Beyond the Build

Commodities Pricing

Trend in the Making: How the Economy Affects the Way We Bid

We recently priced a pro ject in Atlanta (a little less than $1 million job), which had several general contractor bidders and a ton of subcontractor quotes. In fact, there were a total of 20 subcontractors competing for $70,000 worth of HVAC work. Amazing. What’s even more amazing is that our cost was exactly the same as the general contractor with the lowest price and we came

in second. The difference? The general contractor with the low bid put $0 for his overhead and profit. At first blush an owner may think that is a great deal, but in keeping with the laws of economics someone will eventually lose.

Something similar happened when we priced a project we are currently constructing in Richmond, VA. After being awarded the job, our sprinkler subcontractor said his price included reusing the old pipe, a new one for me in the industry. Everyone is looking for ways to get “low.” We are currently buying steel bar joist at the cost of the raw product—bar and angles. So basically we are getting the design cost, engineering cost, fabrication cost and the freight for free, as are our customers.

The recession has compelled many to find innovative ways to cut costs. Interesting times for sure.

Merrill Stewart Jr.

Merrill Stewart is Founder and CEO of The Stewart/Perry Company, a commercial building contractor based in Birmingham.