# Tough economy=lowballers??



## cexcavation (Apr 17, 2008)

I am curious if this is a fluke or if any of you are running into low ball bids lately? I looked at a demo job on a fire damaged house today. Cinder block foundation with footing, all of the interior appliances, housewares, etc-lots of stuff. Anyhow, just eye balling the volume, I figured (5) 30yd dumpsters so I would bid 6 @ $500 my cost (if the weight restriction is met else more $ from the sanitation co.-hence the 6th box) That was $3,000 actual cost just to get rid of the stuff, not even demo and loading. The homeowner wanted the property to be in sellable condition, which to me meant stubbing all of the existing utilities up to grade, capped and in boxes, area picked up by hand after major removal, existing ground work smoothed etc. I told him that if I had to bid the job, it would be at least $6,000 due to unknown variables but that was shooting from the hip (I only threw this out since he told me another guy looked at it earlier and I figured I would give him a realistic figure that would keep me from wasting both our time by working up a bid based on my hunch the other guy was cheaper) My hunch was correct and the customer related that the other bid was $3,800 using the same number of boxes from the same sanitation company!!! By the time the guy paid his overhead and fuel, he's taking one heck of a pay cut. Funny thing was that the homeowner said he ran his own numbers and was figuring/hoping on spending $6-7,000:thumbsup:.I know of this contractor and he is an excellent guy from what I know, does good work, and has been around for 15-20yrs. It seems like he is selling himself short, or we weren't bidding apples for apples. Let's hope our fellow contractors don't start selling the trade out due to fear. It still costs what it costs, and I can make more money sitting at home watching the tube since it doesn't burn $4.00/gal diesel and if I break the handle on my lazy boy who cares:laughing:. I have enough work to eat so it's not a big deal yet, I just don't want to start seeing customers get the Wal-Mart mentality and expect more for less based on low-ball bids that will break even the low-overhead owner operator outfits. Are any of you seeing this in your area. Dumptrucks are the same way right now with tandems going at $65-$70hr while burning $40/hr in fuel, $5-$10 in maintenance, and $5 or so in insurance/fees leaving the driver with about a $5/hr truck driving job-I bumped up to $80 just for the fuel difference, but not a lot of guys have figured that out yet and customers are still expecting $65/hr on deliveries. Long term planning means that prices need to stay up to at least an honest wage.


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## BKFranks (Feb 19, 2008)

I wonder if the guy quoted everything you did. The reason I say this is because I've know some contractors to be somewhat vague in their contracts, but when speaking in person making the person think they are getting everything they think they are, but when it comes down to it, some things end up being extra.

I could easy say to a customer, "Yeah, I can do that." That only mean I am capable of doing it, not that it's included. Customers hear that and think it's included so we end up ironing the details out later ofcourse.


The guy could be selling himself short like you said, or just giving his guys work because he desperate, or even losing his shirt with the lowball bid. I've been lowballed before. I've even had the pleasure of seeing the outcome and repairing their terrible work.


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## wizendwizard (Nov 11, 2007)

Not that I could follow all that run together but here's my view on it.

If the HO came to the same figures that you did, he may respect your bid more and throw you the bone. Knowing, as it would seem, the cost of this project. He may just be smart enough to realise the other guy is making a serious flaw in cost judgement. This would lead me to go with someone who came off as more knowledgable about pricing.

The big question is.... Did he refuse your estimate or not?


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## Blas (Jan 29, 2008)

I could bomb a job and still get beat by 60% right now. It is just ridiculous out there. Right now there are 30+ general contractors bidding every project and 20+ excavators bidding to those generals.:no: What a joke. Not to mention the fact that since the residential dried up you have allot of residential excavators bidding commercial work below cost, because they have no idea what they are doing. I could talk about this for hours.:furious:


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## SelfContract (Dec 6, 2007)

It's like a small fish in the pond shared by three big sharks.


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## cdub (Feb 4, 2008)

I expected to see a lot of silly low bids this year. But honestly, bids have been breaking down about normal. Except there's about 15 bidders on jobs where you would expect to see two or three.
I've bid everything with my usual margins and been competitive every time. I missed better than $1million in 3 jobs by less than .5% ( dad had the wonderful advice that I should've lowered my bids by .51%. Thanks dad:thumbsup

As relates to your question, there's always going to be guys out there that will turn in a stupid number regardless of the economy or how much work is out there. And I've also found there's a special class of contractors that prey on homeowners and individuals who might not know better by giving them a price to do a job but then bill something different in the end with a lot of excuses to back it up. They can be confused with lowballers, but are something else entirely.


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## cexcavation (Apr 17, 2008)

Thanks guys. I like to see what's going on outside of the local area in hopes of being proactive in case things are changing. I've had a few jobs that have felt like guys were too cheap, but there again I have been bidding on a fair amount of jobs-maybe I am just getting better at bidding which means I'm not always the lowest bidder. :thumbsup:


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## rino1494 (Jan 31, 2006)

We are fortunate to not have to worry about this. Customers call us to just to do the work. Some ask for a price just to see what it is gonna cost them. Out of all the work I bid this year, none of them got another price.


