# Why is Job Bidding done in Secert?



## Treasurehoard (Dec 17, 2004)

*Why is Job Bidding done in Secret?*

Why is the bidding for a job done in secret?


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## Glasshousebltr (Feb 9, 2004)

For the same reason your boss at Burger World told you to keep your pay to yourself.

Bob


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## Treasurehoard (Dec 17, 2004)

Glasshousebltr said:


> For the same reason your boss at Burger World told you to keep your pay to yourself.
> 
> Bob


Yes ok it was funny the first couple of times you were being a dumb ass but really do you know anything about this industry? I mean I am seriously looking for information here. Would someone please confirm that this is a forum finding out information?


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## Glasshousebltr (Feb 9, 2004)

Bidding is done in secret to: 
1. Keep the K-mart shoppers from turning the process into an auction 
2. Keep a professional atmosphere among bidding contractors.
3. It's really no one else's business, except maybe the IRS.

Bob


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## hatchet (Oct 27, 2003)

In addition and expanding on point 2 of Glass's... to keep the bidding contractors from bid shopping. But honestly - it's not secret just a set date and time for final entries. After that's it's public knowledge. On most of our large commercial jobs we get a final bid list and what their bids were.


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## Treasurehoard (Dec 17, 2004)

ok so I can understand why they would do it in secret to make the bidding prices lower. Wouldn't they go even lower if they all knew the prices everyone else was giving and they did multiple bids against each other (of course the lowest bid would still win in this case)? 


For Example company 1 bids 90,000, company 2 bids 89,000, company 3 bids 85,000 so company 1 bids 84,000 and company 3 can still go a little lower and wins the job with 82,000? If they are only allowed to place 1 bid each then company 3 would have won with 85,000 but instead company 3 won with 82,000.


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## wasdifferent (Dec 18, 2004)

No, company 3 might been able to do the job for $79,000, but saw that he could win the job at $83,999.
-Mike


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## Treasurehoard (Dec 17, 2004)

mikesewell said:


> No, company 3 might been able to do the job for $79,000, but saw that he could win the job at $83,999.
> -Mike



Good point ... ok so say there is a margin on the bid ... such as if company 3 wanted to bid again to win they had to place a bid a minimum of $2000 less then the last bid. That way no one can just bid $1 less and win because that would really suck. So that would force company 3 to bid 82,000 if they wanted to win or else they couldn't bid.


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## wasdifferent (Dec 18, 2004)

PipeGuy said:


> What if company 1 has included $15,000 worth of stuff in their price that company 3 didn't even consider? How woud you know? How do you go about defining what it is that's being bid on in such a way that the definition can't be exploited by a bidder?



By using plans and specifications.


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## Treasurehoard (Dec 17, 2004)

Well that is true but in either situation whether the bid was secret or not the company would have to do an estimation of what the job would cost them. The estimate would have to include Estimated Direct Costs + Markup for Overhead + Markup for Profit which would equal the bid price. In either case a company with the lowest estimate would win the job. Maybe it is just the fact that one company has a huge overhead cost and the other doesn't and so they can offer a much lower price. When they place a bid on a job it doesn't matter how they come to that conclusion (as long as they have included everything they need to get the job done right)


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## Treasurehoard (Dec 17, 2004)

mikesewell said:


> By using plans and specifications.



Right that is what the industry already does make estimates. It would done the same way that is currently. A plan would be given to the different people interested in bidding then they would go about figuring out how much they can bid. The only thing that would be different is the way that it is bid on.


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## TimWieneke (Nov 1, 2004)

"Why is the bidding for a job done in secret?"

For private projects the answer is simple - Construction isn't about the cost of a project, but the value of the project. You could have 2 additions built off the same architectural plans. One is built by a team of professionals with decades of industry experience. The second is built by a crew of hacks. Should both cost the same? Heck no. How much more should the first one cost? Depends - what's it worth to the customer? How much it's worth is an indicator of the customer's PRIVATE financial status - hence secret bidding.

In dealing with public projects (and some private as well), check on the legality (or illegality) of collusion between contractors working on a project.

Tim


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## Glasshousebltr (Feb 9, 2004)

Private bidding is supposed to help control kickbacks, but it some cases it gives an inside fella a head start..........Kinda sucks when your not that fella.

