Why do I hate to bid? In a previous post, I bared my inner feelings and said that I felt it implied a lack of respect for us as engineers. There are other reasons. Let me tell you a story.
Some time back we provided a bid for the engineering on a large project to a client. The bid package itself from the client was very well done. It provided a detailed and complete scope of work, along with exactly defined deliverables and schedules. We were bidding against only two other companies. The facility in question was nearly identical to another facility that we had designed in the past year.
While the individual project manager for the client was new to us, we had a long and successful track record with the client. Given all these things, we thought we knew with a high degree of precision the manhours necessary to complete this project. And so we entered our bid with a fair degree of optimism.
We received word sometime later that we had been unsuccessful and that another company had been selected for the bid. We made our usual attempt to gain information from the client about the bid, i.e. how high were we, where did our bid fall short, etc? As usual, the client would not reveal anything, even the identity of the winning bidder. This is pretty standard procedure for all clients. God forbid that we learn anything that might help us do a better job on a bid for that client in the future. It seems to me that most clients think engineering companies major decision in a bid is to determine whether we want a 600% profit margin or are willing to live with a 500% margin.
As is the case in such situations, we went on to other things. In our disappointment at losing the bid we simply voiced the platitudes we always use. These are generally to the effect that "the client did not appreciate our special expertise" or that "the competitor had bought the job".
A few months later, a chance encounter allowed a visit with the client project manager. In the course of the conversation, the client project manager opened up with a rare degree of candor and openness about ForeRunner's bid and his selection process. I applaud and salute him for speaking to us about the issue.
It turned out that we had submitted a bid with the lowest price. On the basis of lowest price and manhours, we were the clear winner. But in fact, we had come in third out of 3 bidders. We came in last. The client had made his selection based on a matrix of different factors. Ratings in each of the catagories in the matrix were based on "soft" criteria, that is a score based on subjective feelings.
As it happens, the client project manager is an experienced professional with good judgement. I would use subjective criteria myself to select an engineering contractor. But we did spend some $ 20,000 to put together a bid. Instead, we participated in a beauty contest.
To pursue the metaphor further, a bidding situation can be compared to a poker game. It is a game with its own set of rules. A beauty contest is a different game with a different set of rules. It is hard to play the game when we don't know what the rules are.
Monday, January 14, 2008
Tuesday, January 8, 2008
Picking an Architect II
Well, its time for the next story about building a house, with accompanying observations on how project professionals are seen by the owners for which they work.
I need to build a driveway into the location where my house will be. We had a pretty late fall this year and were able to work later than we expected in the high country. With the trees finally cleared, I wanted to bring a contractor in to rough grade the driveway and take out the large tree stumps. I found a local guy who came recommended and he was prepared to do just that. Its fairly simple, the road just needs to follow the centerline of the area cleared of trees. Once major snowfall occurs, construction work will get tough.
As it happenned about that time, an associate told me that I should use my architect as a project manager and I should leave the driveway project to the project manager. Convicted by the soundness of the argument, as well as the practicing what I preach argument, I did just that.
My architect eagerly assumed the responsibility and took charge. It turns out that the architect doesn't believe in the wisdom of hiring contractors except through the bid process. In truth, he takes a rather dim view of the entire contracting industry. The only way to work with a contractor, in his opinion, is with a rigorously defined job scope, well defined bids and regular inspection. Those things of course require a scope of work and a job walk, which do take time.
To make a long story short, we now have 30" of snow on the ground and no construction driveway. This lack means we cannot drill the well and cannot do the geotechnical work for the house foundations and septic system. Without those things, a building permit will not be issued. Chances are, our schedule took a fairly a hit. That is, if we had a schedule.
On the other hand, we have defined the job the driveway contractor needs to do. Progress can be monitored and we can have some assurance that I will be getting good value for my money.
Now as an owner through this process, I was a bit frustrated. The job is straightforward and the costs low. We are not risking much in the overall CAPEX budget and time is valuable.
As the owner, I can override the architect and say "Just get that guy out there and get it done. I don't care whether we save a few hundred dollars." But that means in our first collaboration as owner and project manager, the owner says "I don't trust or accept your judgement."
But what do I hire a project manager for, if not his judgement?
I need to build a driveway into the location where my house will be. We had a pretty late fall this year and were able to work later than we expected in the high country. With the trees finally cleared, I wanted to bring a contractor in to rough grade the driveway and take out the large tree stumps. I found a local guy who came recommended and he was prepared to do just that. Its fairly simple, the road just needs to follow the centerline of the area cleared of trees. Once major snowfall occurs, construction work will get tough.
As it happenned about that time, an associate told me that I should use my architect as a project manager and I should leave the driveway project to the project manager. Convicted by the soundness of the argument, as well as the practicing what I preach argument, I did just that.
My architect eagerly assumed the responsibility and took charge. It turns out that the architect doesn't believe in the wisdom of hiring contractors except through the bid process. In truth, he takes a rather dim view of the entire contracting industry. The only way to work with a contractor, in his opinion, is with a rigorously defined job scope, well defined bids and regular inspection. Those things of course require a scope of work and a job walk, which do take time.
