From the seasoned business owner to the start-up entrepreneur, selecting the delivery method to build a new space can be challenging. Delivery methods are not only hard to understand, but their many nuances can impact the cost, risk and timeline of a construction project. Given their significance, we launched a podcast series to help owners determine which delivery method is best suited for their next project. Today, we’ll explain the Design-Bid-Build or Hard Bid delivery method.
The Pros of Hard Bid
This delivery method is simple to understand and has been used for decades. First, building plans are designed by an architect. Then the plans are sent to contractors to bid. Finally, the contractor selected builds the building.
There is a perception among many that hard bid delivers the best price. While it may deliver the best initial price for the design that’s been planned, there’s great debate about whether the best design was priced. We’ll explain more later in this post.
The Cons of Hard Bid
During the design and pre-construction phase of a project, the owner and architect work closely together. A contractor’s voice likely won’t enter the conversation until after being awarded the project. As a result, the project won’t be looked at through the lens of a contractor, who could provide valuable insight into the construction schedule, budget, and raise any red flags early on.
Another pitfall of this delivery method is that the contractor is often selected solely on being the lowest price, not on their qualifications or expertise.
When to Use the Hard Bid Delivery Method
The hard bid delivery method is best used for non-complex, greenfield projects. For example, Bush Construction built a brand-new school in an open field that went extremely well. The client was an advanced owner, knew the ins and outs of this delivery method, and had successfully built many buildings before.
We’ve also been a part of hard bid projects that encountered significant challenges. For instance, we ran up against a site issue on a multi-family project. Had we, as the contractor, been involved in the pre-construction process, we would have been able to have an in-depth discussion with the owner and architect about a critical but missing project element. Even though we raised the site issue during the bidding phase, there wasn’t enough time to openly discuss the implications nor was the owner receptive to our feedback. As a result, the site issue caused a long schedule extension and the owner incurred additional construction costs due to multiple change orders.
Communication and Change Orders
The timeframe for collaboration between an owner, architect, and contractor is very limited in the hard bid delivery method. While an owner and architect may work together for months designing the building, a contractor might only have a few weeks to review the project’s scope of work, interpret the drawings and prepare for bid day. Not to mention there is little incentive for a contractor to spend time identifying and communicating project issues before submitting a bid. Remember, in this delivery method, a contractor is selected based on being the lowest price. It’s only after the contractor is awarded the project will they dig in deep enough to discover certain design gaps. This is when change orders come into play.
Change orders occur naturally, however, they are time-consuming and hard to administer. While the contractor is responsible for presenting change orders to the owner, it’s common the trade partner (plumber, electrician, carpenter) will bring the need for changes to the contractor’s attention. The contractor must vet the reason for the change order and determine if the design isn’t complete, accurate, or fully developed, or if the trade contractor should have interrupted the architect’s drawings differently during the bidding phase.
Lowest Price vs Long-Term Value
For owners considering the hard bid delivery method, here are three factors to think about as it relates to the lowest initial price and the best long-term value:
- The reason hard bid delivers a low price is that the cost of the contractor’s input has been cut out initially. However, that price will be passed down the line and could end up resulting in change orders.
- Having a contractor’s input during the design phase often proves beneficial. For example, impact-resistant drywall and concrete masonry units (CMU) are both viable options for school walls. While drywall is cheaper in the short-term, kids can kick holes in the drywall so CMU might be a more cost-effective, long-term solution. A contractor is able to evaluate the cost, schedule, and constructability implications of each.
- If an architect’s budget is off – high or low – the owner will either be responsible for raising more funds or requiring a redesign to incorporate elements they originally wanted in their building but had to cut out to fit the plan.
We’re Here to Help
We’d love to keep the delivery methods conversation going and are happy to answer any questions you may have. Simply fill out this contact form! Or continue reading our series of blog posts on the delivery methods:
- Construction Delivery Methods: 4 Paths For Business Owners
- The Pros And Cons Of The Construction Manager As Constructor Delivery Method