Another step in the bidding process on the new school took place May 21 when the trade bids were opened in upper Town Hall. The bids were for work that will be done by subcontractors categorized by the state as trades. At a School Building Committee meeting two days later, project manager Tom Murphy presented the unofficial lowest bids for each category as well as the final estimate for that category. The result? The total of the lowest bids exceeded estimates by about $577,000, or 4%.
Project manager Tom Murphy of NV5 reads the bids aloud. (Photos by Lisa Aciukewicz)
Murphy attributed the overage to the estimates being out of synch with the current construction market. “Everybody’s busy, and they’re more selective,” he said. While there were four bids well under estimates and five close to estimate, the bids for the remaining four categories were well over estimates, and they represented some of the priciest work in the project. The lowest bid for heating, ventilation, and air conditioning (HVAC) was about 20% over its nearly $4 million estimate, and plumbing was about 30% over its $1.1 million estimate. Murphy said the HVAC, plumbing, and electrical categories had a good number of bidders, and overall, the spread of the bids was reasonable, so he thought the bids were in line with the market.
The trade bids total about $15 million in construction direct costs (costs before overhead, profit, and contingencies). The direct cost total for the early package (work that was bid in March and is already underway) is about $10 million. The nontrade bid estimates, which are currently being collected by Shawmut, represent about another $10 million of direct costs.
Trade bids could go up or down
The trade bids remain unofficial, and while most are pretty much set, some could change over the next few weeks. Three of the low bids were missing documentation and could be disqualified. In that case, the next highest bidder would get the contract. In addition, Murphy said Shawmut, the construction manager at risk, will contact low bidders whose bids are far below the second lowest bid to make sure they didn’t miss anything in the scope of work or make a math error. If an error was made, those bidders may be allowed to revise their bid. One trade in this category is masonry, where the lowest bid is 15% below the next lowest bid.
From left: Marie Sobalvarro, Don Ludwig, Alice von Loesecke, Bill McNally, and Carl Sciple look over bids.
Lack of bidders in a few categories may also affect the final trade bid number. Only two firms submitted a bid for tile, one less than the minimum number of bidders required for a category. Since the lowest bid exceeded estimates, Shawmut will negotiate with the low bidder to try to get the bid down to the estimate (see “Understanding bidding with construction manager at risk” sidebar). And if the acoustical tile low bidder is disqualified for its missing documentation, that category would have only two bids, making the lowest bid also eligible for negotiation.
Once the trade bids are official, the committee will still be missing one piece of the puzzle, the nontrade bids. These bids represent any work that doesn’t fall into the trade categories specified by Massachusetts General Law. Nontrades include doors and windows, carpentry, and sitework.
If the nontrade bids come in far enough below estimates, they could cancel out the high trade bids. But Murphy said, while he would be “thrilled” if that happened, he expects the nontrade bids to come in higher than estimates as well. However, Shawmut can negotiate both price and scope of work in the nontrade bids. Those bids were just starting to come in as of the May 21 meeting, and Murphy said Shawmut should have some idea of how they look within the next few weeks.
Covering the overage
The project currently includes $300,000 for “bid deduct” items that were bid separately so they could be deducted if the budget were insufficient. In the trade bids, that work accounts for about $100,000. In addition, there is still about $600,000 in the budget for design/pricing and escalation. That could be used to cover some overage, but it would have to cover not only the direct costs, but the markup as well. Murphy said the intention is to work with the nontrades to bring the project back within budget.
If cuts do need to be made to the project, they will have to be items that are in the nontrade bids. MGL 149A forbids changing the scope of work in the trade bids. A value engineering list put together by the SBC in March includes a number of nontrade items that could be cut from the project, although many of these were identified as priority 3—not recommended for cutting. The SBC cut about $1.2 million from the project when the early package bids came in higher than estimates.
As more is known about the bids, Murphy said he will get feedback from the change order working group, which was created by the School Building Committee to handle change order discussions that are too detailed for the full committee. These meetings are not public, but the information will be brought back to the full SBC when it is available. The committee meets again June 20.
Understanding bidding with a construction manager at risk
The bidding process for the new school is different from any the town has experienced before. Typically, the town would receive a single bid for a project that includes the services of a general contractor and all the subcontractors, and those services begin when construction gets underway. But the town chose to hire a construction manager at risk (CMAR), Shawmut Design and Construction of Boston, early in the design phase of the new school project. Prior to construction, Shawmut advised the School Building Committee on design, budget, and scheduling issues, provided cost estimates, and helped prepare bid documents. Hiring Shawmut during the design phase also allowed for the “early package” work to be bid and started before design work was complete. During construction, Shawmut will serve as the general contractor, so bidding is only necessary to secure subcontractors, which fall into two categories—trade and nontrade.
The bidding processes for all public projects is strictly regulated by Massachusetts General Law, and there is a separate law, 149A, for projects that use a CMAR. This law specifies bid regulations for the 18 categories of work specified as “trades,” and different bid regulations for nontrades, which cover all work that does not fall into the 18 trade categories. (Note that the words “trade” and “nontrade” do not necessarily imply skill level; for instance, carpentry is not in the trade list.)
Trade bid regulations:
- Bidders must be prequalified; only prequalified subcontractors receive a request for bid.
- The award in each trade category goes to the lowest prequalified bidder that has all the required documentation. If any documentation is missing, the award goes to the next lowest bidder.
- Negotiation is not permitted in trade bids unless fewer than three bids are received in a category and the lowest bid exceeds the estimate. In that case, the CMAR must try to negotiate with the lowest bidder. If the lowest bidder offers the estimated price, they are awarded the contract. If not, the category can be treated as a nontrade.
- Changes to scope of work are not permitted; if there is a change to the scope of work, the category must be re-bid.
Nontrade bid regulations:
- For each nontrade category where the estimated work exceeds $20,000, the CMAR creates a list of necessary qualifications and three subcontractors that meet those qualifications. The list is submitted to the project owner, who can add or delete from the list, provided additions meet the qualifications.
- The CMAR invites bids from the subcontractors on the list.
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The CMAR collects the bids and can negotiate both price and scope of work with all bidders. At this point, if the project is over budget, nontrade bids can be “descoped” to remove items the owner agrees to cut from the project.
When negotiations are complete, the CMAR chooses whom to award the bid to and explains the choices to the project owner. - For work that is less than $20,000, the CMAR may use any selection method approved by the owner.
Source: “Construction Bidding Basics,”
Office of the Attorney General
