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ConstructionPro Week, Volume: 3 - Issue: 38 - 09/19/2014

Do Optional Work Items Unduly Complicate the Bid Process?

By Bruce Jervis

 

The inclusion of optional additive or deductive work items in a bid solicitation can complicate the process. Bidders get confused and submit incomplete or nonresponsive bids. Project owners may be unsure regarding evaluation and comparison of bid prices.

 

A recent federal procurement compounded these problems. The agency included in the solicitation an optional additive work item requiring 35 days to perform. The agency also stipulated a daily rate of agency administrative costs to be applied to the bidder’s proposed performance period. The administrative cost was supposed to be used for purposes of bid price evaluation only. But, one bidder inadvertently took exception to the maximum allowable performance period. Its low bid was rejected as nonresponsive.

 

What has been your experience with additive and deductive bid items? The appeal to project owners is apparent: it gives them the flexibility to derive the maximum scope of work from the project budget. However, these items also produce more than their share of bid protests, indicating they are a source of confusion and misunderstanding. I welcome your comments.

 

COMMENTS

We often deal with owners who add a wishlist of items "just to see how much it might cost" without really having a compelling need for the item/task --- they don't appreciate how much effort it requires to price all these things. I've also seen this in the federal arena, but there it's even worse as there is an exhaustive process for evaluating base bids and corresponding adds/deducts that is not at all intuitive and can easily cause a bidder to make a mistake (similar to what happened to the bidder in this story).
Posted by: Tony Emerson - Friday, September 19, 2014 10:28 AM


Optional work items are a strong indication the owner has not evaluated project needs adequately. It may even indicate incompetence on the part of owner staff or its design consultants. As an owner representative, I believe the analysis of alternative elements must be done before issuing a bid package. Tell the bidders what you want, provide good quality bid documents and you will get responsive competitive bids.
Posted by: Chris Gypton - Friday, September 19, 2014 10:55 AM


As a public sector Contract Officer I advise against inserting additive and/or deductive work schedules into our bid documents for all the reasons stated so far. Although they can be useful occasionally, more often than not they complicate the evaluation process. I say determine your needs and build to your budget. If something is identified as a must have after award, then negotiate a change order and be done with it.
Posted by: Chris Akers - Friday, September 19, 2014 10:57 AM


I second Chris' argument for good quality construction documents. My experience with bid alternates leads me to believe that additive alternates are better than deductive alternates. And to be fair to the bidders, they should be accepted in the order listed and not used as a way to pick one contractor (with a higher base bid) by selectively choosing which alternates to accept.
Posted by: John Hooker, AIA - Friday, September 19, 2014 11:02 AM


As an Owner's Representative (and past General Contractor), I encourage appropriate options or alternates for projects. As project designs and budgets are being developed the "wish lists" should be narrowed down to reasonable options that can be a huge benefit to the Owner as well as not require too much additional work for contractors, subcontractors and suppliers. I do recall some bids that I went through as a contractor that were crazy with options and if you have not been in a contractors office on bid day (which I think should be a field trip all Architects should make at least once in their careers), it would make them and Owner's rethink their bidding processes (as a risk management plan).
Posted by: Brad Gilbert - Friday, September 19, 2014 11:06 AM


I agree with the consensus that Alternates are an invitation for confusion and mistakes in the final minutes of preparing a bid. I have no problem with simple Alternates like changing a Gym floor from synthetic to wood. The problem comes when the Alternate is to add four more rooms to the base bid building.

However, I disagree with Chris G. about owners "not evaluating project needs adequately." Owner's can evaluate what their budget is and whether they are willing to spend $20,000 more on a gym floor product if it is in their budget. But if the owner or architect could evaluate that the cost of their project is exactly $4,524,000, then they would not need the competitive bid process at all. They would just go out and find the best contractor and tell them this is what I will pay you to do the work.

For the same reason, it is not realistic to expect Alternates to be accepted in order. The owner might not be able to afford the additional four rooms, but he still wants the better gym floor and concrete parking instead of asphalt. If he is intentional tweaking his choices to exclude a particular contractor, do a better job of not being the contractor they want to pass up.

If we could get the owners and architects to buy into two bid times - one for the base bid and one for the Alternates 15 minutes later - followed by the opening of bids, that would resolve most issues.

Brad's suggestion that Architects be required to bid present on bid day is something that I have been saying for decades. However, it shouldn't be once in their careers, but at least once every other year throughout their careers.
Posted by: Jim - Friday, September 19, 2014 1:02 PM






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