Tech Talk: Bidding Wars

March 1, 2004
Putting technology expertise in the right hands.

The requirements of telecommunications systems are unique. Often, general contractors and construction managers have little experience with these systems. Division 17, a proposed addition to the Construction Specification Institute's MasterFormat, which is the construction industry's most widely used organizational model, was developed to improve the planning, estimating and design of inside and outside copper and fiber cable plants, and data, voice, video and other low-voltage systems. However, some architectural firms and school program managers insist that Division 17 technology systems be bid to the school through a general contractor. This often can lead to a bad situation.

Technology systems are specialty items that are different from work performed by electricians, plumbers and masonry trades. So, why do we continue to include Division 17 with the other 16 divisions?

The most common reason is to coordinate all work through one entity. This is a legitimate concern on the part of a school, architect or construction manager. When a general contractor takes responsibility for Division 17, the process can be easier. But is this the best decision for the school?

The basic criterion for awarding a construction project is selecting the lowest responsive bidder. Therefore, the first piece of information a general contractor seeks from a subcontractor is price. But unless the technology subcontractor has had extensive experience with the required systems, plans and specifications, and the requirement for interfacing all systems together, he or she may not be qualified to take on the project. The problems that may be associated with this process might not show up until the project has been completed.

Generally, experienced technology contractors do not like to bid directly to a general contractor; the general contractor often knows less about technology than the owner. If chosen, a technology contractor will submit monthly pay requests to the general contractor, who eventually will forward it to the owner for payment. Once the owner receives the request, payment will be made to the general contractor, and eventually the subcontractor will get paid. However, this process generally results in higher initial bid pricing to a general contractor, as the general contractor's profit and overhead will be added to the subcontractor's price. Where is the value for this additional markup?

When Division 17 systems are bid directly, a school will get to see all submitted bids, and can decide which bid package meets its specifications and plans. Payment is made directly to the technology contractor, and there is no additional markup for profit and overhead from a general contractor. This can be a win-win situation.

Day is senior analyst at KBD Planning Group, Bloomington, Ind., a firm specialized in educational facilities and technology planning. He can be reached at [email protected].

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