IRIDIUM DEVELOPMENT INC.
Making the best choice
Is Price Everything?
There is no definitive way to know who is the best choice. We have created ways that have helped us with selections of vendors and subcontractors. First impression means a lot and we are lying if we say it different. But it is not always a true guide to choosing the best person for the job.
Over the years we have created a few ways to help us make the best choices and in this article we are going to share them with you.
1) Presentation
Our first interaction and every interaction after really allows you to see or discover who this person and company is:
Are they detailed, or over detailed?
Do they really know what they are doing? Or are they trying to hard to win you over with personality?
Is everything a problem? Or are they providing solutions?
When we send out bid packages to new subcontractors we discover a lot about the person bidding and the company. When we send packages out sometimes we receive questions, most times the questions are answered already and the real reason for the call is to try to influence us to think the person really is the best for this job. On our side of the phone we are taking notes, questions asked by vendor are overlooked on the bid details, or subcontractor did not read what we requested pricing on, etc.
Other times we receive a call and small chit chat and then a round cost over the phone for the work. This happens more often than you would imagine and really I still do not understand the reason behind it. “Ok we can do your work then for $100 per square let us know when you are ready”. No written proposal, no details of what is required or included. Do they really think that will result in obtaining a job?
Then there are those who send over a number, no inclusions, sometimes exclusions, but never any details of what is included and the price is insanely high. These bids to me are “F/U”, why do they send it rather than just pass? I don’t know and from my point of view a pass would be better than a telephone number without details. Why go through the trouble?
Last is the fishing expedition, the phone call where they have the price and start talking to you. They talk about everything and anything they can to become friends and then hit you with a ridiculous price they are thinking of sending over but want to know what I think. Hmm, I think…. no I won’t share what I really think but most of my responses are,
How long do you expect the work to take you?
How many people?
How many hours do your crews work a day?
I always leave it at this, if they cannot see that charging $100.00 per hour per person to install siding (material and nails extra) isn’t insane… then we really shouldn’t work together.
Remodeling
2) Details
When you do get past the stage of presentation and recievea bid, then you need to review the details. The saying “what you see is what you get,” that becomes true at this stage. A specific detailed bid regardless fo the number represents someone who reviewed the work and put time in to present the bid. They can drive a dirty disheveled truck and where dirty clothes but they reviewed the work and created on paper a list of what the work is and a cost associated. This is very important, and price is not a factor yet. You need more of these types of bids to asses and choose wisely. This is where you start your qualification process in selecting the best person for the job.
New Homes
3) Leveling
At this stage you have detailed bids to review. The subcontractors submitted insurance certificates so you can cross reference and mark who has what coverage (keep in mind you can request them to add missing items to be awarded the work later). You now create a leveling model where you have items listed across of inclusions and exclusions. 99% of the time the bids are different so you consolidate the missing information and request this information from the other bidders. When you are finished you have created equal content in each bid or excluded a bidder during the process.
4) Price
You really cannot select anyone earlier than this stage based on price. Until you level the field you just have no idea what the cost should because you haven’t defined the work. Now you can and here is how we make our decisions. We want to know how many people on the crew and what are the hours involved in the work. One of the selections is too much time, I want my subcontractors in and out. The least amount of time is best for me and I would pay a little extra for that. When I see the amount of time and hours to do the work then I can break down a fair cost. As mentioned earlier, I really am not going to pay siders $100.00 per hour to cut and nail siding I purchased, sorry. If there are insurance gaps we request the contender to agree to add the coverage we need, plus tell us the cost. This is how we finalize selection of scope and price.
Choose your General Contractor
5) Selection
Now you have a few bids to make your selection. For us it comes down to who do we feel will work harder for us and get the job done. We are hired to perform and our vendors and subs need to perform. We like to be dealing with decision makers and ideally the person who is in charge of the schedule and work. Larger companies with estimating divisions etc. do not fit in our specialty space. Our clients hire us to get the work done at the highest level of quality and detail. For us to perform at this caliber the team we put together needs to be the same as us.
We select our subcontractor or vendor and put together an agreement made with the details we leveled and cost. Our agreements are based on time to complete and this is where we add language of the work days, crew size, and duration. Unless acts of God or something that is outside the control of the subcontractor or vendor cause delays to the project there is a penalty imposed for delays.
Of the 120 custom homes we have built over the years we have only imposed a penalty for one subcontractor to date. The penalty did what it was supposed to do and that was protect us from those who start projects and never finish. We had a plumber who started an 18,500 sf house for us, $125,000 plumbing contract and they had 2 people on site and not even everyday. They worked random days and hours. We missed our inspection schedule and eventually had to bring another company on board to finish. It was a disaster and with all of the selection and due diligence process until it comes down to doing the work you just never really know.
Contract
6) Contract
Paper everything, make sure to put all of the details of the work, the insurance and the duration of the project on paper. Discuss everything with your vendor or subcontractor. The last thing you want to do is start a project with someone who is not going to pull through. You also do not want to try to trap someone and take advantage of them. Be honest and open, discuss needs and create an agreement everyone can sign and be happy with.
We lay everything out on paper and place schedule and performance in the hands of the sub or vendor. I write our agreements as if I am performing the work, If everything is on site can I finish the work in X days? Sure, as long as everything is there and there are no changes I can do it. So if I can then you can and we need to find a timeline and language that works. Include the cost of the project the scope of work and the payment arrangements. Most jobs are progress payments and per AIA (and State) law “deposits are for material only”. You cannot collect a deposit for labor and the deposit you collect has to be for material delivered onsite, not in your warehouse. We are paid and we pay for work performed in place. This is standard language and law in most states and is in Florida. I have heard of many General Contractors billing clients over 60% of the project before any work has begun. That is actually a felony and not allowed in the State of Florida.
A contract is only as good as the paper it is written on, our goal is to bring everything to the surface, be transparent and open so we can work and complete the project knowing what we have to do, what the cost is, and when we will get paid. These are the main objectives and what we accomplish.
Good luck in your venture and if you have any questions or need any advice please contact us at: info@iridiumdev.io