If you want to save time on endless revisions of your construction plans and avoid an army of change orders, a negotiated bid might be your best bet.
Below, we’re going to take a look at some of the best reasons and times when a negotiated bid is far better than a standard competitive bid. After you’ve read this, you’ll know when to go with a negotiated bid.
What Is A Negotiated Bid?
The biggest difference between a negotiated bid and a hard competitive bid is that you’ll be working with a single general contractor with a negotiated bid. The general contractor forms a trusted, professional relationship with both the architect and the project owner.
Typically, the general contractor is involved from the start of the project. That includes being there during the initial planning stages, right through designing, developing, and completing the project.
In contrast, we find that with a typical competitive bid, the project owner will take their freshly drawn plans from the architect and invite several contractors to bid on the project. Most of the time, the lowest bid is accepted.
If the costs are too high, it means going back to the drawing board and asking the architect to draw up another set of specifications. This takes time, costs money, and can happen several times.
Today, the construction industry is changing. It’s clear that negotiated bidding holds several distinct advantages over the typical hard bid. As such, it is becoming ever more popular and essential to maintaining a healthy industry.
What Are The Advantages Of A Negotiated Bid Vs A Competitive Bid?
While both bidding types are equally valid, negotiated bids offer more benefits to everybody involved with the construction project.
Some of those benefits are:
- Accurate, real-time costing while the architect is still busy finalizing the plans.
- Less time is spent altering the architectural drawings to fit with the project’s budget.
- A closer relationship between the project owner, architect, and construction manager.
- You manage to avoid delays and frustrations by reacting faster to issues as they pop up.
When To Choose A Negotiated Bid
Now that we’ve had a look at negotiated bids and why they are so great, let’s look at several times when a negotiated bid is a far better alternative to getting your construction project completed on time and within budget.
Use a negotiated bid for a multiphase project
If you’re planning a large, multiphase construction project, going with a negotiated bid is far superior to the standard competitive bid.
You’ll find that the general contractor provides consistency throughout the project. This consistency helps ensure that the construction standards and the client’s vision are upheld from start to finish.
Another great benefit of the negotiated bid is that your general contractor can quickly identify issues and inefficiencies throughout each project phase. This helps to mitigate risk and improves planning before construction begins. It centralizes all your project management efforts, ensuring timely, cost-effective delivery.
Is the project a prototype or a new concept?
Negotiated bids are also a good option if you’re taking on a brand-new concept. Whether remodeling an old facade or constructing the latest, trendiest facility, prototypes and new concepts always have hidden issues.
With a trusted general contractor on hand, like Chad Fisher Construction, it’ll be quicker, easier, and more cost-effective to find solutions to these issues. Since our contractor is involved from the beginning, we can advise and assist in altering the plans to suit the actual project.
Doing this can help make your vision a reality while saving loads of time and money. Having a contractor involved from the start also helps to ensure that the project gets launched faster.
When the project plans aren’t finalized
It’s happened to the best of us. Landlords, tenants, regulations… There are various reasons why the construction plans may not be finalized when you expect them to be. Luckily, this is where a negotiated bid truly shines.
Having a trusted contractor on hand means you’ll have a better idea of the costs involved with your project. The contractor’s fees and general terms and conditions are stipulated upfront. This way, you can plan the budget and project schedule while plans are being finalized.
You’ll find that this saves a lot of time. Instead of having to go back and forth between multiple contractors, requesting estimates, and juggling several hard bids, you can get down to business faster.
The Bottom Line
While a negotiated bid has several obvious benefits over the traditional competitive bid, certain things can make or break your budget.
The most important aspect of any negotiated bid is clear, open communication. We can’t stress this enough. A negotiated bid is built upon a transparent and trusting relationship between the project owner and the general contractor. This is the secret to its flexibility and success.
If you need a reliable general contractor and are interested in the negotiated bid approach, be sure to get in touch today.