The Game Of Bidding: Commercial Bid Work

Features - Business Management

Contractors are differentiating themselves in the commercial bid market by trading in their bags of cutthroat, competitive tricks for evenhanded strategy.

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July 17, 2001

EDITOR'S NOTE: For more information on bidding please click the following links to sidebars available exclusively online:

The game seems simple enough.

An independent landscape architect creates a commercial site design based on the property owner’s needs – the game board is set. Landscape contractors are invited bid on what it would cost to order and install the necessary materials according to the design’s specifications – the game has players. And the contractor who turns in the best overall package wins.

Unfortunately, commercial bid work is never this simple. In some cases, clients seek the lowest price possible, clouding the bidding effort for contractors whose high-quality plant material or complex business structure requires them to bid high just to break even or profit from a job. Other times, general contractors and landscape architects choose the lowest bid, but pay little attention to whether or not the installed materials actually meet the design specifications. Either way, the finished landscape doesn’t fulfill the original bid requirements – game over, no winner.

But despite the many obstacles associated with this type of work, the bid game can be played and won without going to jail or losing a turn.

The High Road

    Recently on the Lawn & Landscape message boards, contractors discussed how they explain their high bids to clients. Here’s what they had to say:

    DANA ANDORETTI: Do any of you explain your bids, especially if they are high? I normally don’t. But, recently, on a job with some higher costs, I gave the customer the high bid along with a letter explaining the higher-than-normal cost, and he called that afternoon wanting us to do the job.

    I normally don’t explain everything like that to a potential customer, but does this help any of you? Since it helped me this time, I may think about doing it more in the future.

    MATTHEW MORGAN: Communication is your best friend. If you are high, or seem to be to the potential client, a brief explanation or description as to why is very helpful. Without that, many will have "sticker shock" and put your bid into file 13. Most clients don’t understand all that is involved that can create a high price. In many instances, an explanation is needed and a little extra effort can get the job.

    ANDREW HARDSCAPE: I explain to the perspective client that we will be the higher price before I set up an appointment. I explain why we are higher and how it benefits them. I explain that if we were low, there would be a chance we wouldn’t be around two years later to make repairs or perform warranty work. This is called prequalifying.

    MORGAN: When explaining high bids, though, we never put down our competition. You can mention how you can perform those tasks better than others, but do not bad mouth the others. It gives the person you are talking to a bad impression of you and it may just come back to haunt you.

    JOE SMITH: My bid was lower than the big guys because my company is less expensive to run. It has nothing to do with quality of work. My bids were high compared to other companies of the same size. I don’t believe that a low bid equals cutting corners. Just the way a person runs a business can make his or her bid higher. - www.lawnandlandscape.com/messageboard

GET READY TO PLAY. Most contractors agree that bid work is typically price-driven. Commercial clients are naturally inclined to choose the lowest price from a set of bids on identical specifications, so contractors with higher estimates find themselves at a disadvantage. In a situation where relationships are hard to build, differentiation - besides the numbers following the dollar sign at the end of the bid - becomes challenging.

Thus, terms like "cutthroat" and "ruthless" are the first contractors use to describe the competition in major bid markets. The trick, though, contractors said, is to think of bidding as less of a battle and more of a strategic game.

"It’s not a war," remarked Drew St. John, vice president, landscape design and construction, Hillenmeyer Nurseries, Lexington, Ky. "The key is understanding and making sure you’re familiar with the qualifications. We’ve won several bids in the past where we weren’t the low bidder, but we were the most responsive and capable bidder."

During the course of one month, Jud Griggs and his team might receive five to eight bid requests. "There’s more bid work down here in Florida," said Griggs, a Wisconsin native and vice president of operations, Smallwood Design Group, Naples, Fla. "With our pricing structure, we’re never going to be the low bid and we wouldn’t want to be. So we constantly have to look at our process, figure out who we need to be involved with and be competitive."

Bidding On Maintenance [Online Exclusive Sidebar #1]

    Bidding on maintenance work can be just as tricky as bidding on installation work, pointed out Jud Griggs, vice president of operations, Smallwood Design Group, Naples, Fla. "Sometimes it’s even more difficult because you don’t have any specifications to bid off of," he said. "So, there is going to be a high bid and a low bid, but each one may include different maintenance tasks."

    The Davey Tree Expert Co. is driven toward maintenance work so Dan Joy, national operations manager for the commercial grounds management division, doesn’t feel this work is more challenging at all. "It’s just different, not difficult," he explained. "You develop your own specifications and then explain your proposal to the client and point out the differences between yours and the next guy’s. Get both bids out if you can and go line by line. Maintenance bid work isn’t focused on a bottom line number like installation work is."

    Griggs identified with this, pointing out that his success has come from indicating specific horticultural issues on the site that need care, demonstrating knowledge in the field. "We were successful on one site where we pointed out some areas that needed care, such as missing nutrients on one plant and disease problems on a hedge," he recalled.

