Many clients request the lowest bidder, or maybe even the lowest three bidders, to attend a tender or bid clarification meeting.  If you are invited to a post bid meeting your actions in the meeting could mean the difference between winning and losing the project. Rash actions or concessions at the meeting could also cost the company dearly should you be awarded the project.


Reasons for the meeting

The purpose of these meetings is often to:

1.       Meet and assess the contractor’s team

2.       Ensure the contractor has understood the project and has the necessary resources

3.       Address any concerns regarding the contractor’s bid submission

4.       Discuss changes in the scope of works that have occurred subsequent to the bid submission

5.       Negotiate better prices or contract terms


Preparing for the meeting

Before the meeting the client will usually send out an agenda. If they haven't it might be prudent to request one so you can be better prepared for the meeting.

In preparation for the meeting:

1.            read through the agenda and ensure you’re prepared

2.            go through the tender again to refresh yourself on the details (often you have moved onto other projects and have forgotten some of the details)

3.            ensure that everyone attending the meeting is familiar with the project and can add value to the discussion (often senior managers or executives from the contractor attend, many of whom are unfamiliar with the tender and the project constraints, leading them to make inappropriate comments, promises and commitments – ensure they are fully briefed and understand the risks and constraints of the project)

4.            ensure you know the date, time and place of the meeting, as well as the contact person and their details (it’s also useful to know the name of the meeting room since I’ve regularly arrived for a meeting at a large organisation and the receptionist has been unable to find the contact person because they are busy meeting with another contractor)

5.            take a complete copy of the tender submission, filed correctly, including the calculations and the post-tender correspondence (there’s nothing worse than being asked a question in the meeting and having to page through file after file, looking for the relevant document)

6.            take sufficient business cards, a note pad and pen


Your team

The size and the make-up of the contractor’s team attending the meeting will depend on a number of factors:

1.            the size of the project

2.            the agenda provided by the client (for example, if there’s an item on quality it may be prudent for the proposed project Quality Advisor to attend, or, even perhaps the company’s Quality Manager)

3.            who the client’s attendees are

4.            what the client’s known priorities are (for instance, if safety is important take the company’s Safety Manager as well as the proposed project Safety Advisor)

It’s useful to include the senior staff you propose to use on the project. Where possible include the person who prepared the bid and is familiar with the submission and calculations.

Of course it goes without saying that everyone should be dressed neatly and arrive for the meeting on time. It’s often useful to arrive early as it may well provide an opportunity to see the other contractors being interviewed, or to meet some of the client’s team informally before the meeting which could provide some insight into their thoughts regarding the project and your tender submission.

Case study:

We arrived for a tender clarification meeting to be told apologetically that we wouldn’t be starting on time as the previous contractor had arrived late for their meeting – not a good start for them! However, five minutes later the other contractor walked out of the meeting looking embarrassed and we were called in for our meeting almost on schedule.

Sometime later when I met the other contractor at an industry event I asked why their meeting was so short and they told me they thought the meeting was for another tender they had submitted to the same client. They arrived with the documentation for that tender and were prepared to discuss that project, so when the client started asking questions their replies related to the wrong project. When the client couldn’t understand what they were referring to they eventually figured out the confusion. Obviously the client was less than amused and quickly terminated the meeting. Needless to say they weren’t awarded either of the projects.

The meeting

At the meeting:

1.            introduce the team, explaining each person’s role on the project

2.            ensure your team is led by one person who may delegate others in the team to answer particular questions

3.            take notes at the meeting even if the client confirms they’ll be sending out formal minutes

4.            take time to answer the client’s questions; if uncertain ask them if it’s possible to provide an answer later

5.            listen carefully to the client’s concerns and try and address these during the meeting as well as in post-meeting correspondence

6.            at the end of the meeting summarise the questions that require answers, by when they will be answered, and to whom the answer should be directed (ensure there’s sufficient time to get the answers to the client)

7.            appear positive, and if what the client is asking isn’t possible explain why and offer alternative solutions

8.            don’t make promises and commitments that cannot be kept

9.            thank the client for inviting you to the meeting

After the meeting

After the meeting on returning to the office:

