Make Money on Consultant-Led Projects

October 7, 2011

Q: Can a design-build contractor compete with the bid-to-spec contractor on consultant-led projects? And, do the consultants resent that we often do our own designs and favor those who don’t?

A: Here’s the deal… Yes, you can be competitive, but you need to bid according to the consultants design, what their specs call for and what the drawings show – nothing more, nothing less. Now, what I see happening in design-build integration firms is a tendency to re-engineer a design project once it gets into estimating. That’s where your costs start to escalate and frustrations begin to surface. I’ve seen where dozens of emails with RFI’s going back and forth attempting to modify the spec. I’ve seen attempts to discredit the integrity of the design in hopes of substituting the product. I’ve seen all sorts of direct owner intervention. These attempts to outthink the consultant never end well.

The bottom line is that you can’t afford to run a consultant-designed project back through your own engineering process and expect to be competitive. It won’t happen. You need to accept that there is more than one way to design a system if you choose to bid consultant work.

I hear all the time that we lose consultant jobs to others bidding at cost. Yes; and here’s why… your costs include things theirs don’t. Here’s an example: I saw a schedule of values for a project reported to be sold at cost. The materials were within 5% and the project management and technical labor was about +/- 5% from the high to low bidder. The commissioning, acceptance testing, as-built drawings, documentation, etc. ranged from$2,200 to $24,000. The interpretation of on-site personnel required during the close out phase swung the job as the consulting firm was responsible for testing and commissioning. The design-build firm who was high insisted that their design team, field techs and service manager all be present during testing and training in order to be fully responsible for warranty. Look for clarity in this area.

On consultants favoring those who do only bid projects, no, I’ve never seen any preferences, which is good because about 75% of our members consider themselves to be design-build firms. Now I have seen companies quickly moved off the approved bid list for future projects in they continuously challenge the design, value-engineer, or make substitutions that cheapen the job rather than improve the final result. The consultants I know recommend and prefer integrators based upon work results, taking care of their clients and reputation. You should also be aware that in many cases the consultant isn’t necessarily the final decision maker on taking a low bid. In some cases they have very little to do with the award of the contract itself. But when they do, they are under pressure from their clients to accept what appears to be the lowest qualified bid.

And in the worst case scenario the owner brings in a contractor that contacted them directly which takes away all control from the consultant. These factors contribute to many good projects that have gone bad. — CW

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