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## threaderman (Nov 15, 2007)

I put a ad on CL yesterday which said,"the last 4 estimates I gave were for people that started a project with un-licensed people,and either got terrible quality or were plain ripped off",and the ho has no legal recourse if they hire someone not licensed.I'm sure people think it's a scare tactic but it's the honest truth.I HATE when they call me though and say I've just spent all my money on a hack,you prices have to be low as I'm out of money.Well la de da,let me lose money because of your cheap-ness......yea,right.


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## Vermaraj (Mar 6, 2007)

Does your competitor have a lot of equipment notes or employees? 

Some contractors are in survival mode right now. Just trying to make enough cash flow to keep what they have. Keep the business operating while waiting for the turn. May seem stupid in the short-run. But the turn will come and sometimes the guy who's already there gets first shot at the new work. 

If your stretched out and lose your equipment now, when the turn comes it may be very difficult to get new equipment. Banks and leasing companies are losing their asses. Next cycle, financing will not be like the last cycle.


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## Bone Saw (Feb 13, 2006)

cexcavation said:


> I am curious if this is a fluke or if any of you are running into low ball bids lately? .


not a fluke


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## cexcavation (Apr 17, 2008)

My feeling is that the guys who are lowballing without consideration to actual cost will eventually get flushed out since that is more a move of desperation rather than a calculated risk. There are still customers with the finances to pay the honest rate for everyone. However, everyone is always looking for a deal and if we as contractors start obliging and reinforcing the belief that we are hungry, then it is more of self-created situation. I don't think the actual economy has as much to do with it as much as the fear of where the economy is-if that makes sense. I still have my regular customers who don't bat an eye at my pricing, and I occasionally even get tips, so the money is there if the quality of work is maintained. It is the homeowner's that start bidding contractors against one another in order to get work done on the cheap that feed this mentality. If everyone stays put, that homeowner will have the appropriate funds available 9 times out of 10 and the contractor won't have to be in survival mode. My thought is that other trades such as electricians, plumbers, etc. seem to have standard rates in each area. This turns the attention to the quality of work, timelyness, professionalism, etc. and everyone wins. It may not be possible to do with excavation due to the broadness of our work, but maybe it is something to look at. Any ideas??


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## tgeb (Feb 9, 2006)

There is a great deal of truth in your posts, let the lowballers have it is my motto.

I have been fortunate that I have reliable repeat GC's that I work for and they keep me fairly busy.

Finding GC's that will be as loyal to you as you can be to them can be tough.

With my guys I am usually "pricing" jobs (so they know thier budget) as opposed to "biding jobs" in the hope I get the work.

Sometimes I don't get the job based on price, and sometimes the builders get a lesson in who can do the work and stand behind it when things don't go well.

All in all, some you win some you loose.


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## woodchuck2 (Feb 27, 2008)

Hopefully i am not stepping on toes here and i understand what you are saying and going through but it may also be that the other guys equipment is bought and paid for and he has the ability to work for a cheaper price to stay afloat. I just went through a similar situation on a small job that i finished only to find out that a friend of mine had bid on it too. I unknowingly beat his price by $500, he bid $600 a day for 2 full days of work and i bid by the hour at $70 an hour "customer was also a friend of ours and i gave him a break". I did the job in 10 hours and this includes moving my equipment. He and i have the same size mini-excavator and dump trailer, but mine are bought and paid for and his are new and financed. He knew the job wouldnt take 2 days but he told me he overbid to help cover his payments. Now the owner wants me to go back in a couple weeks when the rest of the snow is gone and dig holes for fence posts. Greed cost my friend the job and potential work down the road. Thankfully there is no hard feelings.


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## tgeb (Feb 9, 2006)

woodchuck2 said:


> Hopefully i am not stepping on toes here...... i finished only to find out that a friend of mine had bid on it too. I unknowingly beat his price by $500, he bid $600 a day for 2 full days of work and i bid by the hour at $70 an hour "customer was also a friend of ours and i gave him a break". I did the job in 10 hours and this includes moving my equipment. ...mine are bought and paid for and his are new and financed. ..... Greed cost my friend the job and potential work down the road. Thankfully there is no hard feelings.


In comparison, I will not work my mini for $70/hour, and why would you not charge a move fee? 
Why did you not factor in any overtime on the 10 hour job, just because it can be completed in a 10 hour day does not mean someone should work the extra time with out some compensation.

Greed did not cost him this job, you not factoring in that your equipment needs to be paid for, regardless of whether you have payments due on it or not, cost him to loose a job he made have needed. 

Do you think that the rental companies would not charge the same rate for equipment regardless of whether they have a note on it?

"Mine is paid for" is a poor excuse for not charging properly, these machines have to be maintained and eventually replaced, where does that money come from if not worked into the equation?

Aren't you an electrical contractor?

Don't take any of this as hostile woodchuck, I am just making some noise.