To make a long story short, we now have 30" of snow on the ground and no construction driveway. This lack means we cannot drill the well and cannot do the geotechnical work for the house foundations and septic system. Without those things, a building permit will not be issued. Chances are, our schedule took a fairly a hit. That is, if we had a schedule.
On the other hand, we have defined the job the driveway contractor needs to do. Progress can be monitored and we can have some assurance that I will be getting good value for my money.
Now as an owner through this process, I was a bit frustrated. The job is straightforward and the costs low. We are not risking much in the overall CAPEX budget and time is valuable.
As the owner, I can override the architect and say "Just get that guy out there and get it done. I don't care whether we save a few hundred dollars." But that means in our first collaboration as owner and project manager, the owner says "I don't trust or accept your judgement."
But what do I hire a project manager for, if not his judgement?
Friday, January 4, 2008
I Am Legend
Over the holidays, I and my family went to see the movie, I Am Legend. Loosely adapted from the novel of the same name by Richard Matheson, the movie owes more to influences by H.G. Wells The Time Machine and modern Hollywood sensibilities than to the novel.
In any case, it was an intense movie and will certainly keep you awake and on the edge of your seat. But what really struck me was the climactic scene at near the end of the movie. The hero, muscularly acted by Will Smith, has discovered a cure for the plague which has turned humanity into combination vampires/ghouls. He is holding the vial which can cure the plague, allowing things to be set right and a new day of hope dawning. But the leader of the night people, full of anger, rage and hate, continues to hurl himself against the transparent plexiglass wall which holds Will Smith safe from the attack.
It is extremely painful to the leader of the night people, but he continues to hurl himself against the plastic wall while a horde of his followers gather behind him. Soon the wall is cracking and visibly breaking down. Will Smith pleads with him to stop, to allow him to save the world from the plague. But there is no stopping. The wall continues to break down while outside the night people gather, intent on the pleasure of tearing Will Smith to pieces. Resigned to his fate, Will pulls the pin on a grenade and waits for the inevitable inrush of hate, knowing that he will exact his revenge.
What struck me as I watch it was the sense that this is so much like project work. I have been there so many times at the end of projects. We have run out of money and out of time, rational thought and considered judgement have long departed. There is nothing left but emotion and sheer will. If you get in my way, I will just go right over you, whether you are right or wrong, good or bad.
We have all disappointed each other and failed each other so often that we just don't care any more. The Owner, the Contractor and the Engineer just throw themselves at each other no matter how much it hurts and how little it helps. And we all pull the pins on our grenades so that we don't go down alone.
And then it is over. The sun comes out. We can all imagine the lawyers, accountants, and auditors moving onto the scene. They have not yet begun to bayonet the wounded and strip the dead, but it will come.
And then we go do it again. Another project comes along and we eagerly wait for it. It is almost as if we can't wait to feel our shoulders hitting that hard wall and the rush of that emotional charge. If you have done projects like I have, I recommend the movie to you. See if you don't feel it too.
In any case, it was an intense movie and will certainly keep you awake and on the edge of your seat. But what really struck me was the climactic scene at near the end of the movie. The hero, muscularly acted by Will Smith, has discovered a cure for the plague which has turned humanity into combination vampires/ghouls. He is holding the vial which can cure the plague, allowing things to be set right and a new day of hope dawning. But the leader of the night people, full of anger, rage and hate, continues to hurl himself against the transparent plexiglass wall which holds Will Smith safe from the attack.
It is extremely painful to the leader of the night people, but he continues to hurl himself against the plastic wall while a horde of his followers gather behind him. Soon the wall is cracking and visibly breaking down. Will Smith pleads with him to stop, to allow him to save the world from the plague. But there is no stopping. The wall continues to break down while outside the night people gather, intent on the pleasure of tearing Will Smith to pieces. Resigned to his fate, Will pulls the pin on a grenade and waits for the inevitable inrush of hate, knowing that he will exact his revenge.
What struck me as I watch it was the sense that this is so much like project work. I have been there so many times at the end of projects. We have run out of money and out of time, rational thought and considered judgement have long departed. There is nothing left but emotion and sheer will. If you get in my way, I will just go right over you, whether you are right or wrong, good or bad.
We have all disappointed each other and failed each other so often that we just don't care any more. The Owner, the Contractor and the Engineer just throw themselves at each other no matter how much it hurts and how little it helps. And we all pull the pins on our grenades so that we don't go down alone.
And then it is over. The sun comes out. We can all imagine the lawyers, accountants, and auditors moving onto the scene. They have not yet begun to bayonet the wounded and strip the dead, but it will come.
And then we go do it again. Another project comes along and we eagerly wait for it. It is almost as if we can't wait to feel our shoulders hitting that hard wall and the rush of that emotional charge. If you have done projects like I have, I recommend the movie to you. See if you don't feel it too.
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