bidders is a grateful GC. Apparent lack of interest often starts the GC’s pre-con team to worrying if they are going to get any coverage at all on, say, a small hospital remodel. A sub’s acceptance to the ITB in these cases tends to spark a lot of goodwill in terms of onsite cooperation, deference on added work and favorable treatment on the bidding of future work. I know of one bidmeister who leveraged the good will from performing a couple of these little hospital remodels into the buildout of an entire floor left vacant for future expansion during the original construction.
Still another advantage of performing remodels comes with extra-contractual work. More often than not, the execution of remodel work opens the door to unanticipated extra work (the “mystery factors” mentioned above). This work can either be lump-sum priced quite handsomely or performed on a cost-plus arrangement. Either way, these adds can be quite lucrative.
Yet one more added benefit of performing remodels is they tend to be smaller jobs that make for good filler work between anchor projects. Savvy supers squeeze these jobs into the master manpower plan to keep preferred crews working during slack times.
All these positive reasons and more can tempt a good bidmeister into navigating the troubled waters of the remodel world. But issues unique to this type of work are aplenty and sometimes daunting. A crafty quantifier will arm himself with some serious considerations in advance to sidestep potential pitfalls.
Visit the site. One of the advantages of a renovation is that it already physically exists. The bidmeister can and should avail himself of this benefit and do an onsite inspection, preferably after demolition has been completed, if possible. Many plan-related ambiguities can be eliminated or at least minimized with a simple job walk. A well-timed visit can answer questions regarding the extent of the demolition, existing materials for matches, stocking conditions and ongoing operations, just for starters.
Utilize allowances. When precise quantification is difficult, a best-guess allowance can provide a safety net. An allowance has the added benefit of keeping that portion of the cost out of the base bid, thus creating a competitive edge. This approach is best used for patch-and-repair conditions in which the bidmeister can give a ballpark estimate of costs and still allow for potential overruns beyond what is actually anticipated.
Allow for slower production rates. Typical encumbrances experienced on a remodel job will likely slow even your best crews to a crawl. Difficulties in establishing an efficient flow of work, lack of repetition in assemblies, trade-stacking and ongoing owner operations are just a few of the obstacles that a framing/drywall crew will encounter in tackling a renovation.
Craft the proposal with clearly expressed details specific to the particular job. The ambiguity inherent with most renovation projects can be eliminated with a clear and precise scope statement. Issues arising from extent of demolition, ongoing facility functions and matching existing materials must be met with a detailed declaration of what is and what is not included in the proposed scope.
Potential pitfalls notwithstanding, the burgeoning number of renovation ITBs these days (especially in health care), present bidmeisters with potentially lucrative opportunities. Opportunities, that is, for those who are fearless enough to accept them.
Vince Bailey is an estimator/project manager working in the Phoenix area.