How a building is bought

Why this page exists

Owners are shown the construction and almost never shown the buying, which is backwards: the buying is where the number is decided and the construction is where it is spent.

On a commercial building, somewhere between 80 and 95 per cent of the contract value leaves the general contractor and goes to other firms. Thirty-odd subcontracts, each competitively bid or not, each with its own idea of where its scope stops. By the time a crew arrives on site, the price of the building has already been set by decisions made weeks earlier in a conference room with a spreadsheet.

This page is those decisions, in order. It is written so that an owner can ask better questions of any contractor, including this one.

Step one: build the bid list

Which firms will be invited on each trade, and — the part that matters — how many of them will realistically bid.

A bid list assembled two weeks before bid day is a bid list that produces thin coverage. The good subcontractors in this market are booked a season ahead, and an invitation that arrives late arrives to a firm that has already committed its estimating capacity. The firms that answer a late invitation are the ones with nothing on.

So the list gets built during design, not after permit, and the trades with thin coverage get identified while there is still time to do something about them. Which trades those are is published on the coverage page, because it is knowable in advance and almost never shared.

Ask for the bid list before it goes out. It is unusual for an owner to ask and entirely reasonable. Look for the trades with one or two names.

Step two: solicit, and then chase

An invitation is not a bid. Coverage comes from following up — telephoning, confirming receipt, answering questions, and finding out early which firms have quietly decided not to bid so there is time to replace them.

It is unglamorous administrative work and it is one of the few places where effort reliably converts into money saved. A contractor who sends thirty invitations and does not chase them will receive bids on perhaps half the trades and will find out on bid day.

This is also where scope questions surface. A subcontractor reading a specification section that could be read two ways will usually ask, and that question — distributed to every bidder on that trade as an addendum — is how a gap gets closed before it exists.

Step three: receive, on bid day

Most subcontract bids arrive in the last two hours before the deadline. That is universal, it is rational on the subcontractor’s part, and it means bid day is structured around a crush rather than a steady flow.

What matters here is discipline: every bid logged as it arrives, with its base number, its alternates, its stated inclusions and — above all — its exclusions block. A bid received and filed without its exclusions being read is a bid that has not been received.

Step four: level the scopes

This is the step the owner is paying for, and it is invisible from outside.

Levelling is the comparison of bids that are not comparable. Three roofing bids are three different scopes with three different prices, and the lowest number is frequently the one that excluded the most. The job is to put them on the same basis: what did each one include, what did each exclude, what did each assume.

And then the second pass, which is the one that actually earns the fee: reading every exclusions block against the trades on either side of it. The roofer excluded the wall flashing. Did the siding sub include it? If both excluded it, nobody bought it, and that is a gap — found here, on a Tuesday afternoon, for the cost of an hour, rather than in the field in month seven for ten times as much.

The gap register lists the eight boundaries where this recurs on almost every commercial building. They are not exotic. They are the ordinary consequence of thirty firms each writing a sensible exclusion.

Step five: close the gaps, in writing

Every unbought scope gets assigned to a trade before award, in writing, with the subcontractor agreeing to it — or it gets carried as a stated allowance with the owner knowing it is there.

What does not happen is the third option, which is the industry default: assume somebody will pick it up. Somebody will, eventually, at a price nobody competed for.

Where closing a gap costs real money — because the scope genuinely was not in anybody’s number — the owner is told at that point, while the budget is still being assembled, rather than at month seven. That is an uncomfortable conversation and it is a far cheaper one.

Step six: award, with the matrix attached

The levelled scope matrix is attached to each subcontract, so the boundary is in the contract rather than in somebody’s memory of a phone call.

This sounds like paperwork and it is the thing that holds when a superintendent changes or a subcontractor sends a different crew. Six months later, when two trades are standing at the same corner of the building disagreeing about who does the flashing, the answer is in both of their contracts.

What an owner should ask

Five questions. They are fair, they have real answers, and the quality of the answers tells you more than anything else on a first call — including from us.

How many bids did you get on each trade? A contractor who has the number to hand runs a real process.

Which trades had only one bidder, and what did you do about it? There are four legitimate answers and one wrong one, which is pretending it was competitive.

Can I see the scope matrix? It exists or it does not.

Walk me through three gaps you found at levelling. Anyone who has done this work has examples and will enjoy telling you about them.

What is in your contingency and what is it for? A number with no stated contingency is not more confident, it is less honest.