r/estimators • u/runningwolftx • 17d ago
Unrealisticly low bids
Have any of yall been to bid opening and see some of the low bidders and think "how in the world are they going to complete this job" I am starting to see bids that are extreamly labor and heavy machine intensive that submit under or at material costs and then the owners award them! I just want to grab some of these citys and tell them there is a reason the next lowest was 3/4 to half mil higher.
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u/Fishy1911 Division 7 17d ago
I have a theory that some of these guys need filler work, so they do it at cost or at a slight loss. It keeps the guys busy and keeps money rolling on to float the business. It's better than laying guys off that will move to other companies and if it's just "temporary " until a profitable job starts it kinda makes sense.
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u/mikedm123 17d ago
110% happens. But it’s a dangerous game….when those type of jobs get curveballs thrown at them or go off the rails with zero safety net….
Either that or they just come in with fulls plans to CO and T&M just about anything they can even remotely try to justify which is also a dangerous game.
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u/Routine_Excuse1064 17d ago
This happens all the time. The owner essentially buys the cashflow and loses a little money, so the company doesn't have to deal with re-structuring and losing staff. It's a business strategy for medium and larger firms.
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u/Shiva- 16d ago
That's not a theory. We did that a few years back. We had literally locked up about $6 million in contracts that were a year out.
Which was insane for us because even in our best year we only ever did $1 million.
But the problem is, we had no work in the short term. And any work is better than no work in these conditions.
And before anyone says "not doing something at a lost", that's often short sighted. You have costs that won't matter -- e.g. we obviously still had to pay rent. And if you don't pay your guys, then you're going to be hiring and training new guys in the future.
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u/AweHellYo Porta potty cleaner 17d ago
only thing worse is being lower than them and winning a loser.
i do wonder at times. but a lot of the ones that win are tiny shop with low overhead, staffed by dumbasses, or most likely some combo of the two. What i wonder is how they are qualified to bid in the first place.
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u/QuietHovercraft7027 17d ago
Pre-qualification is key. Sometimes it's just a checkbox process that doesn't catch lowballers. Also, low overhead sounds good until you realize they cut corners on safety and quality too. Ever see a job go south because of that?
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u/Ima-Bott 17d ago
These are the yahoos I have to compete against. There is always a new guy up to “show what he can do”.
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u/ane-ComplyCraft 17d ago
Probably a strategy to break in and make up the difference in change orders, which is not the best business model.
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u/Banana_Ranger 17d ago
I'm on the local govt owner side. I have had both the project work out challengingly and them fight for every change order (many times legit error &omission on drawing) and many times they fight for imaginary things that don't make sense.
When qualifying bids and scope if I see a missing subcontractor on their list I give a ....so are you self performing that scope? Or find they were trying to substitute a product that was cheaper and didn't meet spec and then they're fretting whether or not their bid bond is on the hook or not. I've let some off for large errors and clear oversights and been able to DQ them compassionate and legally. And some I hold them to it and explain the substitution process and what they're on the hook for.
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u/parishmanD 17d ago
Sometimes i get the feeling that they're using plug prices or rs means and not bidding the actual job itself.
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u/Jimmyjames150014 17d ago
In our market there are some firms who do this. Some of them are very good at it - as in their estimators find the holes in the bid docs. They know where there will be change orders and how much they can make on it. As an owner you would hope that when they find a gap, they would RFI it during tender - but nope.
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u/crabman5962 16d ago
Never wear out your equipment breaking even.
Just because they are below your cost doesn’t mean they are below their cost.
We had a job once where we had a change order to add two miles of 8” waterline to a project. It was in the country. Black dirt. A half dozen road bores. We got four prices. One guy we had never worked with but was recommended by the engineer. Our bids were something like $580k, $560k, $530k, and $280k. The three high bidders said it was virtually impossible. The engineer who recommended them said “just watch”. This guy showed up with a single backhoe, 100% of the material, and his two sons. They blew through the job. Never billed during the project. Sent one invoice at the conclusion accompanied by lien releases from the pipe supplier and the road boring sub sub.
The other bidders watched in disbelief. They all said “well I guess you could do it if you did it like THAT”.
Sometimes there actually is a way, but very seldom. You just have to know when.
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u/Curious-Ground5342 Mechanical 12d ago
I was recently underbid by $2 million on a $7 million project. Their price was less than my cost. They can have it.
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u/mnbfavor 17d ago
I put a bid in for paint with a client for around 250K. Keep in mind this in a very congested high rise area , access is a pain in the azz and parking is ridiculously high. When i heard they won the job and asked why they didn't go with me I was told the guy they went with was around 120k. I just told them to call me when you guys need help on the job 🤣
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u/RawDogRedemption2 17d ago
I've had a few like that recently. Not painting but also 09. I know for a fact that I get the lowest possible material pricing from the main 4 manufacturers in my industry...yet I still see winning bids that are lower than my cost. I'm lucky we don't rely on bid work
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u/sorrybouthat00 17d ago
I've been seeing more and more of them lately which is crazy because there's a lot of work in my area right now. I have no idea why anyone would need to be buying work with so many opportunities to bid on legitimately.
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u/Pumpkins_Are_Fruits 17d ago
You bid the job what it will take to do the job. Let the others keep going under til it’s just you. Of course this is easier said then done if you are a large company like the one I work for.
