Most clients feel that they will get the best price if they leverage a competitive bid strategy. This can be true, but only if you are a careful specifier and reviewer of bids. What often happens is that sign companies will not bid equal or equivalent packages of materials and services. This can happen for a number of reasons including:
- The estimator did not thoroughly review the bid request
- A site survey was not performed so there are unknowns to the bidder
- The estimator’s company does not provide all of the services required and leaves those items out of the bid
- The estimator’s company does not have access to the specific materials requested and provides substitutes
- The estimator wants to be a low bidder and substitutes materials of lower cost or quality
For any of the above reasons and more the average purchaser will receive 3-5 bids that are probably not well suited for an “apples to apples” comparison. Actually, you probably have what amounts to fruit salad at this point and just picking the lowest bid will likely result in your getting a beat up banana when you wanted an shiny red apple.
What do you do? There are a couple of strategies that I encourage clients to leverage when they put projects out for bid to ensure that they are getting comparable packages:
- Be very clear in what you want bid and how you want it bid. This means specific dimensions, materials, brands, warranty terms, etc. If you don’t know all of this information, then demand that the bidders spell all of this out clearly in their bids as a requirement for consideration. Also, if you want to see parts and labor broken out (unit pricing vs. lump sum) then be specific in your bid language. You should also consider requesting a base bid with breakout for upgrades or additional components so you can clearly consider must haves and the upcharges for frills.
- Leverage an experienced consultant. That’s right, pay someone to help you. There are times when clients have projects that are not well suited to my business niche and I know I will be the high bid. I am up front with clients and offer to consult which means I help them scope the project and evaluate the bids. This gives my client an advocate who is working on their behalf and will be accountable for the success of the project. In the long run, having an experienced consultant can save your project from costly overruns and you from a lot of headaches.
- Go to suppliers with whom you have relationships already and let them know it is a limited competitive bid. Now you are working with partners who want to keep your business, not just low-ball you to get in the door, and they will sharpen their pencils to give you fair, competitive numbers on your project as well as the service you have come to expect.
- Don’t waste your time bidding the small stuff. Your time is valuable – more valuable than you think. Leverage the suppliers you have had good experiences with, who treat you well and who stand behind the work they do. You save more by dealing with partners who know you, your priorities, your staff, your art requirements, etc. than you will by constantly dealing with new suppliers who you have to “train” just to save a couple of dollars here and there. Chances are great that these suppliers will not be the low bidders because quality and service do have a price.
Too many times clients see bids as the last word when they are really opportunities to start deeper conversations. Don’t just flip to the back page and look at the bottom line. How much you pay is not as important as what you are paying for so take the time to understand the bids and the bidders. If you do, you will make a much better purchasing decision.