1.            allocate the questions to the relevant staff and then coordinate the answers into one reply to the client

2.            when the minutes of the tender meeting are received check that they are correct and are a fair reflection of what was discussed and agreed at the meeting (if there is anything that you disagree with, address this in a formal letter to the client)

3.            if necessary send a letter after the meeting confirming the discussions and any revisions to the tender offer made during the meeting

4.            ensure the client’s questions are replied to within the agreed time

5.            send a letter thanking the client for the opportunity to meet with them and offer to answer any further questions they may have

Conclusion

These meeting provide your company an opportunity to sell to the client why they are the best contractor to construct their project. Don’t spoil this opportunity by being unprepared or by taking the wrong people to the meeting.

Next week I will discuss the negotiations further in: ‘A word of warning – don’t secure the project at any cost’

Similar articles by the author

Post bid communications – the difference between winning and losing a bid

How to improve cash flow on your project - part 2

How do construction companies keep a good client

(Written by Paul Netscher the author of the acclaimed books ‘Successful Construction Project Management: The Practical Guide’ and ‘Building a Successful Construction Company: The Practical Guide’. Both books are available in paperback and e-book from Amazon and other retail outlets. This article is adapted from information included in these books.)

© 2015 This article is not to be reproduced for commercial purposes without written permission from the author.

Subcontractors can play an important part in the success of your construction project. It’s important that subcontractors aren’t chosen purely on price. The subcontractor’s ability to deliver the project on time and to the required quality and safety standards is equally important. I’ve worked on construction projects where the selection of the cheapest subcontractor ended up costing the project more money than if a more expensive subcontractor had been selected.

Subcontractors are viewed by the client as an extension of the main contractor (general contractor) and a failure by the subcontractor can adversely affect your company’s reputation.

Unfortunately some contractors don’t manage their subcontractors. They appoint them and then leave them to get on with the job. Often project staff aren’t briefed about what the subcontractor’s scope of work is. Time and again there is a lack of communication. When there are problems the subcontractor is blamed.

Managing your subcontractors

Some important points to note when managing subcontractors are to ensure:

1. the contractor’s person managing the subcontractor understands:

• the subcontractor’s scope of work
• who is responsible for supplying what
• how the subcontractor will be reimbursed

2. the subcontractor:

• complies with the project’s safety requirements
• produces work of acceptable quality
• works according to the project schedule

3. the subcontractor receives access and information on or ahead of schedule and isn’t delayed by the contractor or other subcontractors

4. regular meetings are held with the subcontractor to discuss safety, quality and environmental matters, as well as progress on the project and any delays and claims, and that minutes of these meetings are distributed to the relevant parties

5. subcontractors acknowledge the receipt of drawings and information issued to them (or there’s proof they have received them) (I have had subcontractors claim they hadn’t received a particular drawing revision when they had)

6. where relevant, the subcontractor supplies shop drawings in accordance with the project schedule, including allowing for obtaining the required approvals from the contractor or the client

7. communication with the subcontractor of a contractual nature is in writing (any verbal instructions should be followed up in writing)

8. only the contractor’s delegated responsible staff communicate with the subcontractor (I have had subcontractors receive conflicting instructions from our staff resulting in confusion and errors)

9. action is taken as soon as it appears that the subcontractor could be in trouble (see my last article ‘Are your subcontractors profitable? Should you care?’)

10. the subcontractor is forewarned of the contractor’s intention to back-charge them for work or services supplied by the contractor and that these charges are invoiced regularly

11. the subcontractor is paid in accordance with the contract

12. the subcontractor has suitable quality, safety, environmental and industrial relations procedures in place that comply with the project requirements

13. subcontractors don’t begin work until there’s a signed contract in place and they’ve supplied the required sureties and insurances

14. the subcontractor’s staff, equipment and their own subcontractors are approved by the contractor

15. the subcontractor’s personnel attend the contractor’s project induction

16. correspondence from the subcontractor is promptly dealt with

When there are problems
Sometimes subcontractors do get into problems. It’s important to understand the reason for these problems which may be due to the main contractor’s poor management, delays, lack of communication or change of scope. However, it is also often due to the subcontractor’s poor management, lack of cash flow or incompetence. By understanding the problem you may be able to take action to rectify the problem or at least prevent it from getting worse.

