September 09

-Construction prices appear to have stabilized  (at the bottom).

-On bid day fewer contractors are going kamikaze (than last quarter).

-The market is up, I believe that the magic of hitting a 5 figure Dow will renew confidence (maybe) 

Strange days for builders. 

GC’s get starry eyed about  a good deal. Whoever said “if it sounds to good to be true it probably is” was definitely NOT  a GC.  We don’t live by those rules; we firmly believe that every deal is great and good and that we are deserving of it,  until it’s not and we aren't. 

September 07, It’s bid day in better times, two years ago. 

We’re collecting pricing from all trades, the bid is due in two hours.  Plenty of time.  We never turn in a bid until 1 minute before closing because that oh so sweet  low low number may roll through the door at any moment allowing us to drop our number and slide in as the low bid, victorious, just edging out the competition on  this $25,000,000  job, oh baby. 

We don’t get frantic until the last 10 minutes, that’s when the last minute deals come through. That’s also when competitors start sending 40 page blank faxes to all our bid fax lines to jamb them up, trying to deny us a last minute price.  That was such a  90’s; tactic, now we’ve got e-mail. 

We’ve got 5 concrete bids, all within 5% of each other, except one.  The golden one; this bid is 40% lower than the pack.   Disregard it?  We can’t !  It’s on the street;  it’s been sent to our competitors, WE’RE not whores,  but THEY are, they’ll USE the number, we have to use the number TOO.  It doesn’t mean we’ll GIVE them the job but we’ve got to carry the number. 

The bid is hand delivered with a minute to spare. Miss by the official closing and you’re disqualified.  The company's marketing manager is standing outside the municipal building in the rain, she’s taking the number over the phone and writing in the bid form.  No time to lose, seal the envelope and get it in before the clock runs out

No sweat, well actually a lot of sweat and lot of cursing at the war room back at the office for again making her run through corridors, knock over old people trying to buy dog licenses and slide into the bid room with no seconds to spare because their clock was a minute faster than ours.   

Public bidding is sure not glamorous but it does provide instant gratification.  The bids are read aloud over the next fifteen minutes.  WooHoo we’re low!!! woo hoo we’re low by 8%, ouch.  Left $2,000,000 on the table. 

We justified the result, we have an edge no one else had, the bids are good, we’re fine, we can make this work.  Hell, looks like we could make 10% on this job. 

“Hey I spoke to the guy with the low concrete number, you now he sounds like a pretty good guy..”  

“It’s a family operation, that’s always nice, a real mom and pop operation..” 

“He’s smaller”  (does a lot of driveways)  

“but he says he’s ready for the big time..”  ($1,200,000 structural concrete package)  

“…this is his ticket, were going to make a big boy out this guy…”    

"I drove by his place he’s got equipment and everything.  I think we’re fine with him.”

 “Great now that we’ve pre-qualified him, lets get him under contract.”  

Like us,  we figure he probably has a secret to getting these jobs done for lower prices, hell, we were low, we’re going to make good money on this.    Let’s not knock the guy because he’s that much more efficient than all of his competitors.  It’s settled get the contract out, get it signed.  

“Hey I wanted a little reassurance so I talked to the concrete guy again,  his price MUST be good because when I squeezed him just a little he gave up another 2%,  so he’s still got some fat in that number,  I didn’t go for more though…”  

Months later.  “OK we are having some problems with the concrete guy, but nothing we can’t work out.  We’ll need to start paying all of his suppliers with joint checks to make sure they get paid and don’t come after our bond,  he’s pretty efficient, I’m sure he’ll do OK, he’ll gets what left after the suppliers are paid.”   

“OK he’s not paying his union dues, so we’ll pay the union dues, he’ll get the balance after that.” 

 “OK he’s can’t make payroll this week, the guys are going to walk.  Looks like were going into the concrete business.  We’ll make his payroll in cash and get receipts, and back charge him, he’ll get whatever is left.” 

“OK there no money left, so we’ll keep back charging and run a negative balance, we’ll bill him later,  I think we can take the balance from the other job we gave him last month.”   

“What was this guy thinking?”