Sunday,
How subcontractors view and bid – general v. const. manager
REMINDER: all these blogs' references to construction manager are to the particular form of construction management services being used on public school building construction in which the work of the project is bid by “work packages” directly to the school district.
Subcontractors bidding work packages must provide performance and payment bonds to the school district. Since most subcontractors do not provide bonds when bidding to a general contractor, the cost for such bonds tend to be 2 to 3 times higher than that of the general contractor. The extra paperwork and fees for such bonds also tend to limit the pool of subcontractors bidding the project. Only the very largest subcontractors work with a bonding agent on a regular basis and have the necessary paperwork to get bonds quickly. Also, the work of most rural school districts tends not to be all that attractive to the larger subcontractors, and they don’t like the headaches of dealing with multiple small contractors under this CM type of contracting.
When bidding to a general contractor, subcontractors do not typically bid their work by covering a complete specification section, because various work items overlap sections. They do not have the expertise to evaluate the complete plans and specifications for problems; they rely on the general contractor to do so. A material supplier may quote a complete price for his item for the entire project. [For example, reinforcing steel is used in various items of work, but the reinforcing suppliers typically quote to a general contractor all the reinforcing steel for the project as one lump sum item, and expect to deliver it accordingly; the concrete section will be used by the contractor doing the concrete work, the masonry reinforcing will be used by the masonry contractor, etc. but the general contractor will purchase and supply it where it is to be used]. In bidding work packages, the material supplier must determine which portions of his supply will be used by which contractor, and how many separate deliveries he must make. He must assess whether each subcontractor will pay on time or if he may not get paid until the end of the project. Subcontractors must include money in their bid for such items as on-site electricity, water, waste hauling, lifting, and so on which are often provided by the general contractor on typical jobs.
With all these different problems, a subcontractor will add to his price a substantial sum to cover the extra costs. This is also true for a variety of material suppliers who are used to quoting a general contractor; they do not have a track record with the subcontractors, so price accordingly. Therefore, the extra costs are piled up and the school district is the loser.
Next blog: The actual bidding and opening of bids
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