Competetive Bidding

John D. Fulton

Just had a possibly novel "on the wall" idea that I felt like airing. Why don't Owners give a request for proposal listing their budget and take the bidder that can provide the most value or best quotation for that amount?
Who really wants the "low bid" anyway?
It's a fun thought (prompted by another quality price lost to the "low bid")

keith

The budjet

info is the most important piece of the puzzle in my opinion. We can design and price out all sorts of wonderful systems but if they just can't come up with the $ what good is it? Unfortunatly when I ask what the budjet is for a project I usually get the blank stare. When dealing with building owners that have been around for a while they usually are receptive because it cuts to the chase. They know that time is $ and there never is enough to go around.

robert griggs

I know how you feel

I just lost a big addition job today to someone who's price was half of what mine was, plus he was supplying the fixtures for three bathrooms that I priced seperately. I'm probably better off- the homeowner wants to do some of the work himself- I don't need the hassels. I'm just blowing off some steam- spent several hours last night and this morning working on proposal and now I have nothing to show for it. I put together a 18 page proposal in a nice binder and the guy doesn't even read it over- just flips right to the price and asks what is included for that price. As one of the other contractors looking at some other work for him said, he is looking for something for nothing. Hope he gets what he wants.

don_9

Budget

I alway have a problem in getting the customer to be totally
honest on how much they are willing to spend.But I understand there point of view.Because if they say(example) 10.000 dollars most contactor will put cost at 9999.00 dollars.Bottom line,well there's a lot of people who take the low bidder.Look at janitrol they had made millions with
the low bid market.I have learn over the years to put several option on the table.almost the same thing boiler manuf do with equipment,Good,best,better.Lost to many jobs
to sitcker shock.So what if its not the best.but if its installed and design properly,will you not come out with the same profit in the end.To many think to offer cadillac
equipment only,then cry the blue's when they loose the job.
You have to know who is setting in front of you.There many different class of people out here.And high end don't come by often enough.Gotta eat,Just my opinion.

GW

curious

I'm not being a smart allec ( how do you spell that word anyways?), but what did you do to come up with 18 pages?

We fit all our stuff one one page, then sometimes use additional pages with cookie cutter clauses that are already spelled out in a Word doc.

Gary

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keith

Paying the price

means our time is valuable. You never know how much back up you need for the presentation. I have gone in both ways. Either information overload or not enough things to touch and feel. Wouldn't it be nice to have them just open up, what are the HVAC system problems now?, tell you the budjet, what they have been researching on the web, Ect?

robert griggs

The 18 pages consisted of a cover letter, a two page proposal on the plumbing work, a two page proposal on the HVAC work, a page of extras with pricing, a two page letter about what to expect from our company (I borrowed this from Dan) and the rest was literature about the equipment I was going to install- the furnace, the a/c system, the thermostat, the sump pump, the 75 gallon water heater, etc.

J Matthers

just a thought

when is the last time you bought a car/ All the manufacturers give you a choice of several "packages" the DL, SL, XL, whatever. Each one of these comes with different levels of bells and whistles. Why do you suppose they do it this way? So they can offer people a vehical that fits the budget. The basic tranportation is the important thing and you can get that at a "Low Bid" price. If you want stuff that makes the car really nice to drive and more comfortable you gotta upgrade and pay more.

just a thought

Patrick_2

Robert, I really feel for ya. Due to the normal physical ailments I have been kicked out of the truck(Doc said keep doin what your doing or walk when your 35, as much as i love turnin wrenches I chose to walk) and have done several other things before proving that I could do sales full time. I recently bid a job that was a fair amount, almost new customer, went in tight, was very competitve, and we were giving better equipment then the competition. After much work and lots of visits they made there decision, the other guy. Get this, I was actually $10 lower and they went with other guy. I was a little upset to say the least(Irish blood was boiling, Mad Dog can relate). I waited for a few weeks so other guy could get job done(and to cool down), dropped in on customer to see how it went and how well it is working. So I pull in the lot and other guys trucks are STILL there, should have been a 4 or 5 day job. They could not get it running, so I took that time to re-explain the difference between other guy and our service. AHH!!! Man that felt good to get off my chest!!!