Bob


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## Treasurehoard (Dec 17, 2004)

couldn't someone just as easily pay a kickback to someone doing a private auction? I mean that is pretty much a bribe to get the job. Either way if the person in control of the auction is unethical they will accept a bribe and just lie about who won ... cause what is going to stop them from doing that if they are already crooked.


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## PipeGuy (Oct 8, 2004)

Treasurehoard said:


> “I mean a rock would be good but then again rocks have been around since pretty much forever and you have only been around since your daddy made a mistake with your momma and forgot to pull out.”
> 
> “Hell you guys probably don't even have anything to do with the construction industry your probably a bunch of punk 15 year old kids who are hidding out in your basements with your pale faces covered with acne and your hands covered with blisters from looking at to much internet porn.”
> 
> ...


Does anyone really think that the author of this kind of stuff merits more thoughtful consideration? Think of me what you will...I certainly don't.


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## Hammertime (Aug 8, 2004)

Lowest bid doesn't always neccesarily get the job.


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## hatchet (Oct 27, 2003)

Very true Hammertime - should be defined as the lowest "qualified" bidder.


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## Glasshousebltr (Feb 9, 2004)

PipeGuy said:


> Does anyone really think that the author of this kind of stuff merits more thoughtful consideration? Think of me what you will...I certainly don't.


I think he was just fireing back the only way he new how Pipe, if he sticks around here long, I'm sure we'll teach him to be sarcasticly arrogant.

Bob


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## Treasurehoard (Dec 17, 2004)

PipeGuy said:


> Does anyone really think that the author of this kind of stuff merits more thoughtful consideration? Think of me what you will...I certainly don't.


Why Don't you just give up on it already. If your not interested in giving any help then thats fine. I have been to lots of different types of forums. Most of the time the adults forums like this one actually have people who try to act like adults. The forums that are full of teenage kids are the ones that I would expect to act like this. If you just want to cause trouble maybe you should go hang out with them. I am not interested in getting into another flaming contest with you. Sure it is funny but it is a waste of all of our time which could be put to better use doing something else more productive.


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## Grumpy (Oct 8, 2003)

Bidding is not ALWAYS done in secret. It depends who your customer is. You have to understand there are varying levels of complexity in the bid processs and that depends on who is involved. Who is the customer? Who is the architect, if there even is one? Who is the general contractor? Who are the subs?

See wheat I know is that in government work the bid is usually almost always "sealed" meaning it is submitted via envelope and opened publicly and ead aloud. The specs are usually very tight and each contractor is bidding the same thing. In these cases if contractor is qualified, lowest cost usually prevails.

Now take a service contractor such as myself who deals mostly direct with the customer. My bids are not secret. The customer collects his bid and hires his contractor based on many variables that are unique to only him.

You are asking a very general question with too many variables to really answer... But the best answer I can give is that bids are submitted sealed to prevent bid tampering.


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## lalo (Dec 20, 2004)

There is a new type of bidding process going on now days. It is the newest thing I have seen.

Target does this for most of their retail stores.
They pre-qualify a set of contractors and choose a few to participate. It is done over the Internet. The contractors are assigned a name something like Contractor 'A', 'B' or '1'. Almost like an eBay auction, the bid is started at a certain time and it ends at a certain time. The contractors can bid at anytime with in this time period. They can all see each other’s bids but they do not know who the bidder is. At the end of the session the lowest bid is awarded the contract.


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## Floorwizard (Sep 24, 2003)

> the lowest bid is awarded the contract


I am suprised anyone would take the lowest bid for labor.


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## lalo (Dec 20, 2004)

Florcraft said:


> I am suprised anyone would take the lowest bid for labor.


Why would you be surprised.


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## PipeGuy (Oct 8, 2004)

Florcraft said:


> I am suprised anyone would take the lowest bid for labor.


What value does a higer "price" add to labor?


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## Grumpy (Oct 8, 2003)

Being the lowest bid is a great way to go out of business, which is another reason I stay away from new construction... It doesn't suprise me though. Some guys like being the lowest bid. I dunno why, but they get all warm and fuzzy about it.

