Alfa Builders
Hiring Subcontractors and Suppliers to Stay Competitive
If you have been in the construction business in the same location for very long, it is easy to start a pattern of using the same subs and suppliers on a repetitive basis. It is an easy and safe thing to do because we get comfortable with their prices and their quality of work.
But in today’s economic climate, we could all benefit from some balance in regard to our hiring practices. It might mean the difference in landing the project or seeing it go to one of your competitors!
Give Other Subcontractors and Suppliers a Chance to Price New Projects
I know in the general contracting business in Montgomery, Alabama, we rarely have work just handed to us. We always have to compete for projects against other companies (sometimes as many as 20 to 30 others).
No matter how good our reputation is, owners more often than not will want to take multiple prices. So I would advise the same approach when you take prices from subs and suppliers.
Take at least 3 or 4 prices for each work item to see what the current market value is. Who knows – you might find another diamond in the rough to start using on future projects!
Pre-Qualify Bidders Whenever Possible
On bid day, it is often unnerving to receive a price from a company you have never heard of. Especially if their price is much lower than other quotes you have received for the same scope of work!
That is why it is beneficial to pre-qualify your subs and suppliers so that when you do get a quote that is extremely cheap, you can be confident about your decision to include or exclude that price from your estimate.
However, there will always be those random prices that trickle in. So you will have to do your best to screen those companies very quickly on bid day to help make a smart decision. If you can’t get comfortable with the company or their price, don’t use it!
In Conclusion
So if you are negotiating a price with a client, by all means use those subs and suppliers you have worked with in the past so that you can be confident of the product you will receive.
But if you are going into a competitive bid environment, you might be best served by pre-qualifying bidders and diversifying your sub list.
If you have any practices that you have found helpful regarding this topic, please leave a comment or feel free to contact me.