It is important to follow the contract and ensure the correct notifications are given. Withholding payment for poor performance without providing the appropriate notifications may result in the GC being in breach of contract.

Conclusion
Subcontractors need to be managed by the main contractor (general contractor) to ensure that their performance meets the project’s safety and quality requirements, and that work is in accordance with the project’s schedule and specifications. Failure to manage subcontractors properly often leads to disputes, claims, project delays, substandard work and even accidents. This leads to project failure, often resulting in all parties losing money and the client getting their project late which negatively impacts the contractor’s reputation.

Other articles by the author:

Are your subcontractors profitable? Should you care?

Is the cheapest really the cheapest?

The importance of planning your project.

(Written by Paul Netscher the author of the acclaimed books ‘Successful Construction Project Management: The Practical Guide’ and ‘Building a Successful Construction Company: The Practical Guide’. Both books are available in paperback and e-book from Amazon and other retail outlets. This article is adapted from information included in these books.)
© 2015 This article is not to be reproduced for commercial purposes without written permission from the author.

Often after receiving tenders, bids or quotations, clients/owners talk to some of the contractors who submitted prices for their construction project.

These discussions can impact whether the contractor wins or loses the project. But also, mistakes at this stage may cost the contractor dearly when they are awarded the project.

These discussions may be in the form of written correspondence, or may involve formal meetings with the contractors.

Why are there discussions

Usually the discussions are initiated because:

1.       The client has queries about the contractor’s price and what’s included.

2.       The client wants to ensure the contractor understands the project and has the resources and skills to do the project.

3.       The client has made changes to the original tender documents and requires contractors to revise their price.

4.       The contractor has included conditions in their price which the client doesn’t want to accept

The fact that the owner/client is talking to the contractor may indicate that they are interested in the contractor's price. However, in some cases they may be talking to all those who submitted a price - particularly if they have made changes that require contractors to update their price.

Dealing with correspondence

You should have included contact details in your tender of the person who the client should contact when they have questions. Obviously, ensure that person will be available to answer correspondence or at least provided secondary contact details. We often had to submit prices just before closing for the industry break. Clients however are usually in a hurry to get answers and don’t respect these breaks. Correspondence that goes unanswered will probably end any further interest in your price.

It is essential questions are handled and coordinated by one person in the contractor’s office. Failure to do this may result in the client receiving conflicting answers or perhaps not receiving any answers when there’s a mix-up between the contractor’s personnel.

Often Clients expect an answer straight away, while the contractor may have to contact subcontractors and suppliers for answers and sometimes do extensive recalculations. You may have to ask for more time, or if the client won’t grant this, make sure that they understand this is an estimate, and then follow up when the correct information immediately it’s available.

Guidelines for answering questions

When the client asks questions relating to the tender ensure answers:

1.            address these questions

2.            have taken into account all of the impacts, which may include changes to the schedule, increased costs, additional overheads, delayed access, extra mobilisation costs and impacts on the rest of the project (for example, even what appears to be a small change in specification could have a major impact on the schedule if an item has to now be imported)

3.            are provided on time

4.            are unambiguous and clearly state what’s included and what’s excluded

5.            take into account previous responses

6.            are framed in a positive manner (It’s easy to say you can’t do something, but the client won’t be happy with the answer. If you really can’t, then offer alternative solutions or explain why it’s not possible.)

7.            highlight reasons for some answers, where necessary

8.            offer alternative solutions where the contractor is unable to comply with the client’s requests

9.            provide a revised tender price which includes the effects of previous answers (Not doing this  got our company into trouble on one project as the client awarded the project on the total price in the last submitted answer, assuming this price included all of the previous adjustments and answers the company had provided. However this price only took into account some of these adjustments.)

