What happened when this went out for bid

[dgbldr]

Don't we do that with subcontractors? I never call them back if they don't get the job

No Dick, WE don't. Maybe YOU and Allan do. I have long-time subs that I pick based on a combination of qualities I require: quality work, reasonable prices, etc. They get every job. I DON'T put ANY job out to bid. My subs are well aware they need to stay competitive. If a sub's quality, cost or other factors start slipping, I give them fair warning then start looking for a replacement. Last time I had to replace a sub was several years ago and it wasn't for price reasons.

Do you put up for bids every medical procedure you have and every tax return or do you stick with a good doctor and a good accountant?

[Lavrans]

Eh, well, then found the rest of the thread.

I agree with Lanya- 3 out of 3 says there was some sort of problem elsewhere, or the owners had bad luck.

I do think that any of the quotes below the $10K range are doable, but would not be from a business with a history and reputation.

Anyhow- anyone here should be aiming toward Allan & Dick's models, which may involve finding subcontractors to do the work at a specified level of quality for the cheapest price possible (I'm not saying cheap, just working to make sure that they hit quality X at the cheapest price they can). The difference is that this little sort of job requires a very high amount of set up and break down for the value of the job. It also involves a lot of risk- it's easily 10x the risk of building a house, because any one small problem can very easily wipe out all potential profit, and two mistakes can wind up putting the company in the negative (r.e. this job).

So the two issues that come into play for me are that it's custom work, and it is irresponsible for my business to price it to compete with production work. There's no economy of scale for me- I will probably do another, but it will be several years. Even so, I am more qualified than any production cabinet shop in the country to do this sort of work. I won't be cheaper than them, though. I shouldn't be.

The second issue is the risk factor. The lower cost bids I've seen just don't consider the mobilization factor of residential homes, and the totality of risk inherent compared to the size of the job. It's easy to look at it and think that, well, even if I flub it completely, I could carry that loss. The cost has to account for the risk and the externalities (where is it in the house, how much protection is needed, how much cleaning after, how much repair after, etc.).

[Lavrans]

I agree, I almost never take the initiative to tell a sub they did not get a job they bid on. There are a couple of reasons, one being they typically don't expect to be told. Or at least that is the impression I get. Secondly, I bid a fair number of jobs and it would be fairly time consuming to contact every sub and tell them, either by phone of by email that they did not get a job. However, if they contact me and ask, I will take the time to explain what happened.

And this is one reason why specialty contractors should always charge a consulting fee.

[dgbldr]

The original question has been beaten to death, but the subject is very relevant and merits discussion, not necessarily argument. I will remind newer members that it's a good idea to read some of Sonny Lykos' advice and general philosophy.

The crux of the matter is that we're in a "profession" with low barriers to entry and consequently, many more poor providers than good. And an over-supply of them.

Let's be modest and not compare ourselves to brain surgeons. Let's compare ourselves to providers of car repair. Your car acts badly. You want it repaired. It may cost thousands of dollars. You don't know how much. Do you immediately think "competitive bids"? No? Why not? Let's say you do. You take your car to a dealer and ask how much (notice the dealer didn't send a mechanic to your house). The service advisor says "that will be a $120 diagnostic fee, we'll look at it and tell you how much it is to fix it". Bingo. You got your bid. You want another "bid"? Sure. Schlep over to another dealer, pay another diagnostic fee and you get your second "bid". No problem. You can do this as many times as you want. Notice nobody does this. Why? Because car dealers are smarter than many "contractors". They figure their time is valuable.

The notion of spending half a day (plus expenses) to go to a stranger's house and produce a proposal, all for free, in the faint hope that you'll be the lowest bidder against several unknown other "contractors" is absurd. Yet it happens all the time. Why? Because there is an oversupply of marginal (or worse) "contractors" who are desperate enough to do it. This creates the consumer notion that it's "normal" or "expected".

In my area every plumber, electrician and HVAC company charges a $75-100 service fee to drive to your house and look at your $200 repair. Then if you don't like the price, fine, they don't do the work. You still owe the service charge. Is a carpenter's time, or contractor's time, so much less valuable that you feel you need to do it for free? Are you worth nothing at all? Well, truth is many are in fact worth zero. Possibly including the contractors in this story. Do you want those people establishing the "norm" or "standard" of the industry? Apparently some do.

Every time you go look at a job for free, without knowing or qualifying the HO or him qualifying you, the message is clear: yes ma'am, we're desperate. We don't have any work, our time is not worth anything so sure I'll do it for free. I've got nothing else.

Here is an elegant way to NOT waste half a day: Yes ma'am we participate in competitive bidding all the time, mostly in commercial work. We do it for free. Here is what we require:
1. A complete set of bid documents. Prints, specs, timing, etc.
2. The names of all parties invited to bid.
3. Time and place of public bid opening
4. A bond guaranteeing that the job will actually be awarded.

I actually did that once, the HO was an arch. He got the point and was embarrassed. The average HO would not get the sarcasm.

[greenyoga]

Interesting...

[Allan Edwards]

Anyhow- anyone here should be aiming toward Allan & Dick's models, which may involve finding subcontractors to do the work at a specified level of quality for the cheapest price possible (I'm not saying cheap, just working to make sure that they hit quality X at the cheapest price they can).

No Dick, WE don't. Maybe YOU and Allan do. I have long-time subs that I pick based on a combination of qualities I require: quality work, reasonable prices, etc. They get every job. I DON'T put ANY job out to bid. My subs are well aware they need to stay competitive.

We all have long time preferred subs, some of mine have been doing my work for 25 or more years. But we still put most of the 40 or so divisions of work out for bid because that is the professional thing to do, and big-boy (and big-girl) subs are not offended. Some of my contracts with subs can be high 5 or low 6 figure range, if I didn’t competitive bid this it would be irresponsible and really a bit lazy. It doesn’t mean we necessarily use the cheapest sub because typically we don’t, but when you are spending client’s money it would be a derelict of duty to not competitive bid their work. All of the subs bidding my jobs are capable of doing the work at a high level of quality, but tell a business man who you are building 3-4 million$ home for that you are using your captive subs without getting another price, they will laugh you out of the process. Or go build a 4 million$ spec and use your long time subs without competitive pricing, and realize at the end that you just built a house for a 3% profit margin. It is human nature that subs get complacent if you don’t bid their work, you are actually doing them a favor and helping them stay competitive by doing this.

If you are doing small jobs in the $10,000-$50,000 range, you are probably already using low prices subs. But go do $10,000,000 or more a year in work, and try to use only captive subs, you won’t be in business very long.

[Jay123]

So Walrus....how'd it all work out?

And is it me...did I miss something? It seems like you don't want to answer the question as of what you do in the industry.

You seem like a very intelligent guy...why the secrecy?

I only ask due to my own interest, and the multiple dodges.

[IamTheWalrus]

Well, it has been a while, but the work is almost done. And as it turns out, the assembly and design, while having the spirit of my poor scratchings, is really quite different in the details, and the methods.

Backlogs, lead times, etc. And when the contractor was ready to start, the owners said, hey, we are going down south for a bit. A week here, a week there, and the next thing you know, months go by.

Pics to follow soon. Work included all electrical, of course, and all done by the carpenter.