During bid evaluation, a general contractor notices that all mechanical subcontractor bids are 20% higher than the original budget estimate. What is the most appropriate action?
Correct Answer
D) Review the scope and market conditions with the owner
When all bids are consistently higher than estimates, it suggests market conditions or scope issues that should be discussed with the owner before making decisions about the project budget.
Why This Is the Correct Answer
When all subcontractor bids are consistently higher than the original estimate by a significant margin (20%), this indicates either market conditions have changed, the scope was underestimated, or there are specification issues that weren't accounted for in the original budget. The general contractor has a professional duty to communicate this discrepancy to the owner and discuss the implications before proceeding. This transparency allows the owner to make informed decisions about project scope, budget adjustments, or alternative approaches. Taking unilateral action without owner consultation could lead to disputes and potential liability issues.
Why the Other Options Are Wrong
Option A: Award to the lowest bidder and absorb the cost difference
Re-bidding may not solve the problem if market conditions or scope issues are the root cause, and could delay the project unnecessarily while potentially getting similar results
Option B: Reject all bids and re-bid the work
Negotiating with only the lowest bidder without understanding why all bids are high could result in cutting corners or getting an unrealistic price that leads to problems during construction
Option C: Negotiate with the lowest bidder for a reduction
Absorbing a 20% cost difference on mechanical work could significantly impact project profitability and may not be financially feasible, plus it doesn't address the underlying issue
Memory Technique
Think 'CommuniCATE before you ACT' - when facing unexpected cost increases across all bids, communicate with the owner before taking action
Reference Hint
Florida Building Construction Standards - Chapter on Bidding and Contract Administration, or Business and Finance for Contractors section on bid evaluation procedures
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