10.          are sent in a formal letter (if an answer is provided verbally in a meeting it should be followed by a letter) addressed to the client’s nominated representative

11.          refer back to the original tender documents, terms and conditions, and exclusions and qualifications

12.          are carefully thought through

13.          are filed in the tender file, together with the supporting calculations and information, so that it’s possible at a later stage to understand how the revised tender sum was arrived at

I had one project where we couldn’t find any calculations relating to how the original tender price had been reduced to the final price in the contract. They were obviously done on a scrap piece of paper and discarded. I might add that the difference was worth several million dollars and nobody could tell me how the new price was arrived at.

Unfortunately, sometimes the questions are sent several weeks, or months, after tenders are submitted and the Estimator has moved on to other tenders or projects. It’s important the Estimator takes time to analyse and answer the question, referring to, and reading the original tender submission to refresh their memory. Failure to do so can result in costly errors.

It’s essential when subcontractors or suppliers could be affected by these questions that they are consulted to allow them to modify their prices if necessary. Nonetheless, they do need to understand this mustn’t be treated as an opportunity to add money to their quote without reason, making the contractor’s tender price too expensive.

The fact that the client is talking to the contractor should be kept confidential so the other bidders don’t hear of this. If they know the client is talking to you they may come up with a strategy to ensure they are viewed more favourably. Any subcontractors or suppliers involved in these questions should be cautioned to keep them confidential.

Conclusion

Frequently contractors are rushed in replying to questions posed by the client. They may be distracted by other bids they are working on. This can lead to them misunderstanding the questions, perhaps making a mistake with their calculation, or not given the required attention to their reply. After all your efforts in preparing and submitting your bid you wouldn’t want to let the opportunity of winning the project slip through your fingers because of a carelessly answered question. But a carelessly answered question could also cost the company dearly later when the costs are higher than anticipated in the answer.

In my next articles I'll consider post bid meetings and negotiations.

For similar articles read:

Steps to help you win your next construction project

Don’t make a mistake when you price your next construction project

Tender submission or quotation – Get it right

(Written by Paul Netscher the author of the acclaimed books ‘Successful Construction Project Management: The Practical Guide’ and ‘Building a Successful Construction Company: The Practical Guide’. Both books are available in paperback and e-book from Amazon and other retail outlets. This article is adapted from information included in these books.)

© 2015 This article is not to be reproduced for commercial purposes without written permission from the author.

Many General Contractors (Main Contractors) probably aren’t concerned whether their subcontractors make or lose money on their construction project. Why should it impact them? It would after all seem to be an anomaly, because if a subcontractor is making money it’s probably at the project’s expense? But no! 
In fact some GC’s make a habit of squeezing their subcontractors so they can be more profitable.





Why it’s helpful when your subcontractor is profitable

A subcontractor who is profitable is usually a happy subcontractor, and a happy subcontractor is:

1. more likely to treat your project with the importance it deserves, allocating their time and resources when needed
2. more willing to assist and accommodate the contractor when required
3. of course a subcontractor who makes money on your project and is looked after will usually want to work for your company again, possibly even giving you a better price than they provide your competitors on your next project, which could give you a competitive advantage

But a subcontractor who loses money:

1. may cut staff and equipment on the project to save costs, which may jeopardise the project’s safety, quality and schedule
2. could take short cuts which could endanger safety and affect quality
3. might use inferior, cheaper products
4. often go to any lengths to lodge claims for additional costs and additional time, which if justified will cost the project money, however many might be spurious and merely an attempt to claw back some of the subcontractor’s losses, yet these claims will still tie-up the contractor’s staff and cost money to evaluate and refute them
5. may become bankrupt on the project, meaning you will have to engage another contractor at additional costs and delays to finish the outstanding work
6. won’t want to price your next project, or will add a premium to their price knowing that you are a difficult customer

How can you assist your subcontractors?

So why do subcontractors lose money and how can you assist them?

Many smaller subcontractors aren’t astute as they should be, or don’t have the management skills and knowledge that they should. Some subcontractors are working on a number of projects at one time, trying to share their time and resources between their different projects and clients. They often don’t have the money for a large number of supervisors or project managers. Some General Contractors are happy to let their subcontractors bumble on, only taking action when there’s a major problem. I however, prefer managing my subcontractors and providing help and guidance when needed.

How you can help your subcontractors?

