The Pitfalls of Over-inviting General Contractors to Bid on a Project

Why Inviting Too Many Bidders Can Lead to More Problems Than Solutions

When embarking on a construction project, the selection of a general contractor is a critical step that can significantly impact the overall success, quality, and budget of the endeavor. Many project owners believe that casting a wide net by inviting numerous general contractors to submit bids will increase their chances of finding the best option. However, this approach can often be counterproductive. Here’s why inviting too many general contractors to bid on a project can create more challenges than it solves.

Dilution of Quality

One of the primary advantages of a streamlined bidding process is the opportunity to assess quality over quantity. When too many contractors are invited, the focus can shift away from thorough evaluations of each contractor’s credentials, experience, and past performance. Instead of deeply evaluating a few qualified candidates, project owners may be overwhelmed with numerous bids, leading to superficial assessments that overlook critical details. This dilution of quality can result in selecting a contractor based on cost alone, rather than a holistic evaluation of their qualifications.

Bid Fatigue

Inviting too many general contractors can lead to bid fatigue among both the contractors and the project owners. Contractors may spend substantial time preparing detailed proposals, only to find that their efforts may be competing against too many other bids, diluting their chances of being heard. On the flip side, project owners can become overwhelmed by the sheer volume of bids to review. This fatigue can lead to rushed decisions, increasing the risk of overlooking key information and making an uninformed choice.

Increase in Costs

The bidding process involves costs for contractors, such as the time spent on project assessment, proposal preparation, and the materials needed for detailed pitches. If the bids are too numerous, contractors might need to inflate their prices to account for the time and resources they invest in preparing for a competitive field. As a result, project owners could end up with higher bids than they would have had in a more manageable bidding scenario. Moreover, the cost of managing and reviewing numerous proposals can strain project budgets and resources.

Compromise of Relationship Building

Building a relationship with a contractor is crucial for effective collaboration throughout a project. When too many contractors are invited to bid, project owners miss the opportunity to establish a rapport with potential partners. A smaller and more selective pool allows for deeper engagement during the bidding process, where owners can gauge not only the contractors’ qualifications but also their willingness to communicate and collaborate. Successful projects often hinge on the strength of this relationship, which can be compromised in a crowded bidding environment.

Neglecting Specialized Skills

Not all contractors have the same expertise. By casting a wide net, project owners may inadvertently overlook specialized contractors who could bring unique skills relevant to the project. A targeted approach, where owners select a few contractors known for their specific capabilities, can lead to better outcomes. This ensures that the contractors considered are not only qualified but also suited to the specific needs and nuances of the project.

Time Consumption and Delays

Quick Facts

• GCs may cut corners to be competitive and increase the risk of low-quality work
• Excessive bidding reduces personal interactions, limiting the opportunity to build trust 
• When bids exceed 7, decision-making time can increase by up to 30%

Conclusion

While the intention behind inviting multiple general contractors to bid on a project may stem from a desire to ensure competitive pricing and options, the drawbacks of this approach often outweigh the benefits. By focusing on a smaller, carefully selected group of contractors, project owners can enhance the quality of their contractor selection process, build meaningful relationships, and ultimately increase the likelihood of project success. The key lies in balance: inviting enough bidders to ensure competition, but not so many that the process becomes unwieldy and counterproductive.

At ESI Group, we specialize in helping project owners streamline their bidding process and select the right contractors for optimal results. Contact us today to learn how we can support your next project.