Construction Information Technology Blog

What does it cost an Owner to receive a bid?

The cost of the bidding process for owners of construction projects is significant when you consider all the aspects of managing it. Once the project documents (Drawings and specifications) are complete there are a number of steps required before prices can actually be received and analyzed. Errors or omissions in these activities can have serious consequences including non-compliant bids, claims for delays or extras or litigation relating to the bidding process itself. Some of the key activities include:

• Preparing the bidding instructions
• Preparing the bid form
• Selecting a list of potential bidders
• Advertising the opportunity
• Issuing Invitations to Bid
• Issuing bid documents to interested bidders
  • Making adequate numbers of copies
  • Checking for completeness of the bid sets
  • Packaging bid sets
  • Staff time to organize and log sets that are picked up by bidders
  • Preparing waybills and calling couriers
  • Receiving bid set deposits if required
• Responding to questions and clarifications requested by bidders
• Issuing addenda and tracking who got them and when
• Checking time clocks for accuracy prior to closing time
• Logging bids as they are received and recording the time
• Receiving amendments that arrive via fax or other means
• Matching amendments with the correct bids
• Opening the bids
• Evaluating the bids for completeness and compliance
• Reviewing that the required bid security is compliant
• Tabulating the bid results to prepare them for analysis
• Receiving and organizing returned bid sets if required

While this list is not exhaustive it is indicative of the amount of detail that must be dealt with in order to properly manage the bidding process. The actual cost will of course vary with the size and scope of each project ... but big or small the steps to manage the process are very similar. Hard costs include items like paper copies, long distance calls/faxes, packaging and couriers. The cost of the staff time required to undertake these activities is substantial and is certainly not the highest and best use of valuable human resources. The biggest indirect cost arises after the fact from potential process based litigation or claims for delays and extras resulting from missing information.

In a previous post I discussed the digital site of record approach to managing all of these activities that offers tremendous potential to reduce or eliminate most of the costs of managing the bid process along with reducing most of the risk for problems after the fact.

Preventative legal advice

One of the most commonly given pieces of preventative legal advice for construction professionals is “document everything”. Clearly this is very good advice ... but it is not always given the attention it deserves. If you’ve ever been involved in a claim or suit you are well aware of the costs of putting together the story of what actually happened. The bill can be thousands of dollars or even tens of thousands for significant claims. Ensuring a properly documented ‘audit trail’ as I call it can be a time consuming effort but it is like buying insurance ... you don’t expect a problem ... but if it arises, you are prepared.

Good document control technology automates the majority of the documentation needed to know with clarity and ease who saw what and when. The best part of this is that simply having the systems in place can avoid the escalation of an issue to a claim or a lawsuit right up front. A number of our clients have reported on situations where someone states they didn’t receive a particular document or piece of information and as a result expect that they are entitled to compensation. An easily generated activity report showing the information was fully available can often lead to an immediate resolution of the issue. For example, a log report from our system stating that “[Person] from [Company] on [Date] looked at page 1, 7 and 10 of Addendum number 6”, was conclusive enough evidence to avoid the time, costs and potential bad relationship of what was a six figure claim for an extra.

Best practices today not only ensure a proper audit trail but they also contribute to significant reductions in the time and cost associated with generating it. Manual creation of distribution logs, transmittals, waybills, email records and other means of proving your case are completely automated. Given the tools and efficiencies that are available today it might be worth taking a second look at how your firm is addressing that piece of very good legal advice.

To scan or not to scan

I was asked the other day by someone if I thought they should buy a large format scanner to scan construction drawings. They are increasingly receiving digital files but still have lots of paper documents flowing through the office. The scanner and printer combination they were looking at was many thousands of dollars. My very helpful answer was “maybe”.

When we first started this business in 2000 virtually every page of drawings and specifications uploaded to our system was scanned. At that time design consultants and owners were still wary of sharing digital files and scanning was the only way to get the information digitized. There has been a radical shift in the last few years and the concern over distributing digital files has been far outweighed by the efficiencies and cost savings that the consultants and their clients achieve. Happily that means less scanning. Today, 85% - 90% of the documents uploaded to our system are received in digital format.

