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Hard Bid vs Private Negotiated Work Rochester NY

In western New York State, it is becoming increasingly common for private negotiated work to win most construction projects as the owner is more familiar with the contractor and the work can move forward with both contractor and design team working together at set milestones.

A hard bid, on the other hand, is a price discussion between new contractors. In this situation, the contractor is suggesting a capped price that the work is completed at, placing the priority then on the lowest bidder in a competitive setting. Unfortunately, these hard bids don’t necessarily provide a schedule that the project is bound to, and this can set owners and contractors up for a misalignment of goals.

What is the Difference Between a Hard Bid and a Negotiated Bid?

A negotiated bid is largely considered to be a more transparent process for owners to work with new contractors, though it can take more time up-front. If the contractor is chosen to negotiate their bid, the owner can see the constituent parts of the project totals. This gives owners a more transparent look at what makes up the project costs, rather than a lump-sum bid in a competitive bid strategy that tends to favor the lowest bidder.

A negotiated bid is more likely to net quality results than a hard, competitive bid system when you are looking for a new contractor to work on your project.

Hard Bid VS Soft Bid Pros and Cons

Hard bid’s biggest benefit is that it tends to result in lower-cost projects upfront. The downside of a hard bid system is that these savings are not typically kept throughout the entire project life cycle, as design changes, contractor input, or unexpected project costs may throw a wrench in the plans. If your project is being developed on a strict timeline, this can quickly become a problem, delaying opening dates and putting the project’s success at risk.

In a soft bid, or negotiated bid, the benefit is that there are more people working collaboratively to the success of a project. Having the contractor’s initial input in the design can often save time and money throughout the project, ensuring that all parties are aligned in the work that must be done to complete the project. The downside is that these projects typically take a little bit longer upfront while the team is aligned on every detail.

Challenges of the Hard Bid Strategy

When you opt to select a contractor using a hard bid strategy, you can face some significant challenges if you aren’t prepared. With this strategy, contractors are obligated only to price the work that is shown on the bid documents and no other types of services or fees that are otherwise not included in the up-front bid. While this makes the process fair when comparing contractors by setting similar expectations across the board, these bids may not include all the details necessary to complete the construction, or take into consideration any unknown risks, budgetary limitations, or funds allotted for delays.

By accepting a contractor’s proposal with a hard bid strategy in place, there is additional risk for unexpected costs or conflicts between the contactor and the design team as architects and designers might disagree on what is necessary or should have been included in the bid if there are discrepancies between the bid outline and the drawings during construction.

Facing these challenges head on, or even discussing these challenges with your chosen contractor can help you alleviate some of these challenges and have an open discussion with the team. This is also why more people choose to work with the negotiated procurement strategy, which is also known as private negotiated work in Rochester NY.

Challenges of the Negotiated Bid Strategy

With private negotiated work Rochester NY construction bids can become a little more freeform as an owner is better negotiating the terms of the construction agreement ahead of the work. In this case, it’s common for the owner to know the contractor, or trust that they will get the work done as promised. This forgoes the competitive hard bid process entirely, allowing the owner and contractor a chance to engage simultaneously with the design team, and project construction costs and project timelines ahead of the process.

With a negotiated bid strategy, there may be a longer wind up as the contractor comes onto the team much earlier, but you are working with your contractor to ensure there’s no misalignment with the project ahead of time. This typically leads to a more successful project overall, with higher quality work and better team alignment.

What Bid Type Fits Your Project Best?

Ultimately, projects are not limited to a single type of negotiation style, and more than one negotiation style may fit into your process when you are looking for the right contractor for a first-time project. No matter what, it’s important that expectations are set ahead of time and your team is ready to collaborate.

The biggest misalignment happens when there are assumptions about the project, or if your project has limitations that are not discussed with both the design team and contractor ahead of time. If you find that a certain type of bid isn’t working for your project, you can also request that contractors re-submit their bids with a different style. For example, if you don’t have time to work with a procurement strategy, you might find that a competitive bid style works best for your situation, allowing you to pick a contractor from the competitive bid to then have more nuanced discussions with.

Keys to Effective Negotiated Contracts

It’s important to understand several key areas of negotiation that will help you keep your project on track throughout its development. While there may be other areas depending on your existing experience with a specific contractor and design team, or depending on the type of build-out you are looking to construct, but overall, it’s best to engage with these four things in mind.

First, engage only with qualified general contractors that have marketable experience with the conceptual phase of the project. While it can help, you don’t need drawings from your team in hand.

These types of general contractors, such as the ones at C.P. Kelly, have the ability to develop accurate budgets based on minimum milestones, such as when there is a conceptual design in place, 50% of the design drawing is complete, and finally at construction set drawings. This also allows the general contractor to be responsible for managing risks and maintaining the project’s budget once project costs are set.

You should also ensure that all budgets with your general contractor include risk budgets and allowances for contingencies in case additional funds are needed as the projects arises; these funds are returned to the owner if not utilized.

Keep the Design’s Value in Mind

It’s the contractor’s responsibility to always keep the design’s value in mind when developing the budgetary restrictions and project timeline. At C.P. Kelly, we provide ground-up, start-to-finish general contracting services in Western New York since 2005, creating and finalizing projects that owners can be proud of. We take the time to discuss every detail with you, ensuring your project gets the attention it deserves.

As a quality contractor providing private negotiated work Rochester NY depends on, we strive to be more than just a construction company, keeping your business moving forward every step of the way.

Always Deliver Quality Craftsmanship

Delivering quality craftsmanship at every stage of the project is an important part of our project motto. That’s why we go the extra mile to make sure your project is successful, thinking not just about the end result, but what the project looks like once we walk away from it.

We work with owners to ensure the project is successful and durable, lasting not just through the construction process, but as a timeless project that showcases a unique sense of forward momentum and trustworthy atmosphere.

How C.P. Kelly Keeps Bidding Professional in the Rochester NY Area

At C.P. Kelly, we are a customer oriented construction group that works directly with clients with private negotiated work to create a construction project that thrives, both in Rochester and beyond. From general contractor to builder and industrial, our family-owned company strives to create a better community with every client we work with. For many of our owners, the architect may recommend us, or you may be looking for a contractor to start private negotiations with.

No matter what you are looking for, our team is here with you and willing to customize your project to the fullest extent, ensuring your vision is realized on the ground. For more examples of how C.P. Kelly has worked with private negotiations in the past, check out our portfolio.

For more information about our process or how we can help you with your project, get in touch with a team member today. We are here to help make your dream come to life.

Posted on May 22, 2024.

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