Challenges With Cost-Plus And Fixed Price Contracts

When implementing cost-plus and fixed price contracts, the project owner and builder are in constant measure of cost control, maintaining low risk, and ensuring a timely project completion, among other important objectives. To this end, project success is created by many variables, including a solid contract agreement tied to a comprehensive project design, awarding contracts to the most responsive and responsible subcontractors, and adequate communication and collaboration between all stakeholders throughout the pre-bid and construction phases.

Visibility and transparency of all stakeholders is integral to negotiated projects. As a result, project owners need to monitor all activity, including subcontractor communications and bid activity, for all trades, on a real-time basis.

Transparency Reduces Risk

Due to the inherent limitations with conventional mediums, such as face to face meetings, telephone calls, emails and faxes, the project owner may not be privy to much of sub trade activity during the bid phase.

By using a systematic process designed to standardize and streamline competitive bidding, the project owner and builder can affect the design and cost of every project. This can be accomplished by providing a concise review of the builder’s subcontractor cost submittals for all trades. If the owner and builder are to ensure better competitive subcontract pricing, they must have an effective method to deliver their bidding process, understand contractor selection, and the capability to monitor communication with the subcontractors bidding on the project.

Control and Visibility Ensures Project Success

Project owners and their builders can achieve an appropriate level of communication and visibility to all pre-bid activity using a unique bid management product, referred to as Multiple Prime. This product is specifically designed for use with negotiated construction projects. This is the perfect solution for obtaining better competitive pricing from the subcontractors and providing an open network of communication to all involved.  Multiple Prime allows for flexibility throughout the subcontractor bidding process, regardless of the phase, or invited trade.

With TotalBid’s Multiple Prime product, the builder can invite specific trades at specific times and also have the capability to invite a subcontractor to multiple trades thereby targeting those subcontractors that bid on work in more than one trade. Owners are provided the capability to monitor RFIs and respond to those RFIs as needed. This combined with the capability to view and analyze bids through comparative analysis, line item variance reporting, deviation analysis, low bid analysis and detailed interactive dashboards, helps the owner engage in cost controls while lowering their risk. Simply said, Multiple Prime gives the project owner and builder a looking glass into all activity and every bid submitted by every bidder, and within every trade.

Never before has a bid management tool like this been developed and made available to the project owner and builder. The TotalBid Multiple Prime tool will help to reduce the threat of cost overrun by alerting the owner and builder to submitted sub trade bids, immediately, at the end of every bid. As a result, the project owner and builder can ensure cost control, low risk, with the ultimate goal of a timely project completion. Learn more about TotalBid’s Multiple Prime product, contact us today.