For others who are considering this question there are several considerations.

• When you receive paper sets of documents are your personnel requesting digital files? Almost every document today is created digitally.
• Do you need the convenience of having the files immediately scanned in your office or can you efficiently outsource it to a local reprographer or scanning service?
• Do you want your personnel spending the time it takes to learn and then operate the scanner?
• Are you prepared for the maintenance bills? We recently replaced the glass on one of our machines. It is $700 just for the glass.

Ultimately the person I spoke to decided that the convenience of having immediate access to both printing and scanning was worth the investment. In a few years this may well be a moot point as more and more information is being exchanged digitally. In the mean time it may well be worthwhile to consider having conversion technology in your own office.

The most effective way to manage your construction documents efficiently

We are back! Our blogging activity has been curtailed over the last couple of months as we have been very focused on completing our latest innovative new solution for the construction industry called PlanSource FT – File Transfer. I am excited to tell you about it. 

Our existing technologies are widely hailed as delivering significant time and dollar savings to those who use them while concurrently reducing project risk and environmental impact. We were one of the first companies to see the potential of internet technologies to deliver these kinds of benefits to the construction industry. Ten years ago there was no shortage of sceptics who thought that managing and distributing construction documents online was a bad idea. “I need to have the entire plan laid out in front of me to work on it” was a familiar refrain. Changing something as ingrained and iconic as the traditional roll of drawings is a slow process that will only happen if the benefits are substantial. Good news – the benefits have proven to be substantial and the process is changing rapidly. 

When we first started this company (100,000 plus projects ago) virtually every drawing, specification page or addenda uploaded to the system was scanned from paper originals despite the fact that they were all created digitally. About two years ago the transition away from distributing paper sets accelerated as design consultants became increasingly comfortable with the idea of sharing their documents in digital format (typically .pdf or .tiff). Today, only 10% – 15% of the documents uploaded to our systems are scanned, and even that number is declining. 

For the most part the design consultants have used FTP sites (File Transfer Protocol) as the mechanism to share and distribute their digital files with their design team and more recently with contractors. While this mechanism works, it is by no means the best way to accomplish the task. Managing the sites, maintaining security, organizing and working with the files are just some of the challenges presented by FTP.

In response to those challenges we have taken the opportunity to leverage some core elements of our very powerful PlanSource applications to provide the industry with a dramatically better solution to managing and transferring construction files online. That solution is PlanSource FT – File Transfer as mentioned earlier in this article. It is specifically designed for construction and is fast, easy and secure. Users can set up an account and in minutes be viewing documents, sharing them with others, printing them directly, downloading the files they need or even sending orders for copies directly to their own reprographer. It is very inexpensive and will even offer a completely free and fully functional version to those who only have a limited amount of activity.

As digital files have become more commonplace, everybody including Architects, Engineers, General Contractors, Trade Contractors and Suppliers all have an increased need to be able to efficiently manage and work with these files. Whether the files are on a CD, DVD, downloaded from FTP sites or are from an online planroom, PlanSource FT provides a tremendous way to use a single system to effectively manage all of them. We anticipate this great new tool will be released in May and look forward to once again delivering an innovative solution that solves a widespread problem for the construction industry.

A four step estimating tune up

Construction estimating is a complex and time consuming process. A good estimator truly understands how a project is managed from start to finish and is able to translate every step into a dollar amount. Estimators today have some very powerful tools available to help them put together the best and most accurate numbers upon which to base their final price. If you are not already doing them here are four ideas that might help you fine tune your process:

1. Help your Trade contractors and suppliers be more efficient
   On a recent and very large project the General Contractor decided to distribute the drawings and specifications on Dvd’s. There were hundreds of pages of drawings and the cost of distributing paper would have been significant. The information on the Dvd’s was poorly organized and very difficult for anyone to work with and find what they needed. Many opted to simply get it all printed out at significant expense just to figure it out. This was simply a short sighted exercise in transferring the cost and effort on to the Trades and Suppliers. It is hard to imagine how that kind of approach which essentially says ‘I don’t care about your time and expenses to give me a bid’ can ultimately result in that Contractor getting the best price from that Trade. If your attitude up front is that you don’t care, why would it be any different when you get on the site? Given that a significant portion of any bid is usually made up of bids from many Trades and Suppliers it would only make sense to demonstrate that you are good to work with and that you are interested in doing what you can to help them make money as well. A better alternative to the Dvd’s (and subsequent addenda) which still took time and cost money to produce and distribute would have been to make them available in an online planroom like PlanSource for fast and easy access by everyone who needed them. It would have cost less than the Dvd’s, taken less time and would have been far better for everyone involved.
   
