I remember the first time I had to read specifications. They were part of the bid documents for a new Bank of America building. My boss walked in my office one morning, dropped a specification book on my desk and said, “Here, read this.” Talk about being thrown into the deep end.
Since this was my first specification, I was quite apprehensive, but it turned out that some of it was easy to understand. The sections covering outlet boxes, devices, conduit and wire were, for the most part, very straightforward. Switchgear, lighting, fire alarm and other quotable items required quite a bit of learning, mostly because of the technical terms, jargon and abbreviations.
Early on, the scariest part of the specification was usually the beginning; most often, these were general conditions, written in legalese. It became apparent quickly how important it was to understand the legalese, as a few words could represent a major cost.
Games people play
After learning how to read specs, a new “game” called “How can we win the bid and still comply with the specifications?” became the order of the day. I know it’s a long name, but it was an essential part of my life as an estimator. Since I became an estimator, the bidding landscape has become more competitive, eventually changing the game to “What can I get away with excluding?”
My colleagues and I studied plans and specifications closely, looking for any advantage we could find. We started excluding scope or generating requests for information (RFIs) on any gray area in the bidding documents. The exclusions were used to get our base bid as low as possible because the low number gets looked at before the exclusions are noted. The RFI strategy was used to cause an addendum to be issued, hopefully making our competitors include the gray-area costs in their bids.
My customers and I have seen a growing trend since the recession started. We have documented the fact that many bidders are ignoring the specifications. Some are adding a qualification to their proposals, stating they are bidding to the minimum National Electrical Code requirements. They believe this relieves them of the responsibility to follow the specifications. Others are bidding to minimum Code requirements with no qualifications or exclusions at all.
I understand the reasons some contractors resort to this kind of bidding, but even though times are tough, this is a risky practice. Sometimes, the bidder gets away with this strategy or is able to work out a deal with the owner. Other times, the bidder is made to comply with the specifications and will lose money on the project (if he or she does not walk off).
One of my customers was in a perfect position to “catch” a bidder that was ignoring the specifications. A friend of his was constructing a commercial building. He bid the project to his friend but was not low by a substantial margin. The builder gave the job to the low bidder but then hired my customer as an electrical inspector. Sure enough, the low-bid contractor started substituting everything with the cheapest materials and methods available. When the contractor was stopped and told to comply with the specifications, he walked off the job.
The most prevalent practice I have seen is bidders ignoring a specification requirement that all conductors be run in raceways. They base the bid on MC cable instead. Other bidders substitute commercial- or residential-grade devices for specification-grade devices. I also have seen aluminum conductors substituted for copper. And of course, lighting fixtures are always substituted. How does an honest contractor compete with this kind of bidding, and how can you level the playing field?
Doing the Limbo
I have always believed, and most of my employers have required, that the base bid be per plans and specifications, with substitutions and value engineering added to the end of the proposal. However, since the industry keeps getting more competitive and the low number gets noticed first, my beliefs have changed. I have been recommending to my customers that they make these kinds of substitutions for their base bid but keep them above board by writing detailed qualifications in your proposals. Get your preliminary proposals (without bid numbers) to the general contractor (GC) or customer as soon as you can. I also recommend including adders for the specified materials and methods if the customer wants them. I have seen this kind of proposal prompt the GC/owner to ask if the other contractors are bidding to the plans and specifications. Of course, many GCs don’t care what’s in your bid. That’s another story.
About The Author
CARR has been in the electrical construction business since 1971. He started Carr Consulting Services—which provides electrical estimating and educational services—in 1994. Contact him at 805.523.1575 or [email protected], and read his blog at electricalestimator.wordpress.com.