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Selecting a General Contractor, by Corinne Maddox, CCM, CFM

My department recently took bids on a construction project. Are there factors other than price that I should consider in selecting the contractor?

There are multiple factors that should be considered in evaluating construction bidders and their proposals. Selection criteria ultimately depends on the priorities of the project and your company. Evaluation criteria generally falls into 3 categories - the proposal, the proposed project team and the company. The proposal would include the price and other requirements such as the construction duration, and compliance with contract terms such as insurance and bonds. The price breakdowns, quantities and unit prices of each bid should be compared. Large variances in a bid indicates that the bidder miscalculated their bid or may not understand the scope of the project. Occasionally, bidders "lowball" their bid intending to make it up with change orders after the contract is awarded. Large variances among all the bids indicated that the construction documents are ambiguous. In this case, significant clarification should be made prior to award of the contract or the contract may require additional documentation and rebidding. Other requirements of proposal such as unit prices, overhead and profit amounts, and any bid exceptions or qualifications should also be considered. Contractors may try to underbid the competitors by excluding items or taking exception to certain bid requirements. To get an "apples to apples" comparison, the evaluator must estimate the value of the bidder's modifications and add it to their bid price. If not resolved prior to award of the contract, the modifications are likely to turn into costly change orders.

Company information to be considered should include their size, bonding capacity or other indication of financial stability, their experience in projects of similar size and type, local experience, other active work, their reputation and references, and their project methodology. It is best to match the company size to the project size, since small companies may not be experienced with the techniques of larger project processes, and large companies may not place enough importance or be as efficient on smaller projects. It is very important that a contractor have experience in the project location to be familiar with local suppliers and subcontractors, as well as codes and construction standards. Project methodology should include controls such as good scheduling systems, submittal tracking, document control, testing and engineering support. The review of the project team should include experience and references of key staff assigned to the project, as well as their bidder's proposed list of subcontractors and suppliers.

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