Maximizing results on flooring RFQs.
At one time or another, everyone on both sides of the bidding process has been challenged by “unintended results” that lead to higher overall project costs. Delayed completion, poor workmanship, failure to fulfill the scope of work, and changes or requests not accounted for in the original RFQ or bid can all have a negative impact on the project budget.
Although most people and companies have established relationships with preferred contractors and vendors, many still solicit “competitive” bids to ensure that the contractor who offers the best value is completing the work.
A well thought-out Request for Quote (RFQ) can maximize the value that any contractor brings to a project, and help avoid unintended results without requiring an excessive amount of extra time to evaluate and execute.
This article will discuss critical information that may influence a flooring contractor’s costs, and ultimately, the finished work. By including this information in your RFQ, comparative bid evaluation will be more accurate and you will improve the overall quality of the bids that you receive.
Understanding Direct Expenses
Direct expenses are categorized into the following: labor, materials, equipment, freight, disposal, storage, and travel and subsistence. By providing pertinent information and including key questions in your RFQ, you allow bidders an opportunity to allocate expenses and provide valuable insight about the work. Evaluating this information will assist you in better understanding and assessing variances among your bids.
Labor typically accounts for 50% to 80% of total project costs, depending on who furnishes the materials. Factors influencing labor costs can be evaluated by phase of work. These phases include:
1. Mobilization/Material Staging: The start of any project involves delivering contractor tools and equipment, offloading materials and staging materials. If the worksite is difficult to access, has multiple levels, or is far from material staging, additional labor costs will need to be included in the bid.
2. Demolition/Floor Preparation: Estimated time for removing existing flooring can vary significantly depending on the type of equipment the bidder has, whether the bidder has personally inspected the jobsite, and the productivity of the crew. In my experience, this phase tends to vary the most among bids. Typically, a flooring bid includes nominal floor preparation costs such as filling minor cracks, control joints and floor leveling up to 1/8-inch in material. However, grinding concrete, removing existing subflooring materials such as plywood, or removing excessive buildup is not usually included in a bid unless specifically requested. New construction bids may also include demolition of the existing floor. Some projects may require moisture testing, which requires extra time and multiple trips.
3. Installation: Installation practices and productivity should be consistent among legitimate flooring contractors. The use of independent subcontractors versus direct employees should not result in significant variations. Most flooring contractors accommodate fluctuating workloads by adjusting their balance of subcontractors and employees.
4. Punch-out/Cleanup/Warranty: Although this constitutes only a small portion of the labor cost, this critical phase can make or break a project. Time needs to be included to perform a final walk-through with the customer. Most contractors offer at least a 1-year warranty on labor. However, they do not budget a 1-year (or longer) walk-through warranty unless specifically requested in the scope of work.
Materials may account for 10% to 60% of the total project cost, depending on who furnishes the materials. When the contractor is supplying the materials, make certain the bid includes sales or use tax. (If your project is tax exempt, you will need to provide a copy of your tax exemption certificate.) If your company has national pricing agreements with material manufacturers, include your representative’s contact information in the RFQ so bidders can obtain the correct pricing. Material pricing on projects scheduled to start more than 120 days out may be subject to price increases. Some bidders may choose to charge a material increase fee instead of purchasing materials early. If you are furnishing materials, provide information about the specific quantities that will be available. This will ensure uniformity among the bids.
Many flooring projects have different contractors in charge of installing different flooring materials such as ceramic tile, carpeting and vinyl composite tile. One area that often causes confusion is specifying which contractor will provide transitions or wall base. Finally, if you require “attic stock” or surplus materials, make certain the RFQ specifies which materials you need and the quantity desired.
The bidding contractor should determine which equipment is required to complete the work; however, providing specifics can improve the accuracy of a bid. For example, an RFQ should state whether any owner-supplied materials will be delivered to and/or stored on-site. In this instance, it must also be clear to the bidding contractor whether a forklift will be available onsite or whether arrangements must be made for forklift to be delivered. On the other hand, if the project site has a dock, there may be no need for a forklift at all.
These details are very important because the delivery, use and pickup of a forklift for one day can easily cost $500 or more. Leaving the bidding contractor to speculate on these costs can result in inaccurate bids, and make direct comparison difficult.
Freight, Disposal & Storage
Freight, disposal and storage normally account for less than 5% of the total bid amount. Freight costs are typically covered by the provider of the materials and quoted by the material supplier based on standard delivery. It is important to note that if the project start date is scheduled within 30 days, increased freight charges may be required to expedite delivery. Providing project start and completion dates will enable bidding contractors to evaluate freight requirements.
Disposal typically involves using an onsite dumpster for collecting all demolition materials and discarded packaging. Bids normally reflect costs associated with a dumpster that will be delivered near the worksite. If debris needs to be removed from the jobsite on a daily basis or the bidding contractor will use existing onsite containers, that information should be noted in the RFQ and reflected in the bid. Storage is usually required on long-duration projects. In many cases, the construction manager or general contractor will coordinate storage for all the specialty subcontractors. On small-duration jobs, the cost of storage is generally covered under facility overhead expense and provided to the jobsite when needed.
Travel & Subsistence
For bidding contractors located more than 100 miles away, travel and subsistence may account for as much as 10% to 15% of the overall cost. In recent years, fuel costs and lodging rates have increased dramatically and this part of the bid often accounts for the primary difference in cost between a local and traveling vendor. For single-site bids, evaluating all local contractor bids or all traveling contractor bids as a group will result in bids that are more comparable. On bids involving numerous sites, all contractors will add costs for travel and lodging. You can minimize these allocations by reducing the number of concurrent projects in the RFQ or allowing bidders to propose a completion date that is in line with their current project management.
Is It Worth It?
Some may question whether the additional time preparing and evaluating RFQs is justifiable. If accepted as practice, this preparation will result in a competitive pool of accurate bids. Most contractors, whether they are a preferred vendor or are working with a client for the first time, appreciate and value a well-prepared RFQ. By anticipating some of the challenges the contractor might face and answering some key questions up front, you allow the vendor to prepare a more accurate bid in less time and with a higher degree of confidence.
In the long run, bids that are more accurate mean you can worry less about unintended results or overages that negatively affect your budget. In addition, understanding what information to include in an RFQ will help you start building long term relationships with contractors that are the best fit for your projects and your company.
— Nino Cervi is vice president/partner of Progressive Flooring Services, Inc. and Progressive Services, Inc. Email him at [email protected].