# Getting tired of bidding



## jmacd (Jul 14, 2009)

> The only consolation remains is value. A smart GC or home owner will realize that you, more often times than not, get what you pay for.


True if this is a job that was paid for upfront. 

I will state some facts that anyone that has done commercial work in the past is painfully aware of.

When doing commercial work you are not paid any amount until work is completed to specs and then the GC can still hold back as much as 10% for one year after you finish. 

The argument that "you get what you pay for" doesn't hold true because the GC doesn't pay until he gets whats in the specs and approved by owner and paid for by the owner.

The GC has every incentive to shop for the lowest number and past performance doesn't have much value if he can find a sub that can do it cheaper. In the end price is king and you as a sub have to find ways to do the work cheaper than your competitor or stick to residential work were past performance could mean something.


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## cexcavation (Apr 17, 2008)

jmacd said:


> True if this is a job that was paid for upfront.
> 
> I will state some facts that anyone that has done commercial work in the past is painfully aware of.
> 
> ...


I can see the validity of your points in most respects. One thing to think about, however, is holding back payment on work not completed, 10% retainage, etc. isn't really a benefit to the GC if his job is stuck in the mud so to speak. 

Point being, time is money, and a lower priced sub can cost you more time than a properly prepared/skilled sub who gets in and out efficiently. 

If a GC is all about making money in the end, he would be wise to choose the guy who knows his stuff, makes the GC look good and charges fairly. 

As soon as we start believing that low price wins then the low price will win..........if quality companies begin lowering their pricing just to beat out the next guy, then the consumer gets to drink wine on a grape juice budget while we starve.:thumbsup:


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## Electric_Light (Nov 25, 2007)

cdkyle said:


> The only consolation remains is value. A smart GC or home owner will realize that you, more often times than not, get what you pay for.


While this isn't wrong, they don't hold a linear relationship and like everything else, it follows a diminishing return trend. 

What the contractors usually isn't what the customers want. They want to maintain the cost as low as possible while maximizing price.


"in other words... how much does it raise our cost in order to get away with charging twice as much price on this project?"

and in customers view "how much can I shave cost without sacrificing quality?" 

In residential stuff, I think its almost expected that customers purchase parts through their contractor and cost is hard to estimate since parts markup is a big chunk of the retail price. I've also seen contracts that stipulate parts markup (i.e. labor at negotiated rate and parts at xx percent markup and make invoice available at request).

Contractors are usually hired for their skilled labor, but you don't really need them for buying stuff, so utilizing them for unnecessary things is a waste of money. 

A HO may buy entire set of bathroom fixtures through his re-modeler, but a property manager replacing all the water heaters at his 60 units is not gaining value by purchasing the water heaters through a plumber. He might even get a better deal through his supplier on a wholesale account than a contractor could based on volume and credit rating. A contractor is not really needed until the actual installation. The same model water heater is the same thing regardless of who made the purchase, so its possible to get the same product (parts + install) without involving contractors as middlemen in parts/product purchasing.


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