There is this one guy who installs windows. This guy has a reputation of bidding so low that he just has to walk into a pre-bid meeting and the place will clear out. The other guys know they can't touch him. 

How does this guy do it and stay in business? My gues sis he cheats his taxes and insurance. That's just a guess though. All I know is he has a seemingly very successful business built on being the lowest bid. 

Pipe Guy, you asked what value a higher price adds to labor? The answer is really easy. If you pay your guys more they are usually happier. You usually get better skilled employees when you pay higher wages. Also if you have a higher price you can offer nice benefits to your employees, thus making them happier. 

Now if the bucks stops at the management level then there is no added value to having a higher price other than the greed of the management. If it's shared evenly through out the company then everyone is happy.


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## Mike Finley (Apr 28, 2004)

Grumpy said:


> There is this one guy who installs windows. This guy has a reputation of bidding so low that he just has to walk into a pre-bid meeting and the place will clear out. The other guys know they can't touch him.
> 
> How does this guy do it and stay in business?


 :cheesygri :cheesygri :cheesygri Yeah, he's losing money, but he makes up for it in volume! :cheesygri :cheesygri :cheesygri


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## Glasshousebltr (Feb 9, 2004)

No offence Grump, but that almost sounds like comunisim.:cheesygri jk

Bob


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## PipeGuy (Oct 8, 2004)

Grumpy said:


> There is this one guy who installs windows. This guy has a reputation of bidding so low that he just has to walk into a pre-bid meeting and the place will clear out. The other guys know they can't touch him.
> How does this guy do it and stay in business? My gues sis he cheats his taxes and insurance. That's just a guess though. All I know is he has a seemingly very successful business built on being the lowest bid. .


"Contradictions do not exist. Whenever you think you are facing a contradiction, check your premises. You will find that one of them is wrong." 
-Ayn Rand




Grumpy said:


> Pipe Guy, you asked what value a higher price adds to labor?


Grumpy- It was my intent that the question be considered in the context of Target's practice of purchasing contract services from prequalified bidders on a lowest bid basis. What value is added to Targets purchase of services by paying something more than the lowest price for labor - presuming that the contractors have been objectively prequalified? 




Grumpy said:


> If you pay your guys more they are usually happier. You usually get better skilled employees when you pay higher wages. Also if you have a higher price you can offer nice benefits to your employees, thus making them happier.


Pay them 'more' than what? More than your competitor pays for the same talent? At what premium does the 'more' game end? Provided that a wage is not substandard, I think that the quality of the employee hired has more to do with market forces, the personality of the hirer and the effort put into the hiring process than it does the wage. 





Grumpy said:


> Now if the bucks stops at the management level then there is no added value to having a higher price other than the greed of the management. If it's shared evenly through out the company then everyone is happy.


"From those what got to those what need"
Paraphrased Karl Marx (Groucho's third brother)


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## Grumpy (Oct 8, 2003)

Pipe you said: I think that the quality of the employee hired has more to do with market forces.

And I agree. That's the whole point to paying better wages. It brings in better employees. You think you are going to get a guy worth $25, willing to work for $15? I've walked out of interviews once I have heard the offer. 

At my last job I wasn't even able to get the people I wanted into the interview beause of the wage I was forced to offer by my boss. How are you going to find a qualified and experienced office manager for $12 an hour?! That's what office assistants make!


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## Floorwizard (Sep 24, 2003)

> You think you are going to get a guy worth $25, willing to work for $15?


That is correct, you are not going to find craftsman for the price of hack's.
how smart is a contractor who has exceptional skills to bid low to get work?

It certainly is possible, and maybe some guys do it. But I have found in the business world that "you get what you pay for"

But I also do believe that if you are certain you are getting high quality install for a negotiated price, then go for it. But the trick is not to blindly pick the lowest price without examining "WHY" the price is low.
You just may end up getting what you asked for.

I have talked to plenty of businesses in the 8 years selling floor coverings. I have simply asked if I was the lowest bid, or the highest, or in between.
I usually NEVER hear I am the lowest bid, I usually am in the middle or sometimes the highest. But my close rate is great.
I know that it is because businesses and customers alike who are experienced, know that if you get a low bid, it's best to find out why.
if you like the reason why, then it's a no brainer.