    Drew St. John, vice president in charge of landscape design and construction, Hillenmeyer Nurseries, Lexington, Ky., said that contractors can win maintenance bids if they push the fact that they are timely and can finish the job quickly and accurately. "You’re already at an advantage because you know that the client doesn’t want to do the work himself," St. John said. "You’re there to eliminate a job he doesn’t want to manage or handle - or he’d have an in-house crew on the site. Take advantage of his perspective and eliminate his headaches and you’ve got the job." - Nicole Wisniewski

The Bid Checklist [Online Exclusive Sidebar #2]

According to Pieter Rossi, president, BP Landscapes, Grass Valley, Calif., having a bid checklist is the only way to estimate a job’s costs quickly and efficiently. "We take each item on the checklist and we go down and make sure that we’re not missing a single thing," Rossi explained. "Then when we’re on the site measuring, we get accurate measurements. Plants, irrigation, concrete, etc. are all based on square footage. Then we add up the quantities and square footage and there’s our bid."

Here’s a look at Rossi’s checklist:

JOB NAME:

SITE INSPECTION

  • Local laws and cc’rs
  • Ground water
  • Permits and local codes
  • Engineering/architecture (site plan)
  • Soil test or possible compaction test
  • Well test or water source/point of connection for irrigation identification

GROUND PREPARATION

  • Soil amendments
  • Application of herbicides and preemergents
  • Demolition of existing hardscapes or landscape
  • Grading
  • Fill dirt/importing
  • Rototilling
  • Clearing and brushing
  • Burning
  • Hauling of debris
  • Off-site removal of soil

DRAINAGE

  • Wall drainage/French drains
  • Sump pump or sump drains
  • Surface drainage/DI’s
  • Roof downspout channeling

IRRIGATION

  • Local codes for backflow prevention and type of backflow
  • Size of source of water (well, treated or raw water)
  • Holding tanks accessible with pump
  • Gravity fed supply water
  • Pressure
  • Volume of flow
  • Specification of controller size and location
  • Wiring requirements
  • Size of pipe and valves
  • Amount of control valves
  • Head placement and type

LIGHTING

  • Type of lighting fixtures
  • Determination of power source
  • 10 volt or 12 volt

HARDSCAPES

  • Concrete walkways, stairs or patios
    • Colored
    • Aggregate
    • Stamped
    • Salt finish
    • Broom finish
    • Sealed with lacquer of water based
  • Masonry
    • Block retaining walls
    • Keystone or modular block planters or walls
    • Flat work/flagstone
    • Inter planting flagstone flat work
    • Brick
    • Veneering
    • Stucco finish or plastering
    • Pillars
  • Water features
    • Custom natural waterfall with natural rock
    • Custom contemporary waterfall
    • Pre-fabricated water feature
  • Customer carpentry
    • Pergola or patio cover
    • Fencing
    • Decking
    • Gardens and raised beds
    • Painting
  • Iron work
    • Railing
    • Gates/arbors
    • Security gate entry system
    • Fencing
  • Site amenities
    • Outdoor kitchen (BBQ or refrigerator)
    • Benches
    • Bridges
    • Swing
    • Play structure
    • Spa installation (custom gunite spa or pre-fabricated spa)

TURFGRASS

  • Sod or seed
  • Lawn border
    • Concrete extruded curb
    • Custom poured curbing
    • Trex border

HYDROSEEDING AND EROSION CONTROL

  • Erosion control
  • Decorative seeding with wildflowers and clover

PLANTING

  • Climate and exposure
  • Deer or wildlife impact
  • Water source
  • 24-inch or larger specimens quantity
  • 15-gallon quantity
  • 5-gallon quantity
  • 1-gallon quantity
  • Flats quantity

MULCH/BARK

  • Ornamental beds
  • Erosion control
  • Weed abatement

- BP Landscapes, Green Valley, Calif.

CHOOSE YOUR GAME. Prequalification is a major component in bid success. Because many buyers are known for taking the lowest bid, regardless of a contractor’s capabilities or reputation for timely work, choosy contractors try to avoid dead-end bids.

"Bidding works for us when we selectively qualify which projects we bid," said Kurt Kluznik, president, Yardmaster, Painesville, Ohio. "Not making a sale to those buyers who don’t meet our client niche is just as rewarding as making a good sale."

Out of every 50 bid prospects that arrive at Smallwood Design Group’s door, Griggs said he might actually bid on only three or four projects. "We stay away from those builders we know aren’t looking for quality work," he said, pointing out the difference between a value-oriented mass merchandiser that doesn’t expect or require quality on the job vs. a high-end hotel that wants to maintain its image and reputation with impressive, bold, long-lasting plant material.

