How to Get the Best Bid on Capital Projects

INSIDE TRACK: This article is reprinted from the July/August issue of Habitat, "Insider Tips From 47 Management Leaders."

When we transition into new properties and go through how AKAM’s sealed-bid process works for major capital projects, many clients are very appreciative of the step-by-step process we follow, and they understand why it’s needed. 

On a typical capital project, we have a professional draw up a comprehensive scope of work. For instance, if you’re doing exterior facade restoration for Local Law 11, the engineer/architect draws up the detailed specifications, reviews them with management and the board, and sends the document out to bid to five or six qualified vendors. 

Once the vendors receive the bid documents, the engineer will coordinate an onsite walk-through of the property. We generally give a vendor between three and four weeks to submit their sealed bids. The sealed bids come back to a board member as well as an industry professional working for the building – that is, the building’s attorney, or the building’s architect or engineer. We generally consider any project over $25,000 a major capital project.

Upon receipt of the sealed bids, a comprehensive analysis spreadsheet is prepared that compares pricing on the base bid with the pricing for all the alternate work and various options that the board would need to consider. These alternates/options may include everything from additional costs for working on weekends to the use of different types of materials.

Once that’s completed, the board, management and the engineer/architect will meet with the three lowest bidders and review their qualifications as well as go through each one of their bids line by line to ensure the bids are level. 

The key to getting comprehensive and competitive pricing is an organized sealed-bid process. If an option comes back where they’re painting the lintels of a building, for instance, and it’s significantly higher than the other vendors’ pricing, before disqualifying them, we need to find out why. Once the bids are leveled, we ask all the vendors to come back with a best and final sealed bid. We give them additional time to submit their sealed bids, and they must follow the initial sealed-bid process.

We will then open up those bids and prepare a final review and comparison spreadsheet. This way, you know that you’re getting the best pricing, as well as the most comprehensive and complete job.

Michael Berenson is president of AKAM Associates.