Why would a contractor charge more for quality work? well, it's a little thing called self esteem.


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## Grumpy (Oct 8, 2003)

Flor, the difference between our customers and buying agents like Target or the US goivrnment is that the buying agent makes us, the contractor, sign our lives away and idemnify them of any of their own wrong doing. Pages upon pages of subcontractual agreements. 

If you screw up on one of these jobs, about your only recource is to file bankrupcy in some cases. 

*I think this story is important. Read this:* I did one government job where they wanted a certain roofing membrane that NEEDS to be installed in above 50 degree weather. I told them this, before we started anything. The whole roof was done except this small area. They wanted it done, and I told them I didn't want to do it wrong. They insisted I do it. I told them it was too cold, but if they needed it done they needed to sign a waiver agreeing I am not responsible for adhesive failures. They declined to sign and instead told me they were going to invoke their "time is of the essence" clause, which means that if I don't go do it wrong and warrant provide full warranty, they will hire someone else to do it and back charge me the difference. How fair is that?


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## Floorwizard (Sep 24, 2003)

I am suprised this wasn't discussed prior to install.
I also will refuse to do something wrong, and in some cases, I won't even except a waiver.
I have high self esteem, and will not take more liability than what is fair.
sounds like you walk the same path.


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## Grumpy (Oct 8, 2003)

Read above, it was discussed. In this case 8 squares of EPDM flat roof were holding up payment on 35 squares of shingles. I decided worst case scenario was one or two seams failed and I'd go back and fix em. One seam did fail. 

When the superintendant tried to give me a hard time about it; I said very loud and in a stern voice "Well what do you expect when you force me to do the job wrong?! I told you this would happen."


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## PipeGuy (Oct 8, 2004)

We agree - nobody worth their salt is going to work for a substandard wage if they've been at work in the market for long. And anyone that offers $15 to a $25 employee is either an idiot or a jerk - they deserve what they get. I also agree that trying to pay substandard wages is a losing proposition.

What I meant about the market goes more to the availabilty of talent then the price. When it's booming its next to impossible to hire talented, dedicated employees - they're all working! If you come across someone that looks exceptional you gotta' wonder (unless they just got off the bus) what's up with this? and look extra hard at what you might be getting.

Maybe there are companies that are paying wages that are 20% (or more) higher than the market for the sake of attracting the very best talent out there - I just don't see it happening. From what I can see wage rates by skill set seem to be within 1.5% of the 'average' from company to company within my market area. Maybe a little more on the unskilled end, a little less on the skilled end.

When I was grunting and found someone offering $9 when everyone else was paying $7.50 I always thought "If it looks to good to be true..." But that's just me.


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## lalo (Dec 20, 2004)

I know about the Target bidding system because I work for one of the pre-qualified contractors that bids on this type of work.

The company has an annual revenue of anywhere of 175million to 225m. They pay the industry standard in wages. On the perks side every employee is given health insurance at no cost to them, 401k plan and a profit sharing plan. The company has a safety program and provides the employees with standard safety equipment (Safety Glasses, Gloves, Hard Hats, safety lines, harnesses, and so on). They run an average of about 2000 men on a national level. Men are trained other than the safety Director most foremen have an osha10, 30 and a few have osha500.

The way that money is made this way is simple. The system is flawed; there is no professional to scope up the bids. Everybody is given plans & specifications with a list of scope items so everybody is apples to apples. You can no exclude anything on that list. Most people will do a takeoff and prepare an estimate. With the cost information at hand they will put in a very high number. It will come down and the lowest bid most of the time has a large margin but the customer does not know it. He is happy thinking he got the lowest possible bid from a list of qualified contractors that does quality work. They know they are going to get their moneys worth even if they go with the low bidder. Because the jake legs running their business out of their truck are out because they do not qualify.


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## PipeGuy (Oct 8, 2004)

lalo said:


> every employee is given health insurance at no cost to them


Lalo, who is the cost "to"? If the employer didn't pay for all of the cost (maybe they just paid 2/3, or even 1/2) who's pocket would the other 1/3 or 1/2 of that money be in? Just something to think about. I'm not sure I know either but I have an idea. Also, if it's a good idea for the employer to pay for health care, would it also be a good idea for the employer to pay for groceries? My annual food bill is way more than my annual medical expenses. Again, just a thought.