1. Pay them on time and don’t unduly hold money due to them.
2. If the subcontractor is producing poor quality work which has to be redone they will incur additional costs not allowed for. Point out poor work as soon as it’s noticed and ensure that the subcontractor has the appropriate quality systems in place before starting the project.
3. Many subcontractors don’t have suitable staff or supervision on the project causing them to manage their works inefficiently, resulting in poor productivity and planning. Assist subcontractors where possible to plan and manage their contracts as efficiently and productively as possible. This doesn’t mean doing the work yourself, but it may mean calling them and pointing out potential problems which they haven’t seen.
4. Subcontractors often lose money when they don’t have access to their work area due to the main contractor or another subcontractor delaying them. Many subcontractors will, of course, claim for these delays. Ensure that your subcontractors aren’t held up by your work, other contractors or the client.
5. Adjudicate subcontractor prices thoroughly to ensure that they understand the project, their price is market related and that they have the skills and resources to undertake the project.
6. Another reason for not making money may be because they aren’t maximising their revenue, although, of course, you don’t want them doing this at your cost. Often though, subcontractors end up performing additional work for the client due to an increase of scope, or a change in the specifications, resulting in additional or more expensive items being required. If you’re aware of any reason for the subcontractor to request additional monies from the client you should, in general, be encouraging your subcontractor to claim for these, and if necessary even assist them. If the claims are successful the subcontractor not only earns more revenue, resulting in them making money, making them happier, but the contractor usually earns additional profit as a result of their mark-up on the subcontractor’s claim.

It should be remembered that many subcontractors may be unsophisticated in their approach to claims and may require assistance to not only maximise the claim against the client, but also to present it in such a way that it’s not refuted by the client. By assisting the subcontractor you could also have some control in ensuring the claim is presented in such a way that your company, and project, doesn’t risk being in the position where it has to pay monies that should be covered by the client.

When your subcontractor is in trouble

However some subcontractors will never make money on a project, due to their incompetence, or a contract price that is too low. I certainly don’t advocate you pay them money which isn’t due to them. Still, it’s important the Project Manager is aware of problems a subcontractor may have, particularly if they are losing money on the project, and takes mitigating actions, for example:

1. tasks may have to be removed from the subcontractor’s scope to ensure that work can proceed according to schedule
2. assist the subcontractor where possible, and when unnecessary costs will not be incurred
3. start preparing a replacement contractor (this may take the form of getting quotations for the outstanding work and checking on the availability of other subcontractors), to ensure minimal time is lost should it become necessary to appoint another subcontractor
4. try to ensure that the subcontractor completes all work they have started so, should they leave the project, there aren’t numerous unfinished tasks which will be difficult and costly to complete
5. ensure major items of equipment and material already procured by the subcontractor are installed as soon as possible
6. expedite the delivery of long-lead items supplied by the subcontractor
7. ensure the subcontractor has not been overpaid, the retention money held is correct, and the bonds and sureties are valid
8. understand your contractual rights so that if you terminate the contract it is done correctly

Conclusion

Construction requires teamwork. Often subcontractors are vital to the success of a project. A delay or poor quality caused by a subcontractor usually impacts the project as a whole and negatively impacts the General Contractor’s reputation. Proper selection of subcontractors including correctly adjudicating their quotation will help minimise problems. Managing subcontractors properly is essential.

Other similar articles by the author


Understanding what impacts your company’s reputation

Did you make a difference on your project today?

Choosing a subcontractor

(Written by Paul Netscher the author of the acclaimed books ‘Successful Construction Project Management: The Practical Guide’ and ‘Building a Successful Construction Company: The Practical Guide’. Both books are available in paperback and e-book from Amazon and other retail outlets. This article is adapted from information included in these books.)

© 2015 This article is not to be reproduced for commercial purposes without written permission from the author.

Winning new construction projects is often not just about having the lowest price. Don’t underestimate how important your tender submission is. This must be as professional as possible. In the past, I’ve often attended tender clarification meetings where the client has complimented us on our tender submission and they have possibly been swayed to award the project to us.
Leaving out something from your tender submission could mean that your price is disqualified or that your tender is evaluated without the client have access to all the relevant information.
Clients may have a number of submissions to evaluate and sometimes won't be bothered to read through all of your tender submission to search for the required information that wasn't clearly available.


