How To Evaluate A Subcontractor Bid

The Real Estate Espresso Podcast

On today’s show we are talking about how to evaluate a bid from a subcontractor.

If you follow the procurement method used by most government departments, in the US and in Canada, the process makes sense.

Everyone needs to meet the minimum requirements. For all those who meet the minimum requirements, the purchaser will select the lowest bidder.

Intuitively this makes sense. But it puts the burden on the purchaser to specify every aspect that matters to the buyer.

My mentor Dr. Nido Qubein says that when the value is unclear, the discussion always degenerates to price. All other things being equal, then price would be the only remaining differentiator.

But some things are subjective and not just functional. When an architect designs a building for you, there is a complete set of drawings. These drawings are then supplemented by another document which details the specifications. In most of our projects, this spec document is somewhere between 600-800 pages in length. Even then, it doesn’t capture everything that we would want in the products used in our finished buildings.

The specifications fall into several categories. First there are those specifications that are required by the building code. Two of the most difficult items to specify are the product longevity and the product quality.

If you are specifying a paint, the paint can have different qualities of durability. What is the solid content of the paint?

What is the durability of a product? How many years will a wood floor finish last in a high traffic area?

Some products feel cheap, or look cheap even if they’re not. How do you specify that you don’t want the ceramic tile to look cheap?

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