   
2. Make sure the right people know when you are looking for pricing
   Sending out Invitations to Bid is essential. There is no doubt that for critical Trades and Suppliers you will still need to have a conversation with them but why not give notice that you are working on the project and let them view the documents in advance of your call to make the exercise more efficient. There are countless stories of how one price from one particular Trade or Supplier made the difference in getting the project. Even for a Construction Management or negotiated contract it is still essential to let people know as soon as possible that you are looking for them to spend some of their time and resources to work with you to put pricing together. Adequate notice simply helps them plan better. PlanSource has excellent Invitation to Bid and messaging functionality that can make the process fast and easy.
   
   
3. Get your database of Trades and Suppliers in order
   We are in a position to see lots of company databases of their Trade and Supplier contacts. Obviously, a key resource for any estimator is the list of contacts they have available to gather pricing from. It appears to be a big challenge for many Contractors to maintain and keep accurate as people and companies come and go. The task of “cleaning it up” is often a once a year exercise for one of the administrators that can take a lot of time and effort to get done. There is a better way. Once again there is software available today that virtually eliminates the need to maintain the list. It can be automatically managed and updated using the management tools available in PlanSource . Add in the available prequalification tools and you have an easy way to screen prospective new contacts to improve and expand your available bidders.
   
   
4. Use On Screen Takeoff software
   Accurate quantity takeoffs are of course a critical element of a good bid. While there is certainly nothing wrong with a scale rule and estimating pad there is no question that good onscreen takeoff software can help you get the work done faster, more accurately and with more options for analyzing and refining your numbers. In addition to the takeoff tools available in PlanSource, there are many options in the market but one well worth looking at can be found at www.oncenter.com .

In a market like the current one where every tender is highly competitive it is more important than ever to make sure you are doing all you can to be efficient with your own time and expenses and to reduce the time and expenses it takes Trades and Suppliers to work with you. Better systems yield better results and ultimately improve your odds of being the successful bidder.

Free stuff from PlanSource!

We are nearing the final stages of developing a new secure online technology that is simply the fastest, easiest and most efficient way to share and distribute construction documents.

Do you receive digital files from others? Do you have access to an online planroom or an FTP site? Do you need to then share or exchange those files with other contractors or suppliers? PlanSource FT is designed to be the most efficient possible way for you to do that. It is like an FTP site on steroids. Unlike a typical FTP site where you can only transfer files, PlanSource FT allows users to instantly view, print, download or order paper copies of documents. It is easy to use and requires ZERO training. There is no software to buy or hardware to install. Just sign up online and in minutes you are ready to go.

PlanSource FT is the latest development from one of the construction industry’s most innovative and successful technology companies. Our experience in delivering online planroom technology to over 15,000 users on over 100,000 projects has positioned us with the technology platform and industry knowledge to develop this breakthrough on demand service for the construction industry.

We will be making Version 1.0 of PlanSource FT available early in 2010. If you would like to be one of the first to benefit from using it we have a great offer for a limited number of participants. The first 50 companies who sign up to use this great new software service will receive 6 months of service free. Simply click on this link to sign up. You will be provided with complete details of all fees (which only apply if you continue to use the service after the first 6 months) and of how the service works prior to the launch date. This offer is only available until December 30th 2009 so we encourage you to take advantage of this no cost, no risk offer and be one of the first to start saving time and money.

The ‘Site of Record’ approach to tendering

The process to obtain a price and enter a contract for construction work is complex in part because virtually every project is unique. Over the course of years construction tendering standards have evolved and been shaped by best practices and changes in the law. The advent of new internet technologies offers a new way of integrating the entire process to eliminate some of the more common issues and problems that typically arise through the tender period of a project.

