- April 24, 2017
- Posted by: Jeff Julia
- Category: Uncategorized
It’s interesting how a Google search can turn up so many experts on the ideal number of bids we should obtain a construction project (yes, I’m considering energy efficiency retrofit projects as construction projects here).
It’s also interesting how most of these experts conclude (3) is the ideal number.
So, if I have (3) bids on an energy saving project, I have a high bidder, a low bidder and someone in the middle.
If I’m looking at cost alone as my evaluation metric, this might be fine.
But as soon as I begin to cross-check each bid, my comparison attempt quickly becomes a confusing, fruitless “apples to oranges” exercise.
The providers are different, the equipment is different, the inclusions and exclusions are all different, payment terms, acceptable forms of payment, warranty, and the list goes on ad infinitum.
Which in theory makes sense right? It’s a competitive marketplace with many similar but different options.
If I go to the grocery store and ask to buy some fruit, I’m going to have a mess on my hands. Even if I boil it down to a specific fruit, let’s say, apples.
So why do we continue to compare bids like apples to oranges thinking we’re doing ourselves a favor when we’re making an impossible task for ourselves – it doesn’t make any sense.
There is a better way to do it.
- Break the project itself into its critical components
- Evaluate each component individually using a grading scale that makes sense (1-5, good/fair/poor)
- Evaluate each project individually
- Evaluate each project against each other
When the evaluation framework is set, it’s easy to compare any number of bids and find the best proposal – even one bid.
Negotiating the best deal, however, is a different story.
Energy Project Advisors
If you’d like to learn more about the components we evaluate and our grading system, visit our website at www.energyprojectadvisors.com or give us a call at 512-765-5328. Engage with us on LinkedIn and Twitter!