What you submission should contain

Some or all of the following could be included in the tender submission:

1.            an index

2.            covering letter

3.            the final price or form of tender

4.            commercial and technical clarifications and qualifications

5.            the tender schedule

6.            a break-down of the price

7.            the contractor’s proposed project management organisation chart and curriculum vitae of senior staff

8.            a list of equipment and subcontractors

9.            the deliverables the client has requested (which may include proof of insurances, cash flow and histograms)

10.         company profile including a list of similar projects the contractor has completed

11.         safety information and documentation

12.         quality documentation (keep the information relevant to the project and demonstrate the company has a clear understanding of the client’s requirements and will meet and even exceed these)

13.         environmental management information and documentation

14.         if necessary, traffic management plans

15.         the project approach, work methodologies and considerations taken into account in the tender

16.         company brochures (which may include financial statements and safety statistics)

Include as much information as possible to demonstrate that the company has an understanding of the project, has thought through the construction process, and has the personnel and resources to undertake the project successfully.

Ensure sections such as safety and quality are included in their own separate divisions and aren’t spread across other areas of the submission. This could result in the reviewer only receiving, and reviewing, a portion of the relevant information.

Remember, tenders are often reviewed by a number of different people, or departments, within the client’s organisation. The tender is frequently split into the relevant sections which are then circulated to various people who aren’t even directly associated with the project but will, for instance, be requested to review all the tenderers’ safety documentation. If they don’t receive the full submission from a tenderer they’ll assume it wasn’t included and will give the tender a poor rating which may adversely affect the contractor’s chances of being awarded the project.

Tender adjudication

Many tenders are scored not just on price but are affected by other items in the submission such as quality documentation, safety plans, methodology and schedule.

Often the client has a defined method they will use to score and adjudicate the tenders which usually takes into account a number of factors including the price. This process often follows a set formula which is outlined in the tender document. The contractor must understand how this formula works, ensuring they maximise their scores. The items the client will look at should be clearly highlighted and must comply with the client’s requirements.

For instance, some clients may score the contractor’s price as 90% of the overall score with the remaining 10%, say, being made up of various factors such as the local ownership of the company, the number of indigenous employees, the amount of money that will be spent in the local community, the experience of the proposed construction team, the resources available for the project and the contractor’s safety record.

Checking your submission

Check the submission to make certain:

1.            all the documentation requested by the client has been completed and is included

2.            that all the pages have been printed and are included (sometimes in the binding process pages get inadvertently left out, or during printing, errors occur resulting in blank pages)

3.            the documentation is presented in a logical and easy to read format (The specific documents the client has requested should be highlighted and easy to find. I’ve on occasion had clients ask for documentation which we had included in our submission but which they couldn’t find. This is frustrating for the person adjudicating the tender and can lead to them assuming it isn’t available, resulting in the tender being disqualified.)

Conclusion

It would be a pity if you weren’t awarded a project, despite all the work you put into pricing it, because your presentation was shoddy, the client couldn’t find a required document, or weren’t convinced you were the best construction company to construct their facility.

Other similar articles by the author:

Steps to help you win your next construction project

Don’t make a mistake when you price your next construction project

Why owners sometimes appoint the wrong contractor

(Written by Paul Netscher the author of the acclaimed books ‘Successful Construction Project Management: The Practical Guide’ and ‘Building a Successful Construction Company: The Practical Guide’. Both books are available in paperback and e-book from Amazon and other retail outlets. This article is adapted from information included in these books.)

© 2015 This article is not to be reproduced for commercial purposes without written permission from the author.

Are you pricing numerous projects and not winning any work? Why aren’t you winning projects? You probably think it’s because your price is too high? But maybe there are other problems.

Last week I discussed the importance of ensuring your price was correct. Read; ‘Don’t make a mistake when you price your next construction project’.

In this article I’ll discuss how you can make your bids/tenders/quotations more successful, so you can win more work.