Selective prequalification also matters at for Hillenmeyer Nurseries, even though competitive bid work only makes up about 10 percent of its work. "Our overhead structure is such that we need to charge a certain amount," St. John commented. "So when price dictates who’s going to get the job, we’re pretty selective on what we bid.

"We’re on a few local general contractors’ and several private landscape architects’ selected bid lists," St. John continued. "Typically, we get one out of every five jobs that we bid. But when we’re on these lists, we get one out of every three because we’re competing against a limited group of contractors who are more like us and charge prices like we do. Plus, our reputation is what put us on this list, so that’s automatically taken into consideration. These people already know us."

A project’s potential need for maintenance pushes The Davey Tree Expert Co.’s staff to bid on it, according to Dan Joy, national operations manager for the commercial grounds management division. "We look at whether or not this client would fit into our typical maintenance client niche, such as office parks or high-end retail areas," Joy explained. "If the project doesn’t fit, then we won’t bid on it."

The client-contractor relationship also can make or break the bid decision. Architects or developers that need three or more bids will ask contractors they know to bid on the work even though the job may not suit them. "There are many jobs we bid out of courtesy to certain architects or developers," Griggs said. "We do this as a way of keeping up these relationships. We win 20 percent of the jobs we bid, but our success rate is closer to 40 percent if we take these favor bids out."

Having a competitive advantage is the final, yet critical, factor. To bid a job and win, contractors must have "an angle of opportunity," or a special service or selection that few other bidding contractors possess. For instance, a contractor who can source plant materials that aren’t readily available to others has this upper hand.

Griggs looks for a project niche, such as luxury, high-rise condominiums, in which Smallwood has a quality reputation, or he looks at the project’s complexity, such as the need for certain tasks that take more skill and not all contractors can handle.

Smallwood Design Group’s price is typically 10 to 20 percent higher and can be up to 50 percent higher than the lowest bid, Griggs said, explaining why bargaining leverage is crucial. "With our higher prices, some people won’t choose us no matter what our relationship is like," he said.

As a benefit to the client, Griggs will offer "value engineering options," where he provides similar, but less expensive, plant material or suggests alternate plant spacing to save the client money. "We can offer them significant cost-saving options and this shows them that we’re working with them," he said.

Timing also can work to a contractor’s advantage. "At certain times of the year, a buyer may have difficulty obtaining competitive quotes, may be under the gun to hire a contractor or may be tired of dealing with the troubles that accompany nearly every unrealistic bid," Kluznik said, pointing out that these moments can provide a natural, competitive edge.

PASS GO, COLLECT PROFIT. Winning a job isn’t nearly as difficult as properly bidding it. Developing a proposal that covers all the bases and provides room for profit, while being competitive, can be tricky. Too often, contractors bid low and then realize they didn’t cover their job costs.

Joy first develops a materials list when he receives job specifications. "This list must be as accurate as possible because for every piece of material used on the job there is a labor cost associated with it," Joy advised.

Also, special site conditions, permits, telephones, portable toilets, site access problems and travel are commonly overlooked costs, Griggs pointed out.

A rushed schedule usually accompanies and further aggravates the bidding process. Many times contractors only have one week to 10 days to develop and submit an accurate and profitable proposal, Joy said.

To appropriately bid a job with this hurried agenda, Davey Tree handles the bid process with a team approach. "We break down the shopping list of materials and assign numerous people to tackle different tasks," Joy explained. "Then a few days before the bid is due, we bring all the information together."

The key to effective bidding for Pieter Rossi, president, BP Landscapes, Grass Valley, Calif., is a bid checklist (see above). "This way, we’re not trying to remember all the important aspects of a job at the last minute," Rossi said. "We have them on a list and whether the site uses every item on this list or not, it prevents us from forgetting an important or expensive addition to the job."

In addition to having bid systems that include drafting a materials lists or using checklists, most contractors agree that gaining experience is the only way to learn how to correctly bid jobs. "I’ve been doing 800 to 900 bids per year and, frankly, experience is the only way to get good at it," Rossi shared, pointing out that BP Landscapes’ bids are typically 40 percent higher than the lowest bid and 10 percent higher than the next bid.

"You have to be extremely thorough when bidding," he continued. "Don’t assume anything. When in doubt – for example, if you’re not sure whether there is proper drainage on a site – implement a clause in the contract stating that if additional excavation is needed, an additional cost will be added."

As their bidding tactics improve, contractors must learn to take control of the bid game rather than bet on a roll of the dice. "You’re taking a big risk when bidding a job," St. John said. "I’ve been doing it for 22 years and I’m still learning. It’s all about understanding access to the site and who’s responsible for what. To cover ourselves, we’ll do clarifications in bids to identify what’s in the scope and price of the work and what’s not. All those things need to be identified on the front end so folks can make an accurate evaluation of your pricing."

The author is Managing Editor of Lawn & Landscape magazine.