On the money making side - are you saying the contractor can make money by exploiting a bidding system that is flawed because, on Target's end, there's no professional to evaluate the bids as they are received on any basis other than price?


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## lalo (Dec 20, 2004)

The company pays for all of the cost of health insurance for the employee. The employee pays for Health Insurance for the his family. All employees have life insurance too.

MoneyMaking
I have not bid any Target Retail stores, but some of my co-workers have. When I turn in a bid I try and get my best #'s with a reasonable margin (usually what the market allows). Then you have to figure out if your apples to apples with the other bidders. With the Target System of bidding, you do not go in with your best #'s because you have a chance to undercut the next guy, and your going to try and not leave any money on the table. If all bidders are qualified and everybody is apples to apples then yes all they can make a decision on is price. The construction professional that can evaluate bids is very important; if they remove that guy from the equation then you could be paying twice as much. Target probably keeps track of how much their stores cost and compare the bids to that though. And they reserve the right to no accept any bids just like everybody else.


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## Treasurehoard (Dec 17, 2004)

I would much rather have Health Insurance then have them pay for my food. Sure it would seem like a waste when your not using it. Of course you probably spend less then $5000 a year on food depending on the size of your family. One hospital bill though will total way more then that if you have even a mild injury after the doctors get done jacking up there fees. If you have to stay in there for any length of time its not even funny. My friend was in the hospital for just a month. The bill just for staying there in the room was $205,000 ... that doesn't even include anything that the doctors did. The total for the bill is well over half a million now. No way anyone can afford to pay all of that unless they are crazy rich or have medical insurance.


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## hatchet (Oct 27, 2003)

This conversation has strayed a little but oh well  I don't see full expenditure of health insurance to employer as a bad thing  Yes it increases the costs to project owners - but IMO it's the price to pay to know that that employee will be at work and productive (at least in most cases hah).
The company I work for right now has some of the best insurance I've ever seen at no monthly cost to me - cost me $150 to have a child 2 years ago. Of course the company is self-insured too.


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## A.W.Davis (Oct 17, 2006)

BUMP :thumbup:


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## Tscarborough (Feb 25, 2006)

Some jobs are bid as an "auction". That is, the owner will determine a price, and allow contractors to beat that price, with several rounds of bids. It is a suck way to it for everyone but the owner.


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## A.W.Davis (Oct 17, 2006)

Tscarborough said:


> It is a suck way to it for everyone but the owner.


Yeap.........._but _it will suck for them when they choose the contractor that was $5000 cheaper than the rest and they do a wonderful hack job :laughing:


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## PressurePros (Jul 3, 2006)

lalo said:


> There is a new type of bidding process going on now days. It is the newest thing I have seen.
> 
> Target does this for most of their retail stores.
> They pre-qualify a set of contractors and choose a few to participate. It is done over the Internet. The contractors are assigned a name something like Contractor 'A', 'B' or '1'. Almost like an eBay auction, the bid is started at a certain time and it ends at a certain time. The contractors can bid at anytime with in this time period. They can all see each other’s bids but they do not know who the bidder is. At the end of the session the lowest bid is awarded the contract.



This was most interesting to me but how do they compensate for material variance and quality?


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## Celtic (May 23, 2007)

A.W.Davis said:


> BUMP :thumbup:



Next time you want to raise the dead (anyone else notice the last post was from like 2004? #*39*)...

Use the sign:










...thanks Mr. Bump











LOL


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## A.W.Davis (Oct 17, 2006)

Celtic said:


> Next time you want to raise the dead (anyone else notice the last post was from like 2004? #*39*)...
> 
> Use the sign:
> 
> ...


 
:laughing: you got it!


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## Celtic (May 23, 2007)

That thread was pretty old when it ended *12-21-2004, 10:57 PM *...

Think you could find and resurrect and even older one?:laughing:


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## tnt specialty (Apr 19, 2007)

Didn't go back to 04...didn't even read many of the posts.....

I encourage a pre-bid meeting with all bidders attending. That way everyone, including the customer is on the same page.

Keeps everyone honest.

I feel all the bids, (amounts), should be shared with the other bidders following the bid date/opening.


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