Paul Rohrs_2

Wholesale support?

As a plumbing wholesaler, I would be curious to know if there is anything we could do to support the bidding process? (other than dropping our prices and integrity)

I have the opportunity around here to do the bulk of the design work & quotations for radiant floor and snowmelt projects for my liscenced contractor. All but 2 of my contractors let me handle their (material) cost quote as a package based on the parameters that they define for each job. (I start with the heat load, and then define zoning, question if Outdoor-reset is in the budget, DHW, venting issues, etc. and package the material list)

We know that if you don't land the job, some joe-schmoe wholesaler of ill-repute will sell a Model #1 from Freds Boiler Co. to your competition, and we will not move our product. (Taco, Peerless, Wirsbo,Amtrol,Tekmar, and Lochinvar are a few quality names we stock.)

Interested in your success,
Paul

Mark Eatherton1

What you can do to help...

Thanks for asking.

One of the biggest concerns I have with my wholesale suppliers is their penchant to tell other contractors how much they could be charging "per square foot" for radiant floors. They heard this "number" from a supposed radiant expert. The next thing you know, this "number" is spreading like a wild fire, and every plumber turns into a radiant expert over night with dollar signs in his eyes. The problem is, that the supposed radiant expert has no idea what his overhead costs are, and he's pricing his work for far less than it is actually costing him to do the work. He does this for a few years until the tidal wave of cash flow is overwhelmed by the tidal wave of red ink. He then shuts down his business and starts a new one leaving you stuck with a big bill, which you have to recover by spreading this cost among the people who are still in business doing business with you. People like ME.

When a newby asks how much he should charge to install these new fandangled systems, gently explain to him that it's "not just like plumbing", and suggest that he take the time to learn how to do it right. Also tell him that HE needs to figure out what his costs of doing business are (overhead) so that he'll know exactly how much he needs to charge in order to stay in business and stay out of trouble.

In times like this, where a lot of people are being laid off by the big consolidators, the market is being flooded with "entreprenurial" business men who have made the decision to venture out on their own. I welcome competition so long as it is on a professional level.

When these guys start their business up at "what ever the market will bear" hourly rates, they pull the rest of the industry down when they fail. I know because I've been there and done that.

Direct them to this web site, where they can ask reasonable questions like "How many man hours should it take to install a 250 foot long staple down circuit?".

When they ask "How much should I charge?", we direct them to Dans book store where they can buy a book by one of the brightest (and purdiest!) people in this industry, that's titled "How Much Should I Charge?"

Offer to teach them the correct way of installing these systems. Lean on your manufacturers resources and sponsor seminars. Have pictures on hand of professionally installed systems so that they'll know what it's supposed to look like when it is done. Not a bowl full of spaghetti with colored wirings interwoven. Teach them how to do it right the first time, and educate them how to price themselves correctly so that they become a staple in the community, and not a pain in the A$$.

Sounds like you're on the right track. Keep up the good work and feel free to come here and ask questions, or send them here for answers. We're willing and ready to help.

ME

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Paul Rohrs

Whole\"sailing\"

Mark

All to often I am a "Wall" Flower and watch and listen to you contractors from afar. (Behind this Keyboard) I am well aware of your affilitation with RPA. I look forward to the day when our local chapter opens and benefits of professionalism from our contractors abound. We are both also aware that the current liscensed Newby to the trade is also trying to do it on a professional level. The great thing about our trade in "Radiant" is that people are still afraid of what they don't understand. I came in on the tail end of a job for a contractor for his personal mansion. Upon completion, and personally going out and re-wiring his controls, he stated that he won't install this for his customers. So, I guess it was good enough for him, but not his customers who are willing, and do, pay for quality work. I am honored by 5 or 6 skilled professionals to allow me the opportunity to service them. They in turn, don't try to "save a buck" by shopping for a penny a foot cheaper tube. From this, I have contractors that I cater to, and they likewise. Everyone benefits, especially the HO who is the best form of advertising.
Love to hear more from you
Paul

leo g_9

lowest bid

just got word that i lost another one to "the lowest bid". was told that i was the highest, "great" says i! "why" asks the con? "because the company you chose is like balogna, while my company is like steak, they both fill you up, but you know which one is the real deal and you pay for it!" we ended the conversation with the con saying that if the balogna doesn't work out, he may have to call the steak. LOL!!!

leo g

Mark Eatherton1

Welcome...

to the Wall. You are joined by many in your ranks.

