Bids 101: A Look Inside the Bid-Proposal Package
May 12, 2015 — Last week, we took a look at how to prepare a bid request — or request for proposal — so your board can nab the best contractor for the best price. In this second of a multi-part series we will be taking a look at the bid proposals that come back from the companies you reach out to. Your architect or engineer will almost certainly include two things in the bid-proposal package: a "schedule of values" — a line-item breakdown of each phase of the work, for which the vendor will bid a price — and a "unit-price schedule" — the cost per unit of materials.
"The unit pricing is important if more or less work must be performed," says Rosemary Paparo, director of property management at Buchbinder & Warren. "For instance, a brick-replacement project may call for 2,500 square feet in the base bid specifications. The unit price holds the contractor to a particular price per square foot. If more [bricks are] needed, the contract price increases by that amount, [and] if fewer, a credit is issued based upon the same square-foot price." The unit-price schedule also includes provisions for add-on alternates. For instance, with a roof restoration project, replacement of skylights might not be absolutely necessary but it might be something that the client wants as the project progresses.
"You have a base price and then add-alternates," says Matthew Providente, director of operations and compliance for Akam Associates. "Let's say you're replacing a cooling tower. The base bid requires the cooling tower to be made of stainless steel. Now, some cooling towers are made of galvanized metal. So the engineer/architect may get an alternate price to see what the difference would be by using galvanized metal. You'll get a base price of, say, $150,000, then an alternate of, say, $50,000."
How many vendors should you ask to submit bids? "We do a minimum of three," says Warren Schreiber, president of the 16-building, 200-apartment Bay Terrace Cooperative Section 1 in Queens. "If we can send out four or five, that's great."
Depending on the size of the project and how specialized it is, "you may only go out to three or four, or you may go out to six or seven," Providente says. "I've seen [it sent to] ten, eleven, or twelve [firms], but I think that's a little unwieldy," particularly when it's time to meet with the contractors together.
Notes Schreiber: "You reach a certain point where if you send out too many bids, how do you go through them? I've also had instances where we've had difficulty having contractors submit bids. When we replaced our roofs, it was a tremendous job. We're a garden-apartment complex with sixteen [residential] buildings and eight garage buildings. We actually had some contractors say they couldn't bid on the job, that it was beyond them. A lot of contactors are used to working on small buildings and not on 14 acres [of buildings]."
Next week: Meeting the vendors