Ontario Electrical Contractor 29 T BUSINESS Bidding Risk and Bidding Decision By Dr.Awad Hanna, PE, FASCE, NAC The most common means for electrical contractors to procure work is through competitive bidding. In general, most public agencies, such as provincial or federal governments, rely heavily on competitive bidding to acquire and award work to contractors. Electrical contractors (EC) typically contract with General Contractors/Construction Managers as a subcontractor or contract directly with the province as a separate prime contractor. In addition, EC can bid for work under the traditional delivery system, which is sequential with the design typically complete at the time of the bid. When bidding for fast-track model with design and construction overlapping, this creates a substantial risk for the electrical contractor, as the design document(s) is dynamic, rather than static, and there is always a difference between bidding document(s) and construction document(s). In the experience of this researcher, in the Fast-Track model the design documents are released between 70 and 80 per cent complete. Because of the fast-track nature of today’s construction, EC need to quickly evaluate the bidding risk. There are many factors to consider, among the most important are: schedule, type of project, design completeness, source of funding, your company’s current workload, and cash flow. It is recommended that EC do not competitively bid if work load/cash flow or two or more of the other project variables are negative. If EC are required to bid to keep a good client relationship, EC should adjust Contingency or Factor to reflect manpower and cash flow situation. Schedule analysis is important to accurately gauge a project timeline. The schedule must contain realistic and attainable completion dates. EC should check to see what milestones are required and if any associated liquidated damages are involved. Also, keep in mind how such external factors as site access, condition and other trades will affect the schedule. One of the most important factors in bidding is to have a clear and complete definition of the scope of a project. Investigate the quality of the design and determine if there is previous experience with the designer. Also, examine similar projects your company completed in the past and consider the size and complexity of a potential project. If a project is unique, ascertain how many bidders are capable of pricing the project. Make certain that resources are in place for a profitable project. These resources include bonding capacity, start-up capital, positive cash flow, ability and skill of workers, and quality of supervision with the proposed type and size of work. Although your company may currently have adequate resources for a project, EC should take into account how workloads at other jobs will affect a project when it begins (such as availability of overtime pay elsewhere). Also, consider the source and continuity of the project’s funding and what the procedure will be for getting paid. A careful review of project variables before bidding will help determine a project’s success. Simply creating an estimate of material, equipment, and labour does not accurately determine a bid price or even determine if a project is worth bidding. Conducting a pre-quote analysis, however, will mitigate project risk and give a clearer indication of whether or not to bid based on potential profitability and risk. Dr. Awad Hanna is Boldt Company professor and chair of the Construction Engineering and Management program at the University ofWisconsin- Madison. Professor Hanna is a consultant to the construction industry and longtime provider of management training to Canadian companies and ECAO. He can be reached at ashanna@wisc.edu Be Confident In Your Gear! High quality Arc Rated/FR Safety Apparel, Workwear & PPE from top brands to keep you safe, comfortable & looking great on the job! Workwear – FR Gear – Custom Uniform Programs – Branded Apparel & Promotional Products info@truesafetygear.ca 877 605 0822 WWW.TRUESAFTEYGEAR.CA