The following are just a few examples of typical issues that arise during the process:

• Missing documents or information
• Trade contractors having different information than the Prime Contractor
• Late issuance of Addenda
• Incorrect document versions
• Unclear closing times
• Incomplete tender submissions
• Missing schedules or attachments
• Missing tender security (bonds)
• Late submission of tenders
• Busy fax lines precluding bid amendments from arriving on time

These and many other related issues can be managed effectively using a Site of Record approach to tendering. All tender activities, information and documents are made available to all bidders in a single secure online site. The Site of Record is the only official set of information made available to bidders leaving no chance for errors in the production, distribution or tracking of hard copy documents. Every bidder who accesses the information is automatically included in the distribution list for any addenda. The tender form is made available to Bidders electronically with all requirements clearly defined for the bidders. It cannot be submitted with missing information which ensures a complete tender submission. At the instant the reverse countdown clock reaches the closing time bids are no longer able to be submitted or edited. At that same instant the results of all properly submitted tenders along with any required bid bonds or other attachments are all immediately available for review either individually or in a spreadsheet format. All of the activities in the process are logged ensuring that all the key elements of the process are verifiable should the need arise after the fact.

Using a Site of Record approach to construction tendering saves time, reduces costs for all parties and most importantly it significantly reduces the risk of problems or claims arising from errors or omissions in the tendering process.

File Transfer – Building your own solution?

There is an undeniable trend happening in the construction industry towards greater use of the internet for moving drawings, specifications and other documents. The use of FTP (File Transfer Protocol) by Architectural and Engineering teams is widespread. Contractors and Suppliers are receiving more and more information in digital format that they still need to share with others.When working out how to resolve this issue some are looking at the option of building their own in-house solution.

When considering this option it might be useful to ask yourself a few key questions:

• Are you confident that the solution you plan to spend time and money to build has a high probability of delivering the desired results?
  
  
• Are you confident that the actual working solution can be completed within the timescales for development and implementation that are initially predicted?
  
  
• Are you confident that the fully functional solution will be implemented for a cost that is controllable and acceptable?
  
  
• Are you confident that once implemented the cost of maintenance will not be an uncapped drain on your IT Department’s resources?
  
  
• Are you confident the solution will meet your requirements for speed, simplicity and security?

The harsh reality is that in many cases the actual solution finally provided will probably not achieve the original business objectives or savings in costs which made the project valid in the first instance. The inescapable conclusion is that where an existing solution exists, it should be used unless it can be demonstrated that it cannot handle the majority of the required business process. Few companies have the resources and energy it takes to build a fully functional solution. Wasting time, money and people resources on a non-core business activity to implement what seems like a fast and cheap solution is unlikely to make your business better.

 

You don’t want to save money?

I was out for a walk in my neighbourhood recently. One of the telephone/media companies had a major sales blitz going on. There were sales reps in yellow shirts on every major street corner for blocks pitching the "best deal ever" on bundling phone and media services. I was approached 7 or 8 times with the same offer. Each time I declined. I was not interested in even looking at what they were offering even though I had no doubt it might actually save me some money if I looked at their offer. On approach 7 or 8 I declined as did another guy waiting at the street light. As we walked away one persistent and somewhat aggressive sales rep hollers after us saying "So you don't want to save money?" In unison we answered "No".

So what is that about? It's not as if I don't like money or have so much stashed away that I just don't care. I know the company and know them to be very reputable and have no doubt they deliver phone, cable and internet services as well as anyone else. If I was dissatisfied with my current services or was actively looking to reduce my household expenses I might have looked. Other than that, I am simply not interested in the hassle of making changes as I don't perceive a compelling reason to do it. I don't think my reaction is that different from the way most other people react.

It is not much of a stretch to apply the same principle to the way many businesses approach their decision making around acquiring technology. They don't perceive a compelling reason to change even though they know that doing so will make their business better. It often takes a costly incident or major problem to motivate people to look for a way to avoid the situation in the future. It's worth asking yourself if your company is stuck in "what we have is good enough" mode. Maybe it is time to proactively look at solutions that could help you be more efficient and avoid that costly ‘incident or problem' while making your business better.