Rebidding Previously Awarded Jobs
We are getting reports from the field that several large general contractors in the Midwest are requesting “new” bids on contract prices previously agreed to. In some cases the fire sprinkler drawings have been completed yet all subcontractors have been told to review their bids. This practice is without precedent and further suggests that there still remains very little day-light at the end of the “sprinkler economic tunnel”.
Corporate earnings are improving because the balance sheets of most companies are gaining strength due to “personnel cut backs” and very careful spending at every level. This, unfortunately, is not translating into new business as financial institutions still have a “strangle hold” on funding. Backlogs are being “chewed up” and competition for all new work is “fierce” with numerous bidders on every job.
However, I am delighted to report that contractor membership in NFSA remains solid with very little attrition. For that we are very grateful.
We would encourage you to blog us with news of what is happening in your part of the country.
That is why contract review is extremely important.
I recently completed a retrofit of a county building. During the bid phase, our bid was conditioned on certain contract language.
Our bid was accepted and the GC sent over a one-sided pay-when paid, possibly pay if paid contract. I negotiated to a net 30 and he agreed.
After completion, we waited nearly 90 days before filing a bond claim. The GC said they were not being paid by the owner. Thanks to our negotiated contract, Cherokee Fire did get paid, irregardless of whether the GC was paid or not.
I thank God and our founding fathers that we have lien rights in this country or the GCs and owners would never pay the subs at all.
On 2 projects in the New England I have been approached by owners asking for a credit due to reduction in material costs. This has been driven by the volatility in the commodity markets. So far I have been able to avoid the credits but the jobs are ongoing and 1 owner is using it as part of change order negotiations.
We have had several “hand shakes” on jobs only to find out that the GC has held an auction to find a lower price. If one participates in the “auctions” you are only fueling the spiral downwards in pricing. Stick to a fair profit margin and we will all benefit.
Thanks for the input guys …had reports from one large supplier in the midwest that January and February were “dead” yet March was looking very promising..first signs of daylight in 18 months…next month we may have better news…hang in there hopefully thing will improve soon…