Lowball Bids Aren't Worth It

Fall is finally in the air. Along with changing colors, tailgating parties and cooler weather, now is the time of year that many companies begin plotting out budgets and soliciting bids for major construction projects in the New Year. As a leading commercial electrical contractor in the Omaha area, Miller Electric receives multiple bid requests every day. Over our 100+ years of experience providing commercial electrical wiring, design and construction services for healthcare facilities, data centers, manufacturers, industrial facilities, companies and more, we’ve long known that lowball bids should usually be avoided at all costs.

We take every bid request we receive seriously and only respond to the ones we believe we will be successful at and which align with our operational and organizational strengths. Our Chief Estimator, Richard Evans, and Sr. Project Manager, Craig Langfeldt, took a break from their busy days to weigh in on what makes Miller Electric stand out in the area of project bidding and how customers should evaluate the construction bids they receive from contractors.

What Makes Miller Electric Construction Bids Unique
“A lot of work goes into putting a good estimate together,” says Langfeldt. “When we receive a bid, we analyze whether or not we should bid on that project. If we think it’s a good fit with our strengths, we’ll figure out how the work will fit into our existing workload.” Evans and his team answer questions that include:

How will this project fit in with our current workload and manpower capacity from a timeline perspective?
Will we have the right guys available at the time the project will require them?
Are all the pieces there in the proposal request?
What kind of job is it? Medical? Data center? Lab?

“When we take on a project,” says Evans, “if it’s not an existing client, we want to make sure we retain that client for all of the future projects that will follow the one they’re currently bidding out for.”

That commitment to customer satisfaction from the outset isn’t lost on current Miller Electric customer, Tony Fucinaro. A Senior Vice President with MCL Construction, Fucinaro has seen his share of lowball bids (and the problems that accompany them) and explains why Miller Electric wins his business. “We don’t give projects to Miller Electric. They win them. They work well together, not just with us, but also inside their company. They communicate well, which isn’t common.”

When Fucinaro bids out work, he explains what he’s looking for in responses from contractors and cautions businesses against making the number the only factor that matters. “The number is always important but is never the most important thing,” he says. “When you receive a low bid you need to thoroughly evaluate the proposal and not just take it at face value. Take time to ensure the bids you are seriously evaluating are complete and ask questions like:

How well do they work together?
Who from their company is on the project team?
What experience do their teams have on the given nature of the project?
How much work does the contractor already have going on?
Has the contractor clearly defined what has been included and excluded?
Are they willing to sit down in person to evaluate their proposal and respond to questions?”

If the answers to those questions are incomplete, or a contractor isn’t willing to meet with you in person or over the phone to explain their responses, you might be wise to consider looking elsewhere to have your contracting needs met.

When Miller Electric responds to a bid, we are always willing to sit down and review our responses in person and we explain the logic behind the values in our estimates. We want clients to know what our thought process is from the very beginning of our work together.

What Makes Lowball Bids Worth Avoiding
In addition to the likelihood of costly change orders down the road from lowball bids, these responses can signal a contractor that is willing to take shortcuts throughout the project process. “A contractor who submits a ridiculously low bid may try to make the money up that they left out later on, which drives cost up,” says Langfeldt. “They will end up having to take shortcuts, which can take the form of inferior materials or not abiding by the project specifications so that they can save money somewhere else. They might short the manpower needed for the job, and by not applying enough resources to the project, cause schedule delays down the road.”

Other dangers of lowball bids include incomplete drawings or surcharges on material and labor rates whenever a change, no matter how slight, occurs during the project. Perhaps most telling of all however, is the possibility that a contractor who submits a lowball bid isn’t concerned about building a long-term relationship with you or doing anything for your business beyond meeting your immediate need.

“The guy who lowballs may try to make as much as he can on that one project without regard for customer satisfaction,” says Langfeldt. “We want to get the job for a good value, provide excellent service and maintain the customer relationship.”

That level of commitment is what any customer should look for in a bid response from an electrical contractor and is infinitely more important than a cheaper overall cost.

What are some common frustrations you’ve experienced with the construction bidding process? Did you ever go with the lowball bidder only to regret it later?