Please stay and post. Your view is just as important as the contractors who frequent this board.

ME

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Rocky

My two cents worth on bidding

Great input on the previous postings. Please allow me to add my two cents worth. I, like several others, bid a job with "options". If you want this, then its "this" much. If you want "this", however, its this much. Start off with a pretty Vanilla package: Boiler, maybe new zone valves if old ones are of poor quality, ALWAYS a repipe of existing piping as I have never found a homeowner who is happy with a new boiler and old, spaghetti piping. This is not an option in my bid. Will put in a Tekmar 260 as a standard part of my bid. In the bid package I tell the homeowner this. I feel so strongly about reset controls that it is not an option. Also, (and how many of you do this), I include the fact that I put one in my own house? That is a great selling tool! "Yes, ma'am, I really believe in this control, with this boiler, with this hot water maker. In fact, I feel so strongly about them that I put the same system in MY house!" Are we installing in our own homes the same systems we are trying to sell to our customers? If not, why? Too expensive? Now you know how the customer feels. How do you convey to the customer the benefits of your system that you, as a quality heating contractor, know inherently. I say, the best way to walk the walk and talk the talk is to show the homeowner pictures of your own home. You have forced air heat? Why should the customer want something different. After all, if its good enough for you, why isn't it good enough for them? I thought about this in depth this year. I bought my house three years ago. Has (had) forced air heat. This year I ripped it out (literally). Put in a Weil McLain WGO-3, Gold Plus 60, Tekmar 371 with RTU's, RTI plates under floor in living, dining, lower bedrooms and laundry (all on crawlspace), with Runtal baseboard in upstairs bedrooms, and Runtal radiators in upstairs main and master baths. Don't think I didn't take digital pictures of every step of the way to put in my portfolio to show to prospective customers. "See Mrs. Smith, I feel so strongly about this (insert your heating apperatus of choice) that I installed it in my own home." Don't assume people are cheap. If explained properly, customers WILL buy quality installations. Not every one, granted, but enough to justify taking the extra time to go the extra mile. Just my thoughts. I am confident that if most contractors spent as much time on learning how to sell their systems as they do installing them, WAY more money could be made, and, more comfort gained by the customers. I have sold countless "upgrades" to radiant systems installed by contractors who assumed their customers were cheap. They installed low-end systems (3-way thermostatic mixing valve, no reset controls) on $500,000 homes! In Fairbanks, Alaska, that is A LOT of house! Upon meeting with the homeowners, I explained all the options available to them. They were, to a person, flaberagasted that no one ever explained this to them before. I have collected numerous $3,500 checks from these same "cheap" homeowners who wanted me to install weather responsive mixing controls, boiler reset controls, better piping-zone valves-etc...
Forgive me for carrring on. It's just that I know how hard we ALL work to make a living, and I hate to see some of us shorting ourselves. I LOVE my job. Even after 12 years of breathing soot, getting out of bed at 3:00am @ -45 below, etc..etc... I know most people in this business are hard-working, honest, caring folks. Please, charge what you are worth. If someone squeaks,...let them go somewhere else. GOD BLESS you and yours this heating season.
Happy Heating from chilly Fairbanks,

Rocky

heatboy

Cut to the chase.

The quickest way to find out who is serious from who is just chatting is to collect your design fees up front. If they are serious and you show them you are a professional they shouldn't balk at paying for the design up front. It works. I can give an estimate for their job by just looking at their plans. They all make the trip to my shop where we can roll out the plans and talk about their wants and needs. If our initial meeting goes well, we then start the process of designing their comfort systems. They become one of my most valuable assets at that point. If they don't want to pay up front, they will more than likely not pay my price for the project. No harm done. Both parties have invested only an hour or so and we can go our seperate ways. Sometimes they need to talk to other contractors before they realize I know what I'm doing, then they often come back. No design fee, no bid. Referrals are, at times, the exception to the rule.

Warm Regards,

heatboy

"Expert in Silent Warmth"™

610.250.9885

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