Procuring Best Vendor Pricing
Charming the Specialty Contractor/Vendor Community
Did you know that a typical large construction project is 70-80 % subcontracted to specialty contractors and vendors, typically represented by over 50 different firms? Knowing this, it is clear that relationships do matter in the construction business, and matter to the success and reputation of the general contractor.
When a client decides to engage a general contractor (GC) on a negotiated project, they are in fact engaging an ambassador to the larger specialty contractor/vendor community. The folks of this community know which firms run their projects well, operating with fairness and integrity, and which do not. Subcontractors and vendors have preferences for who they prefer to work with, and who they would prefer to avoid. The pricing received (or not received!) by a GC reflects these preferences.
In today's busy construction market, one of the most valuable preconstruction services a GC provides is "marketing" your project to the specialty contractor community. With so many projects competing for limited attention, it is up to the GC to mount the charm offensive and explain why your project opportunity should matter more than any other. This is where reputation clearly counts as a deciding factor in what projects a specialty contractor or vendor chooses to pursue, and the level of effort they put into a competitive proposal.
The GC also needs to make submitting a bid as easy and as straight forward as possible. Here the design team's help is critical. Plan documents that are disorganized, incomplete, and difficult to understand or to find information within (the "page-flipping factor" – high or low) easily cause frustration and disinterest. Obviously, complete and thoughtful design documents encourage bidding participation and result in more complete and accurate bids.
Being that it isn't often a perfect world, and to facilitate a smooth and organized bidding process, the GC must be thoroughly knowledgeable on the work of all trades, bundle specialty work into concise and easy to understand scope packages, provide courtesy comparative quantity surveys as scope checks, and together with the design team provide answers for conflicting document issues and missing information.
To summarize, specialty contractors and vendors are indispensable partners to the general contractor and owner for ultimately obtaining a great product at a fair price. Their willingness to participate on a project is heavily influenced by whether a general contractor has a reputation for professionalism, collaboration, innovation, listening, integrity, and (not least) making timely progress payments. In the end, the price an owner pays for 80% of their project correlates strongly to who they have selected to be their contracting ambassador.