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## Blackhammer (Mar 2, 2008)

tgeb said:


> In comparison, I will not work my mini for $70/hour, and why would you not charge a move fee?
> Why did you not factor in any overtime on the 10 hour job, just because it can be completed in a 10 hour day does not mean someone should work the extra time with out some compensation.
> 
> Greed did not cost him this job, you not factoring in that your equipment needs to be paid for, regardless of whether you have payments due on it or not, cost him to loose a job he made have needed.
> ...


:furious::furious::bangin:We need a smiley for stirin the pot.


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## cexcavation (Apr 17, 2008)

Dido on Tom's points,

This is where communication between contractors is key. All of my equipment is paid for except for my Excavator-almost there:thumbsup:. I perform all of my own major and minor repairs, convert and restored my dumptrucks, do my own books, etc. These things result in keeping my overhead very low, which should equate to better serving my customers and encouraging further growth of my company. The fact that I do these things should be rewards for my company and not more money in the customer's pocket-I don't stay out in the shop till 3am at times just for fun. What I am saying is, hardwork not greed is what will make you money in this business. That is of course, assuming that all of your fellow contractors aren't driving the prices into the toilet in order to be the hero who can be cheaper than everyone else. If your equipment is paid for, you don't start rewarding the customer by lowering your price........that makes no sense when it comes time to replace your worn out stuff that is slowing productivity and eventually costs the customer more anyhow. Just my 2cents as to why we need to quit trying to be "heroes" based on price, and start steering customers towards looking at professionalism, timelyness, budgeting abilities, quality, cleanliness, ability, etc. etc. I turn down jobs that I know I am not qualified to do, and recommend contractors I know that are. I get referrals from other contractors just the same. We are all on the same team:clap:

This is good conversation.....lets keep it up if it helps anyone-it helps me.


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## MBS (Mar 20, 2008)

woodchuck2 said:


> Hopefully i am not stepping on toes here and i understand what you are saying and going through but it may also be that the other guys equipment is bought and paid for and he has the ability to work for a cheaper price to stay afloat. I just went through a similar situation on a small job that i finished only to find out that a friend of mine had bid on it too. I unknowingly beat his price by $500, he bid $600 a day for 2 full days of work and i bid by the hour at $70 an hour "customer was also a friend of ours and i gave him a break". I did the job in 10 hours and this includes moving my equipment. He and i have the same size mini-excavator and dump trailer, but mine are bought and paid for and his are new and financed. He knew the job wouldnt take 2 days but he told me he overbid to help cover his payments. Now the owner wants me to go back in a couple weeks when the rest of the snow is gone and dig holes for fence posts. Greed cost my friend the job and potential work down the road. Thankfully there is no hard feelings.


 All of my equipment is paid for, and I would never consider lowering my prices because of it. I paid a high price of sweating the payments through out many long winters, and I pay for parts and repairs, not my customers. There is no way any customer has earned a lower price because of it. That "payment money" is mine and I earned it the hard way. Thats what I've been working for. I can't imagine why anyone would want to give that away. Cutting my price is cutting my own throat, and also helps lower the overall rates charged by others in the business. It hurts everyone. I'm not doing anyone but the customer a favor by lowering my prices, and as I said, they didn't do anything to earn it.


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## denick (Feb 13, 2006)

I've encountered prices that are much different than mine quite a few times over the years. I did some investigation on some of the projects that prices differed greatly. On residential work most of the time the bids weren't apples to apples because of the owners direction / specification to the bidders. Or the owner let each contractor propose their way of doing the work and then put the bids up as equal.

It is a matter of fact that 90% of customers see no "value" in what is buried under the ground. It needs to be done! Done fast! And at precieved cost!


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## woodchuck2 (Feb 27, 2008)

tgeb said:


> In comparison, I will not work my mini for $70/hour, and why would you not charge a move fee?
> Why did you not factor in any overtime on the 10 hour job, just because it can be completed in a 10 hour day does not mean someone should work the extra time with out some compensation.
> 
> Greed did not cost him this job, you not factoring in that your equipment needs to be paid for, regardless of whether you have payments due on it or not, cost him to loose a job he made have needed.
> ...


Yes, i am an electrical contractor primarily but i also do other jobs too. I gave the guy a break by not charging the normal moving fee and only charged him by the hour to move the equipment instead. I picked up the job when i gave him an estimate to dig a trench for a sub-panel that will go from his house to his new garage that he is building and i will be wiring. I checked around with other contractors and most charge $60-$70 an hour for a small machine, price per hour goes up with size of equipment and location.
Just to clear things up of my trade/business: Panther MT Electric & Home Maintenance- residential/light commercial electric, Guardian dealer/generator installations, small excavation, tree cutting/stump removal, snow plowing/removal/sanding, roofs, decks, siding, lawn mowing. 
I do probably 75% electrical and i pick and chose the other jobs if it pays well, otherwise i pass the jobs on to friends who are in that field of expertise and will do quality work. Over the years i have worked in all these fields and have the tools to perform those tasks. I have never sold any tools, they can and should make you money and there is no reason not to be working and making money.


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