Ins and Outs of Commercial Bidding

Commercial contracting is its own business world. Here, a cabinetmaker gets advice on how to approach his first formal commercial bid. November 26, 2007

So 5 years into this, I get a formal type of job. A PM from a restaurant (we've done several, just on a more informal basis) hands me a set of plans. We discuss what needs to be done. He asks for the formal estimate and gives me a list of the work to be done. I even get a bid request form.

Can someone show me what a formal bid looks like? In the past I've informally written what I call a bid letter that spells out what we will do, when and for what cost, and we go from there. And on the form, he indicates the following under description of work...

Estimate to include:
1 bar
2 prep wall
3 ...
7 Acknowledgement of Drawings dated 4-2-07
8 Acknowledgement of general notes sheet A0.01

Can I assume numbers 7 and 8 are just a notation in the bid saying those were the plans and general notes I used as bid information? I've always included that information anyway, but never been asked for it. Also, at the bottom he says...

If awarded, contract:
Submittals must be in 30 days from notice
Shop drawings
hardware selection
plastic laminate
stain samples x 3 different colors.

1. What are submittals?
2. Do they want to see my shop drawings, and if so, why? They provided me all drawings and elevations in the plans. Normally I work off the supplied plans for most of the work.
3. Hardware selection? Plastic laminate? Stain samples x 3 different colors? Again, they provided me all this information. I can understand stain samples, but laminate?

Thanks. This is not a big job, but it's the first "formal" one I've done and I want to learn all the details and what is proper and professional on this one.

Forum Responses
(Business and Management Forum)
From contributor T:
Maybe he is fresh out of school, maybe he had had problems with someone before and feels a need for this, or maybe he wants to scare you off so he can pick the cabinet guy, or none of the above.

In any case, this is what I do. I give him my standard bid, in my standard form - be very specific on details, time, and price. Get your deposit and state terms for final payment and what you will do if those terms are not met.

"Fresh out of school" architects sometimes put in lots information and requirements that are not reasonable. If you discuss this with the GC or owner, they usually go away. At least that has been my experience. I definitely would not go into it with questions and would not change my policy for one customer.

From contributor A:
Thanks. Can you describe what your standard bid includes? I usually do mine in Word, on company letterhead, inserting CAD drawings as needed. I attach a copy of my contract with payment schedules and send it on. Is this what you do? And I don't mind providing him with what he asks for. I just don't understand what exactly he is asking for.

From contributor D:
This is what I call commercial hard bid work. It is not for the faint of heart, but that can be said about most of the woodworking industry. He is insuring that he gives anyone else the same specs, plans and info as you so he can fairly compare your pricing - apples to apples, as they are fond of saying.

The drawings are dated, and probably have already changed. No problem, you just need to reference all materials with their dates as given. You can make up your own form off of what you use now, just note the dates, page numbers, etc.

Submittals are merely samples: p lam chips, numbers and names, hinge types, stain samples (usually problematic), and more, all together in a (nice) package that you give to the contractor so he can pass around to the owner/arch/design/etc for their approval/input. Make sure your name/logo is on each item, so they at least get familiar with your company. It takes time to get one of these bids together, so charge accordingly (adding it into your bid total, but not as a line item). Being thorough here is the only way you will make any money. Do not be afraid of asking questions. Do not make assumptions.

Some GC's drive around looking for the garage guy with a new circle saw, and ask if they want a $20,000 job. Only after Cletus agrees, signs the docs, and gets into it, does he find out it is a $40,000 job. The better GC's know better, and know that a smooth job is best for everyone. This is the type of work that an AWI membership can help you get and price and make money at. They have bid docs, seminars, etc that will help you get good at this.

If your man actually has the job, that is good. He knows you and came to you for a reason. You can ask what he is looking for in his supplier - quality, service, price, or what, and tailor your response to suit his needs. Going to the plan rooms and giving 10 GC's your pricing is the hard part of hard bid pricing. You have to spend a lot of time with each to try to convince them you know what you are doing, and they have no time to spare anyhow.

From the original questioner:
Thanks. He actually got my name off the AWI member site. Lots of curves, so he needed a CNC. Maybe the dues are worth it. I'll check out the reference at AWI and see if they have anything.

From contributor D:
I sound cynical about hard bid commercial, but that is my experience, obviously not everyone's. Knowing how it works will enable you to have an upper hand in your dealing with the GC and other people in the mix, and your name will get around at that level, and you can get all the work you want.

The advantages of commercial are that they want the same things as you - a clean, smooth, profitable job. They actually want you to do well, so that when they need your services again, you are ready, willing and able. They will congratulate you on success, instead of find another shop, struggling along, to exploit.

I will caution to be thorough again. I once bid a job to 5 GC's and only one asked me if I had seen the small note on one of the pages of drawings. I had not. The note stated that floors 2 through 6 were identical. I only had floor 1 and 2 - I missed 4 entire floors! I would have died a quick death on that one.

Another job had the word "walnut" everywhere, but one note said "walnut finish." I bid walnut, without asking the GC (often done through a RFI - request for information - a written doc that formalizes your question(s) and the response to it). The guy that got the job used finger joint Mexican pine with Minwax walnut stain - looked terrible, but that is what they asked for.

The RFI's, the bid notes, addendums and all can be intimidating, but it is just part of the CYA for them and for you. As long as you read it all, ask questions, respond and document, you can catch it all and gain a good reputation. Good to hear that the AWI affiliation paid off. I'm a current procrastinator but a past member from a former life.

From contributor W:
Typical bid package. That is what college has taught them. Also, just a word of caution, not knowing the companies you are speaking of, a term you are bound to hear, especially in commercial work, is "litigation control." In other words, be able to point the finger at someone else, or CYA. So, make sure you cover yours.

Do your own proposal, be specific, and reference each page, note, cut drawing, and addendums.

As far as shop drawings, you must produce your own for approval based on current conditions, or in new construction what it should be. Nonetheless, your shop drawings will come in handy, because you must update them based on changing conditions, and when the conditions do change, change the drawings, and write a letter with any adds or deducts to your work, and a change order. Also, at the end of the project you will probably have to submit "as builts" to collect final payment along with all approvals and acceptance letters.

As far as submittals or submittal packages go, you were already told what they contain, just want to add make (4) packages. Typically, they ask for them in triplicate and (1) for you to be used as the official record copy for your shop. So as you can see, they are covering themselves, and miraculously increased the cost of the job, and will profit from that as well.

So, read all specs, notes, addendums, etc. and on your proposal, be specific, even line item work not price, and add money for submittals, shop drawings, etc. Once you get the hang of it, it really does become more fun, and profitable!