Tag Archives: Range in bids

The bidding war — a way to test companies out!

Categories: Management | Tagged , , | Leave a comment

It is customary for people to compare bids when hiring a contractor. But, for longer term relationships, it is more complicated. I have learned that a company might bid a reasonable amount on a particular job, but then bid a crazy amount on job #2. If you want to hire someone who can handle anything that you throw at them for the next 10 years, you need to think about how much they can handle.

I gave a bid for a moderately easy project to about 50 companies to see who was in range. I had to give it to many, so that I would be able to choose from the ones who bid within range. What I learned was that only 20% of companies bid within range. A few underbid through desperation or stupidity, while most overbid — through stupidity, or hour padding — or both. But, the lesson that I learned was that when I gave companies who bid reasonably on the first bid — a second more complicated bid, many of them fell on their face.

There are bids on easy projects, medium, and more difficult projects. The range in bids is more extreme and unpredictable on complicated projects. If you are testing someone out to see if they can handle complicated work, you might start them off with the harder bid first, and then give them an easier bid.

I’m testing dozens of companies out. I give them a test project to weed them out. Most companies are too irresponsible to complete a simple assignment on their own initiative. The problem is that after I weed companies out with bidding and small test projects, there don’t seem to be more than 2% who make it through my easy hurdles. Depressing, but at least I am learning good methodology for testing companies out.

If you need a long term service provider, a test is no good unless you test them on the hardest project that you will ever assign to them!

(1) If you’re testing companies out, do you give the hard test 1st or an easy one?
(2) When we requested a 2nd more complicated bid, most companies fell on their face!

You might also like:

The second test project & the second bid

You are a helpless victim if you hire the wrong company