Bid Items—Keep Your Bid Form Simple
by Kevin O’Beirne PE, FCSI, CCS, CCCA, CDT
Editor's Note: CSI is pleased to publish this seventh blog from Kevin O’Beirne, PE, FCSI, CCS, CCCA, CDT. If you have an idea or opinion you would like to share with your colleagues in the construction industry, please contact CSI Content Strategist Peter Kray at firstname.lastname@example.org. He would love to help publish your thoughts.
It is amazing how design professionals and owners often include an inordinate number of bid items on their projects’ bid forms. When quizzed about why they do this, the reason is often a mumbled, “Well, we sort of like seeing something of a breakdown on bid day.” In fact, having “too many” bid items on your project’s bid form makes things much more-difficult for bidders, and may contribute to math errors in the bids, unbalanced bids, omissions, and construction stage claims and disputes.
During the final design/construction documents phase of design, while writing the bid form and piling on the bid items, design professionals and owners are likely failing to understand the bidders’ typical experience. In actual practice, many prospective subcontractors and suppliers hold their final price quotes until very-near the last minute, giving the bidder little time to apportion subcontractors’ and suppliers’ quotes among multiple bid items.
Further complicating the process, prospective subcontractors and suppliers rarely submit their pricing apportioned by the bid form’s multiple, stipulated bid items. In a practice known as “packaging,” it is relatively common for product manufacturers’ representatives—who are the people often preparing and submitting quotes to prospective subcontractors and bidders—to bundle everything they are quoting into a single lump sum price, apparently taking the position, “Buy it all from me or none of it.” Packaging understandably drives bidders nuts, especially when the bid form includes 20 different lump sum items.
Picture yourself as a bidder on bid day. Bids are due, at 2:00 p.m. You receive e-mailed final price quotes throughout the morning. You have perhaps two hours to determine which proposals or quotes to use in your bid and—ugh!—to guess at apportioning their single lump sum prices among perhaps 30 lump sum bid items. You silently curse the person who wrote the bid form. The clock is ticking toward 2:00 p.m. so, you take the only course available and start guessing to break down the quoted prices into the inordinately-complex bid form. Hopefully you’re guessing “close enough,” not making math errors, and not omitting something. With fumbling fingers, you rapidly type your guesswork amounts into a spreadsheet and sum them into the 35 different lump sum bid items that some architect or engineer thought necessary for the project. The boss signs the bid, you stuff it into an envelope, and run out the door to deliver it before the clock strikes 2:00 in the bid opening room.
All that really happens. That design professionals and owners, opening the bids and poring over their bid tabulations believe the prices for the 40 bid items are accurate, complete, and the result of careful, studied consideration by each bidder is both mistaken and perhaps naïve.
Appropriate practice is to include the fewest bid items necessary for pricing and construction contract administration, adhering to the “keep it simple, st**d” (KISS) principle.
In unit price work, especially civil-site work, where final quantities of work are uncertain until construction is completed, multiple unit price bid items are a fact of life. Some transportation projects may have 200 or more bid items. However, there are often opportunities to trim down the number of unit price items from what may, at first, appear necessary.
The real bugbear plaguing bidders, however, is multiple lump sum bid items. Admittedly, on occasion, multiple lump sums may be necessary, such as when a funding-financing entity participates in only part of the project. Another valid reason for multiple lump sums may be when the project includes owner-controlled allowances; it is less-likely that these would be omitted by bidders when they are separate bid items. Aside from these circumstances, there is rarely any truly-compelling reason why a single lump sum bid item isn’t just as good, or better, than, say, 10, 25, or 40 different lump sum items.
For those who want a detailed price breakdown, if the owner and design professional can manage to wait a few weeks until just after the contract is signed and in effect, the General Conditions—including both AIA A201 and EJCDC C-700—typically require that the contractor submit a very-detailed breakdown of lump sums, known as the “schedule of values.” Specific requirements for the schedule of values can, according to CSI MasterFormat, be set forth in a specifications Section 01 29 73 – Schedule of Values.
Because the contractor can devote time and care to how the schedule of values is apportioned, and likely has more pricing detail than is available in the last few hours before the bid opening, the schedule of values will likely be more accurate, detailed, and useful than the possibly-flawed breakdowns submitted in a frantic, last-minute apportionment among 45 arbitrarily-defined lump sum bid items.
When a contractor inadvertently omits something from their bid, or misallocates amounts between bid items, construction stage trouble may arise, including contractor cash flow problems or worse. Thus, an excessive number of bid items can increase the potential for claims and disputes, as a desperate contractor attempts to avoid losing his shirt. No one wants to have to “lawyer up” over this type of thing.
Therefore, the next time you, a client, or your consultant are tempted to require a substantial number of bid items, especially lump sum items, for reasons you can articulate only as, “I want a breakdown on bid day,” consider the many benefits of using a single lump sum (when the extent of the work is clearly shown and indicated) or the fewest possible bid items.
Kevin O’Beirne, PE, FCSI, CCS, CCCA is a professional engineer licensed in NY and PA with over 30 years of experience designing and constructing water and wastewater infrastructure for public and private clients. He is the engineering specifications manager for a global engineering and architecture design firm. He is a member of various CSI national committees and is the certification chair of CSI’s Buffalo-Western New York Chapter. He is an ACEC voting delegate in the Engineers Joint Contract Documents Committee (EJCDC) and lives and works in the Buffalo NY rea. Kevin O’Beirne’s LinkedIn page.