Ensure your price isn’t disqualified

Often prices/tenders end up in the client’s rubbish bin because they’re disqualified. All that hard work and your price didn’t even make the starting line. Reasons for this may be:

1.       The tender arrived late which could be because it was submitted late or it went to the wrong person or the wrong address.

2.       Your tender wasn’t in the format requested.

3.       Your company doesn’t meet the client’s criteria to build the project. This may be because you don’t have the correct registrations, aren’t large enough or don’t have the required financial strength or insurances.

4.       You failed to submit all of the documentation that the client requested in their bid documentation. These may include; copies of insurances, surety bonds, financial statements, safety records, quality plans, etc.

5.       Your tender didn’t comply with the client’s requirements such as; you haven’t priced everything requested in the document, didn’t comply with stipulated requirements or comply with the required methods of construction.

Carefully read the tender document and instructions so that you can ensure your tender will not be disqualified.

Submit a competitive price

Well this sounds really obvious and yet many companies don’t get it right.

1.       Sometimes your price is just never going to be competitive because you are pricing against companies who can do the particular work better and more cheaply than you, or are better located to provide a cheaper price than you can. Understand your opposition and your shortcomings. If you know you are unlikely to be competitive don’t waste your time and possibly embarrass yourself with the client when your price is far higher than others. If you were invited to price the project, politely decline the tender.

2.       Make sure you obtain competitive quotations from suppliers and subcontractors.

3.       Understand the risks. Unfortunately you cannot price all the risks. Some contractors see ghosts around every corner and want to price for everything that could possibly go wrong. Unfortunately you can’t because you will never win a project. You will probably have to accept some risk.

4.       If you aren’t sure of something rather ask questions during the tender period, or qualify what you have priced. Don’t assume the worst case scenario and then price it. You can be sure your opposition probably won’t.

5.       Understanding who your opposition will be may also influence the level of profit you add to your price. If you know some are desperate for work you can be sure they will submit a keen price. We often had a good feel for how our opposition would price different projects and which ones they would be less interested in.

Provide compelling reasons for the client to use your company

Although some clients select contractors on price alone there are many who are more astute and can be selective. They understand the importance of selecting a contractor who is capable of delivering a quality project, on time, without accidents and with minimal risk to them or the project.

Some things you could consider adding to your tender:

1.       Address any concerns that the owner/client has raised in their documentation or at pretender meetings.

2.       Highlight why your company will be the best contractor to construct the project.

3.       Demonstrate that you have the resources to do the work. It’s useful to include your proposed project management organisation chart as well as the profiles of senior members of the project team.

4.       Show you have an understanding of the project. A tender schedule included with your submission is useful in this regard as is a brief method statement or overview of how you will carry out the work.

Try and differentiate your company from the other construction companies.

Think out of the box – how can you make your price cheaper (without sacrificing profit)

Sometimes it’s possible to improve your price even further by:

1.       Offering a discount for early payment or if the client withholds less retention money or releases it sooner.

2.       If the client has brought out a number of packages of work, it may be beneficial to offer a discount should your company be awarded more than one package of work.

3.       Offering alternate materials which may be cheaper.

4.       Offering alternative construction solutions which may be cheaper.

Often tender documents require you to price the original documentation and specifications and these alternatives may have to be offered separately.

Conclusion

I have won many projects despite not having the cheapest price. Often this has been due to the strength of our tender submission which resulted in our client electing to pay a premium to engage our company knowing that ultimately their project would benefit from our expertise.

Next week I will discuss your tender submission, how important it is and what you should include.

Other useful articles by the author:

The importance of maximising your monthly valuations

Should contractors price every project?


[Of course if you don’t want to wait until next week for the next article you can order my book ‘Building a Successful Construction Company: The Practical Guide’. The Kindle or eBook version is on special on Amazon dot com and Amazon UK this weekend.] 

(Written by Paul Netscher the author of the acclaimed books ‘Successful Construction Project Management: The Practical Guide’ and ‘Building a Successful Construction Company: The Practical Guide’. Both books are available in paperback and e-book from Amazon and other retail outlets. This article is adapted from information included in these books.)

 © 2015 This article is not to be reproduced for commercial purposes without written permission from the author.

