Economic situations dictate all types of behavior. Contractors have options when business and the economy are booming, including the ability to be selective about the types of projects to bid. When the economy is down, contractors experience a more competitive marketplace—fewer projects to bid and more competitors to bid against. Because of these dynamics, contractors must differentiate themselves from the competition.
Important Questions
“Why me,” is a question that each subcontractor needs to ask. “Why this subcontractor,” is certainly a question asked by the general contractor. Why should the general contractor select one subcontractor over another? What does the general contractor look for? What are the selection criteria? What makes a subcontractor not simply the lowest bidder, but the best bidder? What needs to happen to secure this win, as well as set alignment to win the next several bids? The answers to these questions are important to general contractors, developers and owners. It is imperative to provide reasons why price isn’t the only way to determine the winning bid.
Scope of Work
Everyone wants “it” for less, but expects more. The owner wants the architect to give more, but design for less; the architect wants the general contractor to deliver more, but build for less; the general contractor wants the subcontractor to do more work faster, but do it for less; and finally the subcontractor wants the supplier to lower its costs, but deliver ahead of full payments. Is less really more? Is more really less?
A thorough and complete understanding of what is being asked of the subcontractor is essential. What exactly does the bid contain? Knowing the intimate details of the project is the subcontractor’s foundation for building trust with the general contractor. Using a color-coded digital takeoff provides a way to easily identify the details of the quantitative measurements. A visual representation of the takeoff simplifies information sharing and will easily set one subcontractor apart from another. Going a step further, inserting color-coded legends on the pages of the documents enhances the understanding of the takeoff. These documents are then ready to be printed or saved as PDFs for mailing or emailing to the appropriate parties.
The bid should be flexible with the quantity takeoff in order to be summarized by bid package breakdowns, building areas or phases. The ability to drill in and out of the estimate will allow a subcontractor to provide a level of detail not often communicated to a general contractor. A valued subcontractor leverages the power of digital communication to share the details of the project with the general contractor. A “live takeoff” demonstrates a full comprehension of what the work will entail and that the bid submitted has all aspects under consideration.
Sending a takeoff file (in a protected status) to be viewed by the general contractor is powerful. The subcontractor has aided the general contractor by providing a more thorough understanding of the project details. In turn, it provides the general contractor with a higher level of confidence in the subcontractor. Partnerships begin with this level of trust.
Critical Communication
All relationships sink or swim when it comes to communication. This is inherently true of business partnerships, especially between general contractors and subcontractors. There are critical communication times during the takeoff and estimating process. It is essential to be as descriptive as possible when completing an RFI or change request. The longer time goes between the subcontractor identifying an issue and the general contractor learning of the issue, the higher the probability there will be a breakdown and profitability will go out the window.
Some subcontractors still lug a set of plans to the copy machine and attempt to align the area where the issue resides. At best, this copy is printed or faxed in black and white and sent to the general contractor. A more efficient and effective method is to send the section of the plan that is in question electronically; retain the color-coded takeoff and imbed hot links to details, photographs and specification documents. This includes items discovered by the subcontractor or submitted via change orders.
The power of digital overlay (placing a set of revised plans over the original plans) identifies within seconds the part of the original plan that is “dead” (colored red) and the part that is “new” (colored blue). Online digital takeoffs, the ability to copy current views of the plans and instant communication of changes via any digital online device are incredibly beneficial. Rather than waiting for the plans in the mail or deciphering a fax, the general contractor receives an email via a laptop, tablet or smartphone with all the information that illustrates the issues at hand. Putting the right information in the right hands at the right time empowers a person to make informed decisions. It ultimately saves time and money while reducing labor risks.
Itemizing Scope
Flexibility and adaptability are key traits of a valued subcontractor. General contractors often have requests that need immediate response, especially on bid day. For example, the ability to quickly present price scenarios for various scopes of the project demonstrates to the general contractor that the subcontractor completely understands the project. The most efficient way to handle these ad hoc requests is by leveraging automation that separates the bid into areas or phases.
Dynamic reporting that shows bid detail and summary by selected area allows the subcontractor to respond quickly and accurately to the general contractor. As mentioned earlier, the information is sent electronically, ensuring that the response is in the hands of the general contractor ahead of the competition. A greater level of detail added to an estimate enables the subcontractor to be more nimble and provide varying price scenarios when requested.
Scope ultimately determines if a bid is won or lost. Being flexible with scope is best done with a collaborative takeoff and estimating process. While it is possible to provide specific information on an estimate manually, doing so is inefficient. Automation assists in bid condition detail identification and makes reassigning bid items to different CSI sections more powerful. Each effort the subcontractor makes to help the general contractor understand the price and align it to the scope of work elevates the value delivered. Building a long-term relationship with a general contractor is an ongoing process. Don’t make the general contractor guess the meaning within an estimate. Be clear and elaborate on the qualifications provided.
