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.