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Different Types of Commercial Construction Bids

When it comes to construction projects, choosing the right type of pricing structure is crucial. As a prospective building owner, it’s important to understand the different options available and their respective benefits and disadvantages in order to make an informed decision on how to move forward. In this article, we’ll explore the most commonly used types of bids including Hard Bid, Design-Build (DB), Design-Assist (DA) and Negotiated Bid.

Hard Bid

A Hard Bid is a traditional bidding process in which a building owner requests that contractors submit a fixed price for the construction work. The winning contractor is selected based on the lowest responsible price and a contract is signed. Hard Bids are most commonly used on public works projects and for straightforward projects with well-defined plans and specifications.

Benefits:

  • Provides a clear and straightforward cost estimate
  • Minimal room for cost overruns assuming a good set of construction documents

Disadvantages:

  • Limited or no collaboration between owner, architect, and contractor
  • No room for value engineering or cost-saving suggestions from the contractor
  • Can lead to low-quality work and scheduling delays if the contractor uses change orders to make up for his low price.

 

 

Design-Build (DB)

Design-Build (DB) is a single-source delivery method in which a single contractor is responsible for both the design and construction phases of a project. The contractor teams up with an architectural firm and works with the owner from design inception to turnover.  The building owner hires a design-build firm and enters into a single contract with them for the entire project. Competition for the project can still be achieved by comparison of a contractor’s cost for general conditions, insurance, fee and bonding costs.

Benefits:

  • Streamlined process with one point of responsibility
  • Early cost estimates based on conceptual design
  • Encourages collaboration between the owner, architect, and contractor
  • Room for value engineering and cost-saving suggestions from the contractor


Disadvantages:

  • Lack of competition may result in higher costs
  • Some contractors may not be able to provide the level of design expertise as a part of the dedicated design team


Design-Assist (DA)

Design-Assist (DA) is similar to Design-Build in that a single contractor is responsible for both design and construction. However in this case, the contractor is brought in at an earlier stage to assist the owner and architect in developing the plans.  As with Design Build, competition for the project can still be achieved by comparison of a contractor’s cost for general conditions, insurance, fee and bonding costs.

Benefits:

  • Encourages collaboration between the owner, architect, and contractor
  • Room for value engineering and cost-saving suggestions from the contractor
  • Early cost estimates based on conceptual design
  • Improved quality and efficiency due to contractor input


Disadvantages:

  • Contractors may not be able to provide the level of expertise as part of the dedicated design team

Negotiated Bid

A negotiated bid, also known as a negotiated contract, is a type of construction project procurement method where the owner directly negotiates with a contractor or a design-build team to reach an agreement on the scope of work, cost and timeline for a construction project. Unlike traditional bidding methods where contractors submit sealed bids and the lowest bid is selected, a negotiated bid allows for more collaboration and communication between the owner and contractor leading to a better understanding of the project requirements and a more optimized construction solution. However, this method is typically used for more complex and larger projects and requires a higher level of trust between the owner and contractor. As with both Design Build and Design Assist, competition for the project can still be achieved by comparison of a contractor’s cost for general conditions, insurance, fee and bonding costs.

Advantages of a negotiated bid in commercial construction:

  • Improved Communication: Negotiated bidding allows for open communication between the owner and contractor, leading to a better understanding of the project requirements and goals.
  • Flexibility: In a negotiated bid, the owner and contractor can work together to modify the scope of the project, making changes and modifications that may not be possible in a traditional bidding process.
  • Cost Savings: With negotiated bidding, the contractor has the opportunity to provide value engineering suggestions and cost-saving alternatives, which results in lower project costs for the owner and or a better end product.


Disadvantages of a negotiated bid in commercial construction:

  • Reduced Transparency: Negotiated bidding can sometimes lack the transparency of a traditional bidding process, which can lead to concerns about fairness and impartiality.  This can be overcome by providing an open book for subcontractor bids.


Choosing a negotiated contract, design-build or design-assist delivery method can be a beneficial option for a cons
truction project, particularly when working with a trusted and reputable contractor like EPI Construction. With a focus on collaboration and open communication, these methods allow for a more streamlined and efficient process, reducing risks and costs while ensuring the project is delivered to the highest standards. EPI Construction has a long-standing reputation for honesty, integrity and trust, making them an ideal partner for a successful construction project through a negotiated contract, design-build or design-assist delivery method.

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