Benefits of Using RFPs to Hire a Public Construction General Contractor
When starting a public construction project, one of the most important steps is hiring a general contractor to carry out the work. As a public entity, you can choose a contractor a few different ways, from open, competitive bidding to pre-qualified bids or through requests for proposals (RFPs). But which is the best approach to stay within budget while also securing quality construction work?
I’ve worked with many public entities, including the State of Tennessee, the Nashville government, MDHA and others, managing the construction or renovation of library branches, public parks, government buildings and more. During these projects we’ve come across each of these approaches when bidding for public construction.
Construction Bidding Approaches
Competitive bidding is a common and long-used practice by many public entities, and its goal is typically to find the general contractor that can do the job for the lowest price. The risk that comes with this approach is that you will learn very little about each candidate’s qualifications on the front end, as cost is the only deciding factor.
Using the pre-qualified bidding approach, you could glean more information about the general contractors and narrow down the list of firms to choose from. But it still doesn’t fully guarantee that the chosen candidate is the best fit for the job, especially if the candidates have not submitted a proposed schedule, management plan or subcontractor names.
Most of the time, when using this approach, it still comes down to the lowest bidder. If your budget is tight, and it’s a fairly simple project – such as a small interior build-out – then that selection is fairly low-risk.
However, choosing a contractor to carry out a more involved construction plan that calls for specific skills and experience may require some more consideration. While cost is always a huge factor in choosing a general contractor, it shouldn’t be the only factor. For this reason, some public entities have shifted their focus away from finding the lowest bidder to instead finding the most qualified candidate at a fair price. They do this by using the RFP approach.
When governmental agencies send out requests for proposals for public construction, they have the chance to evaluate each candidate’s expertise, experience, efficiency and management style through a detailed process. An RFP yields a lot more information about each candidate than the other bidding approaches.
Since the above-mentioned factors ultimately contribute to the quality of work, it’s in your best interest to be as selective as possible when hiring a contractor. One that is truly qualified is more likely to do the job well and deliver a better end product, even if they come at a slightly higher price point.
Three benefits of using RFPs to hire a general contractor for a public construction project are:
1. Ability to better gauge a general contractor’s fitness for the job
An important part of the RFP approach is that you can get the full picture of each candidate’s experience and expertise, similar to hiring an employee. All submitting firms have to include in their proposals evaluation factors, such as projects of similar scope and complexity that they’ve completed (especially recently), what their current safety rating is and how many other projects they’re currently under contract to perform. These factors – and any others that you choose to include in your RFP – will help to determine if the candidate is qualified and has the resources available to dedicate to this project.
By choosing a contractor through open or pre-qualified bidding, the risk that you take is that the lowest bidder could be anyone with any amount of experience – or no experience at all. As long as they have their contractor’s license and have put their name in the hat, they have a chance to win the job if their price is right.
Given the chance to fully evaluate each candidate for the job, you can avoid getting stuck with an under-qualified firm. The RFP approach gives you much more control of who does the work – and, to an extent, how that work is done – which tends to produce a more successful product overall.
2. Understanding how the project would be managed
Part of the RFP process for contractors is demonstrating that they can handle the project logistics well, including the budget, timeline, subcontractors and workforce. That gives you information from the jump about how the project will run, which is a real plus.
Collecting this information is also an opportunity for you to learn if you will work well with a general contractor, based on how the contractor plans to manage the project. Sometimes the organization commissioning the project has a very specific idea of how it needs to be done, so the RFP gives the chance to find a firm that agrees with that plan.
Additionally, because the project managers, superintendent and subcontractors are known ahead of time, you can evaluate their individual qualifications. That gives you the assurance that you’re getting the overall best team possible for the job.
Another way to use the RFP approach to select a general contractor is for a design-build project, in which the contractor submits a proposal based on schematic or preliminary designs provided by the owner. Then the contractor teams up with an architect to provide the actual construction documents. The cost of the design and construction is submitted to the owner. The owner then choses a design/build team based on expertise, price, and their overall ability to carry out the specific designs.
In this scenario, the designer and contractor work together to manage the design and keep it within budget. In fact, design-build projects have resulted in 12.6% less cost growth over the course of the project compared to the traditional construction management delivery method. Meaning, this approach saves the public institution time and money, and it provides more peace of mind throughout the project.
3. Getting “the best bang for your buck” while achieving a quality end product
While a general contractor chosen through an RFP has the potential to come at a slightly higher price point, the extra costs would mean that they outweighed other public construction contractors in terms of experience, project management and other qualifications.
Some RFPs also include incentives for public entities who choose to contract with small, minority-owned or women-owned businesses. You’d be putting your budget to good use while also increasing community stewardship.
Dowdle Construction Group has won bids because of the abundance of documentation, experience and attention to detail in our proposals, even in situations where our bid may have been slightly higher than other contractors’. Plus, in some cases, the most qualified firm could also happen to be the lowest bidder, which is a complete win-win.
Ultimately, by using the RFP process to select a general contractor for your next public construction project, the project is almost guaranteed to be successful and to achieve a better end product.
From parks to historic landmarks to libraries, Dowdle Construction Group has worked with our local public entities to create many functional and beautiful spaces around town. See more of Dowdle’s public construction work.