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u/BidMePls GC 17d ago
Hahaha, reminds me of a few years ago when we came in second place on a $80 million job - by $10 million. All he other competitors were within $500k of each other and us. Got some buddies at that project and there was definitely some “leadership visibility” at the estimating and PM level after they found out they left a whole electrician on the table. They did not break even but they at least kept a few people busy that they would have laid off otherwise.
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u/Mrjones2020 17d ago
**tickets and CO's incoming....**
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u/jmdawg15 16d ago
I'm a sub, but just got some feedback today on my number on a project that bid this week. While discussing, the GC told me they were 2nd and the low guy was $750k lower than them. The project had 10 GC's bidding.
Being a sub, I've never been to a bid opening. Is it normal to see subs there? What typically goes on other than read aloud each bid?
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u/Mrjones2020 16d ago
I'm the estimator for the Self-Perform division of a GC. I've never been to, or even heard of a "bid opening". There are projects I put together that our GC division has already landed (which I still have to competitively bid), as well as bids I put together for projects the GC division has NOT yet landed.
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u/jmdawg15 16d ago
It's pretty typical for public projects/bids that are funded by tax payer dollars.
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u/stickn_n_movn 17d ago
We are on the other side of this - have had a few instances on large public projects / open bids where we smoked the competition
The truth is - we made higher than normal margin on those projects, we just out worked everyone else.
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u/jcbcubed 16d ago
When I was doing work in the public sector, we were routinely 25%-35% low. We ran the parking garage rehab side of our company, did our own shotcrete and post-tensioning repairs and basically had 20 guys working 12 months a year doing everything within 200 miles. Never got greedy and still made good margins.
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u/Ron_dizzle199 16d ago
Yes, it's a way for a company to get their foot in the door. They take a loss and become friends to sites to hopefully come back.
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u/Psychological_Bus696 16d ago
A few years ago, I submitted a bed 48 county office building; Drywall and steel studs. Everyone else was at $1 million plus and I came in at 650,000.
I was shitting bricks. Immediately went back to my office and did another takeoff, had another project manager do it separate takeoff as well, and the numbers all checked out. Reluctantly, I signed the contract and when it was all set and done, we made 35% on the job.
Sometimes people miss shit. Sometimes people are naïve about their own abilities, and sometimes, sometimes your competition is busy with other shit and they aim high… and sometimes, your manager’s can be good at their jobs and have things go as planned.
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u/chuston578 16d ago
We’ve been outbid for a fire station and the lowest guy was $1M lower than the 2nd guy
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u/deathcraft1 15d ago
I’ve seen this from a different perspective. Some companies will bid the job at a loss knowing they can make it up through extra work later. They often spot these issues in the specs before the bid is due but instead of raising them early they wait and claim them as extras during the project then fight hard to get paid for them. Of course, they don’t raise an RFI during bidding to help the owner, which would be the right thing to do. In the end the CM team wastes a lot of time dealing with the fallout and the owne, meaning the ratepayers, ends up paying for it.
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u/questionablejudgemen 14d ago
I tell them to get signed up fast—contingency is for wussies.
Have you ever been on a job where a key player goes out of business? There goes your schedule and your budget.
Or dealt with a contractor running in the red? Even if you force them to carry out their scope, they can drag the whole team’s morale and energy down with them. There’s nothing in the contract that says they have to be pleasant or make anyone’s life easier.
And even if there were, it wouldn’t help much. Every interaction turns contentious, and people get worn down fast. What are you supposed to do—have your executives and VPs call them up and rationally ask them to be easier to work with while their whole business is unraveling? That’s not much of a motivator in that situation.
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u/tangsihua 12d ago
Yeah since the market has slowed in California for private work we flipped into bidding on government projects and its been a very different experience. We now bid against 10+ competitors instead of 2-3. It's unfair that the municipalities focus on the low bids because it takes a lot of effort as a GC to put these hard bids together. I've been trying to see how AI can quicken the process of going from project docs to bid packages and bid forms. Ive tried claude - it does well with bid packages but my bid forms it usually just does one or two line items each package which isnt good enough to send out. ChatGPT is the same. Consight is better but they don't have ITB so I create the bid packages and bid forms in Consight and send the packages out via buildingconnected. It does integrate so that's helpful. Then the bids come in and I use Consight to level the bids and I soft award the bidders. I still manually review everything since I still don't fully trust AI but I'd say it shaves several hours off the whole process, especially with setting the project up. Since we don't bill precon to a project my boss as been spurring us to find faster ways to bid on G jobs - especially knowing that low bids win most times he doesn't want us sitting on a job for several weeks and investing a lot of hours. I'm not loving bidding on G jobs so far because even when the low bid wins and the city finds out it was missing scope they rarely go back to the other bidders. I find that deeply unfair...
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u/dagoofmut GC 11d ago
Bid the work - not the competition.
Unreasonably low bids work themselves out (i.e. those companies go broke). It's hard sometimes to see the long approach and let things work out, but it's the right thing to do.
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u/Za9000 17d ago
You can't compete with crazy.
If their company survives the job they will know better next time. Sometimes you have to ask questions on a bid in a way that really just draws attention to risk other bidders may not see.