Sometimes construction projects end in disputes between the General Contractor and the client or owner. Also, regularly disputes occur between the General Contractor (Main Contractor) and their Subcontractors or Suppliers. These disputes can end in legal action, result in media attention and even disrupt the project - sometimes bringing it to a halt. Usually it’s only lawyers that benefit from these disputes. Yet, somehow disputes are becoming more frequent on construction projects, almost becoming a way of business for some.



Why disputes should be avoided

Where possible disputes should be avoided because they:

1. are time consuming – don’t underestimate the time that disputes take to resolve, time that could be better utilised elsewhere on the construction project, or on other projects
   
   
2. can damage the construction company’s reputation – clients and subcontractors often avoid contractors that have a reputation for project disputes
   
   
3. damage the relationship between the parties – the relationship seldom returns to normal after a dispute
   
   
4. they are costly especially when they become legal and involve lawyers
   
   
5. they may end poorly for the construction company who doesn’t receive the full value of their claim
   
   
6. they can disrupt the construction project and sometimes cause further problems
   
   

Avoiding disputes

Generally most disputes can be avoided if appropriate actions are taken, such as ensuring:

1. There’s a legally enforceable contract in place which protects both parties’ interests.
   
   
2. The contract is well written and doesn’t have conflicting clauses or contractual loopholes.
   
   
3. The contractor understands the contract and complies with its provisions. Often Project Managers don’t read the contract until a dispute arises – it’s normally too late then!
   
   
4. The contractor communicates with the client and their subcontractors, timeously notifying them when problems and variations arise.
   
   
5. The contractor submits and resolves variations as soon as practical.
   
   
6. Clients act in a fair and reasonable manner.
   
   
7. Accurate records are maintained.
   
   
8. There’s willingness by the parties to talk and negotiate.
   
   
9. Personalities and emotions are kept out of the dispute.
   
   
10. The contractor admits when they’re wrong and doesn’t lodge extravagant claims.
    
    
11. The consequences of escalating the dispute are weighed up carefully, since the costs of legal action may be more than the outcome is worth.
    
    
12. Expert advice is sought when necessary.
    
    
13. The construction contract is administered in a spirit of honesty and cooperation by all parties.
    
    
14. Senior management need to be aware of potential disputes and problems on a project so they can take the necessary action and intervene if required to avoid the problem escalating.
    
    

  Unfortunately some clients, Project Managers and construction companies have a reputation for being overly contractual, being unreasonable or being overly enthusiastic with their claims – it may be sensible to avoid working with these companies or people, or if you have to, then ensure your team is competent and able to defend your company.

Sometimes a dispute is unavoidable, but I’ve generally found that most construction variations and claims can be amicably settled without going down the dispute resolution or legal process.

When disputes are unavoidable

Unfortunately disputes which cannot be resolved do arise, and then it’s important to follow the dispute resolution process stipulated in the contract. Only as a last resort should you proceed down the legal route. Having said this, though, do not hesitate to ask for a legal opinion or for expert advice. Of course also ensure that senior management is aware of the problems and the next steps being considered.

Just because there is a dispute doesn’t mean you can walk off the project. Sometimes construction companies do this, but it could be a fatal mistake if the proper termination procedures haven’t been followed, and may allow the client to take action against the contractor for breach of contract.

Conclusion

Contractors need to be contractually astute. They need to understand the terms and conditions of the contract when they price the project, ensuring they are acceptable. These terms and conditions should be checked before the contract is signed. Project Managers need to understand their contracts and ensure they administer the project in terms of the conditions. By being proactive and knowledgeable most disputes can be avoided.

For other similar articles read:

15 Questions to ask before starting your next construction project

Are you working for free on your construction project

Will your next construction claim be successful?

  (Written by Paul Netscher the author of the acclaimed books ‘Successful Construction Project Management: The Practical Guide’ and ‘Building a Successful Construction Company: The Practical Guide’. Both books are available in paperback and e-book from Amazon and other retail outlets. This article is adapted from information included in these books and was first published in qsadvisor www.qsadvisor.com . To read more visit pn-projectmanagement.home)
© 2015 This article is not to be reproduced for commercial purposes without written permission from the author.