The Low Bid: MORE meaning behind the LESS number
In the world we live in today, everyone wants more for less. Part of that comes from the mentality to save as much money as possible for the future while still managing to purchase whatever it is that suits your fancy in the now. The other part of wanting more for less is that some people are well…just plain cheap. This doesn’t only go for the everyday average Joe strolling into a Target; this also goes for the world of business as well. When attempting to secure a job for either yourself or your company, the number a contractor ultimately bids can say quite a bit, no matter how large or, even more so, how small the number may be.
Some bids may be incredibly high and some bids will be suspiciously low, this is what you need to watch out for. The high bids generally indicate that the contractor included the best materials available and most likely has quite the positive reputation to be justifying such a large final amount. The old saying, “you get what you pay for” works both ways, after all. The low bidder, though, is a little bit more complicated to figure out. Sure, a low number is extremely enticing when purchasing anything compared to all of the other higher priced items on the market for roughly the same goods or services. It is far too easy to initially assume that a low bid submitted by a contractor is the lowest possible number they can fathom in order to simply pay their bills and gas-up the truck. Sometimes, yes, this is indeed true. However, there is likely more to the story. Just because the bid is lower than the rest, by any size margin, does not mean by any means you are getting the best value for your money.
Although the most affordable no doubt, the lowest bidder isn’t always the right choice. Sure the price might be low, but this could potentially have severe repercussions on the job and the job schedule once work begins. The most common truths behind a low bid are fairly obvious. First and foremost, the contractor submitting the lowest number might severely lack in the experience department. If contemplating awarding this contractor a project, be sure to do some digging, research the company and call all references, if any were submitted. The use of cheap unreliable materials is another fairly common issue with low bidders. Contractors buy the cheapest materials in order to make the most money off the fairly small number they submitted. This might be great from the contractor’s point of view, but you see it quite differently. If the contractor can cut those corners, those are most likely not the only corners they are willing to cut when it comes to your project. The other most common mistake when examining low bids is the contractor makes a mistake, such as missing something, due to a misinterpretation of the spec and/or plans, thus omitting portions of the project. Chances are if the number is unreasonably low, the contractor omitted, whether purposely or accidentally, key requirements in order to have a more attractive final number. The last thing you need is a cheap contractor who also misunderstands the overall project at hand. Bottom line, you don’t save money if you aren’t getting exactly what you want or what you need. It goes without saying that every bid you receive should be gone through thoroughly before making the decision of who gets awarded the contract. Three important factors when selecting a job after all is final price and whether the contractor has a complete understanding of the project and is the contractor capable of delivering the project as specified?
The lowest bidder’s intention is to get your attention. They understand how tight money can be and they try to capitalize on it. The benefit of the low bid should be the low price, period. However in many cases it is the exact opposite. The low bid has the potential to turn into the Achilles heel of any potential project. The handful of reasons stated above along with many others end up costing the customer MORE if they selected the lowest bidder than some of the other higher bids submitted. In addition to the money spent on the initial agreement, you will have to go back and spend more money, time and resources correcting all the mistakes and mishaps that went wrong stemming from the low bidder. In addition to the costs incurred from incompetent low bidder, the other harsh reality is that future deadlines are missed pushing back every other trade involved in the project, prolonging the entire operation even further.
Whether the job is constructing a new facility, installing technology within that new facility or simply landscaping the shrubbery outside the office, being able to decipher a great deal from a potential disaster can mean everything. Plus, mistakes that come along with low bids don’t take effect right away in most cases; the repercussions rear their ugly heads further along in the timeline of the project at typically the most inconvenient times, either further along in the construction or more likely when you are actually using the facility or systems after the construction has already been completed. Contractors ultimately just want the job, it isn’t their fault if you award them the contract and get unexpectedly surprised then extremely disappointed by the terms you “agreed upon” within the contract. The lowest bidder is definitely not always the correct way to go.