Picking up the phone and talking to vendors

Wait, so I have to actually talk to someone?

A co-worker of mine gained an edge on a bid a few years ago through his ingenuity.  

Our company was bidding on an interstate mill and overlay job with several thousand feet of guardrail work. The DOT let the job as an “A+B" bid. For those who are unfamiliar, an A+B bid typically works as follows:

• The “A” portion of the bid represents the Contractor’s total price to perform the work.
• For the “B” portion, the Agency assigns a daily user fee ($10,000 per day in this case). The “B” portion is the Contractor-determined number of days to complete the work multiplied by the daily user fee. $10,000 is also the amount that gets charged to the Contractor for inexcusable every day that the schedule extends beyond the original number of days provided by the Contractor.
• The “A” portion combined with the “B” portion is the total amount considered for award.
• This method incentivizes Contractors to work faster, minimize impact on the traveling public, and reduce inspection cost. It also presents an opportunity for contractors who work faster to win a bid with a potentially higher price to perform the work.

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My friend called a guardrail subcontractor prior to the bid to discuss sequencing. It turned out that the guardrail subcontractor could work within the patching, milling, and paving lane closures to perform their work. This reduced the overall number of days to perform the work by 30 or $300,000 (30 days x $10,000 per day). There were 4 bidders on the job. None of the competitors thought to do this. Our firm capitalized on the strategy and won the bid. This was partially the result of a strong relationship with a trusted subcontractor that involved a personal touch to better understand their work and approach.

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Bids are not complete without the best available subcontractor and material suppliers on board. On many unit price highway bids, subcontractor controlled items comprise over 70% of the bid item count. Picking up the phone to discuss upcoming bids with key vendors (pre-quote and post-quote) will improve outcomes. In today’s competitive markets, every potential edge matters. Sure, emails and/or document portals are a must for documentation. But emails alone do not suffice. A blind RFQ is just another of the tens or hundreds of emails that subcontractors receive every day. These folks are busy just like everyone else. Standing out and getting what one wants means speaking to a real person and being prepared with a list of requests, questions, and knowledge about the bid.

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Below a few reasons why personal, pre-bid conversations with vendors can be a differentiator:

1. Not everyone does it.
2. Establishing lines of communication upfront. Who is running point on this bid for the prime contractor and whom should I contact moving forward?
3. Everyone desires to be heard. Vendors and partners may possess a wealth of information, including competitive insights. They are pros, and the best ones know their work inside and out. They may see things that others do not, and these thoughts are unlikely to be volunteered via email.
4. Clearly outlining expectations (e.g. what to to include/exclude) before the bid improves the likelihood that subcontractors/suppliers quote prime contractors “apples to apples”. For instance, if you ask a subcontractor to include their traffic control, they are likely to include this for everyone else too. Inclusions should be confirmed in writing, but the “why” behind the request matters too.
5. On large, complex bids with subcontractor dependencies, extensive plan and sequencing reviews may uncover potential risks and opportunities.

We welcome your thoughts (both prime contractors and subcontractors/suppliers alike) on pre-bid communication as we progress on our journey of the 8 fundamentals.

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At Edgevanta, we are building a technology to help solve the project acquisition process for highway contractors.

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Sincerely,

Tristan Wilson

CEO and Founder

Edgevanta, LLC

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This is the 6th part of a multi-part series on the project acquisition process of the construction cycle for highway contractors.