How to Analyze Subcontractor Bids

General Contractors
September 22, 2021

Come bid day, many estimators only look at the bottom line when analyzing subcontractor proposals for their project. The subcontractor with the low bid is often the one who wins the project, but that doesn’t mean you should automatically pick the sub with the lowest price. There are other factors, including experience, scope of work, and work quality, should be looked at before making a selection.

Experience

Does the subcontractor have experience working on similar projects? It can be hard to tell when all you get is a one-page estimate from them. If your company has worked with them before, then you’ll have experiences to draw from to know about their experience and the type of work they do.However, if they’re new to you, you will want to contact them to get references so you can qualify them before using their bid.

When assessing a subcontractor’s experience, look for similar projects, their ability to complete the work on schedule, how many change orders they submitted, the quality of their work, and their safety record. All of these factors will influence whether they are the right sub for your project.

Proper licensing

Most states require construction contractors to be licensed and bonded before they can work on projects. In some states, only general contractors or trade subcontractors have to register. Make sure that the subcontractor is registered in the state the project will take place in if it’s required. You’ll also want to note how long they’ve been licensed, as the more experience they have, the better.

Also, ensure that the sub has the correct license for the work they’re going to be performing. Not only does the trade need to match, but some states make a distinction between residential and commercial licenses.Make sure that the sub has the necessary license for your type of project.

Scope

Comparing the scope is tricky. No company details the scope in their bid the same way. It can sometimes be almost impossible to tell if two subs have included the same work in their proposals. First, look at the inclusions and exclusions if they’re listed. Reviewing the exclusions usually gives you a good idea of what they’re not bidding, which helps narrow down what they are bidding.

An accurate take-off of all the scopes of work on a project will help you figure out what is covered and not covered in a sub’s bid. If you know there are specific items that need to be included for the scope to be complete, you can look for those and reach out if you don’t see them.

If the subcontractor hasn’t provided a detailed list of what they’ve included, you’ll have to contact them to confirm that they’ve included everything that you found during your take-off. This is the best way to confirm scope and make sure you are comparing subs correctly.

Price

As was said before, you can’t automatically use the lowest bid. In fact, if a sub has a significantly lower number than the rest of the subs for that scope, there’s a good chance that they’re missing some section of the work.

Before committing to their number, verify with the sub that the bid consists of all the necessary factors.

Making a selection

In the best of worlds, the subcontractor with the lowest bid would be the best one for the project, and estimators would have it easy come bid day. Unfortunately, it doesn’t work that way. Estimators have to have a clear understanding of the project they are bidding, knowing what each trade’s work includes, so they can judge whether the bid is complete.

They also need to know which subs have the required skills and experience to complete the project for the price quoted in the schedule’s time constraints. Assessing this can be difficult. Looking at a subcontractor’s licensing records and calling a few references can make the decision easier.  

If you’re a GC and need more subcontractors to bid your projects, you can post your projects on planHub, for free.

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