Winning the Bid
The subcontractors that position themselves as greater assets to the general contractors during these leaner times will benefit even more as the economy improves. Providing general contractors with detailed bid information that is adaptable to different pricing scenarios, as well as varied bid package breakdowns, differentiates one subcontractor over another. Communicating the comprehensive and visually displayed detail digitally/electronically provides even greater value. During the bid process, if ad hoc requests are completed in a timely manner, there’s a higher probability the general contractor will be awarded the project. Helping the general contractor win the bid is the first way subcontractors can demonstrate their value. Once a project has been awarded, there are more actions a subcontractor can take to continue providing value to the general contractor, to the project and to its own future.
Post-Bid
Subcontractors must continue to establish their value to a general contractor post-bid. This is where the largest bottom line value-add arises. Once a project has been awarded, general contractors focus on new and different concerns from those during the bid phase. Their attention is now concentrated on delivering a quality project on schedule and within budget. A subcontractor that enables a general contractor to meet these goals is critical to the success of the project.
There are a few critical points of the construction phase in which subcontractor can influence a successful outcome.
- Crew allocation for scheduling. General contractors look for quality across the project—from bid to closeout. There have been many modifications to crews during the last three years. Subcontractors have reduced overall crew numbers, but have been able to retain top talent. Quality of work ranks among the most sought after traits of a subcontractor. A close second is staying on schedule. When the project is under construction, a valued subcontractor helps the general contractor build on schedule (at least the part the subcontractor is providing) and become an “A” team player. S.M.A.R.T. objectives have long been a part of corporate office culture, but it is time to take this to the construction site. Specific, Measurable, Achievable, Realistic, and Time goals have a place with the field crew as well. The more work that is laid out for crews in precise, trackable, doable, understandable and scheduled ways, the more likely the crew will deliver exactly what is needed in the time allotted. A crew managed with S.M.A.R.T. standards has a much greater probability of delivering higher quality with fewer punch list items. Stocking reports let the subcontractor know exactly where and when materials are needed so the crew isn’t idle. Placing materials and crew in the same place sounds simple, but even 15 minutes of lost work time will chip away at profitability. Staying on top of hours worked and materials used keeps the subcontractor’s site manager informed of possible overruns. Using automated job cost reporting, the subcontractor monitors a job-to-date status.
- Jobsite coordination. Each jobsite is unique with its own set of challenges, but the work activities performed remain similar across jobs. General contractors need subcontractors that are proactive and learn from previous work. Ongoing education and training of the crew should be a normal course of business. They should be trained on equipment, safety and construction automation methods. Investing in a good crew will deliver quality and productivity to the project. The subcontractor needs to know where the crew stands compared to the schedule. The jobsite foreman should close each day walking the site and indicating what work has been completed. This is easily done using a tablet in the field—there’s no need to be in the office, trailer or standing at the gang box waiting for someone else to indicate results. This information is then easily shared with the office immediately via an Internet connection. Identifying the percent complete and color-coded results indicate whether the crew is on or off schedule and whether the project is or isn’t profitable. “Do I know where I am going,” is the real question subcontractors need to ask themselves. It is one thing to know where the project budget stands after payroll is posted. After all, hindsight is 20/20. Leveraging project management automation, the subcontractor can see where the crew has worked, but most importantly it will control where the crew will work next. Reactive project management simply allows subcontractors to notify the general contract of problems, but by the time adjustments are made another week is gone and the magnitude has increased. If the project’s future is controlled, the subcontractor is being proactive, which allows resolutions for problems upfront.
collaboration is key
Subcontractor involvement iin all phases of a project (pre-bid, bid, build and closeout) ensures a general contractor’s success. Ongoing collaborative efforts between these roles provide a win-win-win situation for the subcontractor, the general contractor and the owner. When all three parties involved obtain a successful project, it is more likely they will want to leverage each other for future projects. Trusted relationships and partnerships have a foundation built one successful project after another.Focusing on scope of work, critical communication, itemizing scope, crew allocation and jobsite coordination elevates the subcontractor in the eyes of the general contractor. It is challenging to describe the relationship between general contractors and subcontractors. Each has its own story to tell and both are tied to one another. The general contractor that respects and collaborates with the subcontractor understands that the financial well-being of the subcontractor is critical to the well-being of the general contractor. Subcontractors that take the time to identify a differentiating value proposition will be recognized by general contractors.Subcontractors need to build a positive reputation and be the trusted provider of trade business for the general contractor, which in turn will reward those efforts with repeat business and on-time payments. Given the smaller or perhaps nonexistent backlog of work (and carryover profits) that subcontractors currently are facing, they understand that “united we stand, divided we fall.”
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