People are always asking us how to go procuring bids to get their projects built so I thought I would offer this article as an overview to some of the more popular methods.  Is there a right way and a wrong way?  No, not necessarily. You have to weigh your local politics versus the expediency of getting things done in a timely fashion.

Believe me there were times when I was in the public sector where I wished I could cut through the red tape and just hire the guy I wanted to do the job.  Wishful thinking . . .

Because the private sector can go about this in just about any fashion they want to including the overused "brother-in-law" selection criteria for contractors, I'll just address the public sector contracting methods.  In no particular order they are as follows in most states:

I. ENGINEERING FOLLOWED BY PUBLIC BIDDING

Perhaps the oldest method is the tried and true public bidding method.  In this case, the client (you) hire your engineer (or heaven forbid, architect) to prepare your plans and specifications for you.  Hopefully, this results in everyone bidding on the same project although to see the spread on some bid tabulations you would think somebody goofed.  Usually it's the low bidder, but that's another article altogether.

The design team meets with you the client to determine what it is you hope to build and then they proceed to draw up details, specifications and contract provisions and include them in a bid "packet".  Advertisements are published in papers of 'general circulation' in the project area and deadlines for submitting bids are set.

Usually, but not always, the engineer distributes plans and specifications to bidders and subcontractors to review and price the job.  On the appointed day all bids are received in some central location, such as the office of the client's purchasing agent, and read out loud.  Award of a contract based on those bids is delayed until the successful bidder (usually the low bidder) is checked out and the governing body can vote to award.

At this point the contract is signed between the client and the contractor (bidder) and work can commence.  Your engineer should be with you all the way through bidding, award, and construction, providing guidance and checking on the progress of the work.  Partial payments on larger jobs may be required as the work progresses and finally a payment is made upon satisfactory completion of the project.  There are a thousand other details that your engineer will look after for you.  That's what he is getting paid for.

Advantages: This is pretty much a hands-free method for the owner who wants the expertise but not the hassle of day-to-day running of the project.  The lines of communication are very clear as are the liabilities of each of the parties.  It takes a little longer perhaps than other methods because of the selection and contract negotiations with the engineer before the design can even start.  Engineering, however, falls under the category of public services and therefore bids are not solicited and often even advertisements for  engineering are waived if the client is familiar with the expertise of engineers in their vicinity.  A client can usually hire any engineer they want using whatever local procedures are acceptable to them.
 

II. DIRECT PURCHASE/ CONTRACTING FOR INSTALLATION 

In this scenario, usually when the owner wants a specialized piece of equipment that may only be available from a single source, the owner can advertise for the equipment bids separately using only equipment specifications without worrying about the installation or site preparation or other work necessary for the completion of the total project.  As with the conventional method of design and bidding set out above, the client selects his engineer who puts together both the equipment "package" and the "installation" package for bidding. 

The owner receives bids and awards a contract for the equipment to be fabricated and delivered to the owner at some prescribed place by some prescribed date.  Possibly several weeks or months later, the owner advertises and receives bids for the other work necessary to complete the project. This other work might include earthwork, landscaping, irrigation, foundations,  buildings, electrical, water/sewer, roadways, trails , parking or similar improvements.

In a perfect world, the equipment arrives just in the nick of time for the installer to install.  He has included in his bid all the necessary equipment and labor to install whatever it was the client bought by separate bid.

Advantages:  The process is quick and allows for the long lead time often necessary for fabricating and delivering specialty equipment that is usually made to order and not "off the shelf". The other parts of the design can take place even while fabrication is underway thus expediting the completion.  This method can save money because the equipment is not "marked up" by the contractor because he does not have to provide 'bonding' and 'insurance' on the equipment.  Theoretically, the client can get the same price for the equipment as the contractor would have received and frequently manufacturers would rather deal direct with a city for cash flow reasons.

Disadvantages:  There is an inherent split in responsibility.  If the equipment does not show up on time, it could delay the installer and might result in additional charges for delay.  If the equipment shows up early, the client has to store and protect the materials.  If parts are missing the client has to chase down the manufacturer's representative and pry the parts from his cold, dead hands.  If the equipment fails to work at all then someone has to make the call as to whether it was faulty equipment or faulty installation.  And, finally, if it breaks down 11 months, 3 weeks from completion, someone has to determine if it is a contractor warranty issue or a manufacturer's warranty issue.

III. DESIGN/BUILD (FAST-TRACK)

A third method is design-build.  In this method, the client solicits his own bids from general contractors without benefit of an engineer and asks the bidder to provide not only the equipment and installation  but also  the design of all support systems, site improvements, buildings, electrical, etc. as a "turn-key" package.  Its turn-key because at the end of the job the contractor more or less hands you the job he has designed and equipped.  The contractor hires his own designers by whatever methods he deems appropriate.

The primary difficulty with this method is that:

a) You have little to say about the designer the contractor selects; 
b)   It is difficult for clients to write substantive specifications and avoid the pitfalls;
c) It gives the contractor not only the power to price the equipment and installation but to also select which methods, equipment and materials he will offer. He profits on both ends (sets the price AND the quality) and the client may lose out.
d)   the engineer is aligned with the contractor in the event of any dispute arising out of the quality of work.
e)  the client will  have to provide independent inspection and project management since he has no engineer in his corner.

There are a hundred variations to these methods.  We have tried to outline but a few points.  All three methods have been used successfully and with a good contractor and a good engineer your chances of fantastic results are greatly improved.  You have to, however, weigh the chances that you may not get a good contractor and you should select a method that gives you the most protection!

If you have questions, please do not hesitate to e-mail me or call me, Terry Brannon, PE, at 800-256-2492.