Why bidding creates conflict and how it
could be improved.
When I was
asked to present the OEM’s perspective on Design, Procurement and Fabrication
at the AMTA-SWMOA Membrane Technology Transfer Workshop this past July, I
jumped at the opportunity as I had already started drafting this blog post related
to the inevitable conflict that arises between engineers, OEMs, contractors and
owners during the bidding process.
The
Design-Bid-Build process nearly always ends up being a win-lose relationship
between OEM, contractor, engineer and owner. The biggest hurdle in turning
around this win-lose culture is the fact the OEMs (and contractors) are from
Mars and Engineers are from Venus, i.e. while we speak the same language, we
don’t understand each other….
Honestly, I
think all parties have good intentions but because they don’t understand each
other there is a ‘protect your butt’ attitude throughout the procurement process
from spec writing to post-bid submittals. And the tone is set by the way the
specifications are written. Typically specifications are written so that the
owner and engineer are protected from being ‘short changed’ by the contractor
on the quality and functionality of the treatment process they have designed
and wish to procure, and rightly so since they have designed the system and are
looking to pay someone to build it.
Beware the Dreaded ‘Catch-all’ Statements
As a manufacturer,
what is so frustrating are the ‘catch-all’ statements often embedded in very
detailed specifications. For example, before tightly specifying every nut and bolt to be
used, the specification prefaces the equipment design details by saying “the
Contractor shall supply a complete and operable system including the following
components….”. And then following the detailed specs it will say “The specified
information does not relieve the Contactor of the responsibility to provide a
fully operable system”. Can someone please give me a clear definition of a ‘complete
and operable system’ because this statement is certainly open to interpretation.
I used this example in my AMTA/SCMA presentation;
when my wife says she does not like the color of the living room, I am from
Mars and think she wants me to paint it a different color. But I don’t
understand that what she is really saying is the house is too small, she hates
the new neighbors and she wants to move… How could I have not realized that by
her initial statement?? Engineers and contractors/manufacturers have the same
form of communication disconnect. When they write in a specification that it is
the contractor’s responsibility to provide a ‘complete and operable system’ in
addition to complying with a detailed equipment description and P&IDs, the
contactor/manufacturer assumes if they provide what is in the P&IDs and is
described in the detailed specs they will have provided what the engineer/owner
requires. Wrong!
Cynically,
you could say this is an insurance statement inserted by the engineer in case
something was forgotten and the specifications were not watertight enough so
that the contractor/manufacturer may cut some corners in quality. Perhaps contractors/manufacturers are
therefore partly responsible for these statements because of past practices.
But these statements certainly set up the course of the project as a win-lose
relationship.
I worked on
a project where ‘complete and operable’ meant that since the CIP tank that was
specified was 7ft tall, as the supplier of this tank we were supposed to
interpret that we should also supply a platform for access…. As far as the
contractor was concerned, he wasn’t supplying the membrane system, so that was
our problem... We didn’t read all the details of the building specs, so didn’t
know a platform hadn’t been accounted for. Was
there ever an intention that one of us was going to provide a platform
or did the owner/engineer realize this was needed during the submittal phase
and called in the catch-all insurance statement to cover their butt? In this
case it wasn’t a big cost item and we sorted it out, but it is a good example
of where the contractor/manufacturer can be trapped by vague specs.
Bid Counseling…
So how can
we avoid this win-lose situation? Let me
be a project counselor for a minute and try to
get the parties to understand
where each is coming from. Firstly Mr. Engineer; you have to realize when you
set up a competitive bidding environment, a catch-all statement is not worth the
paper the spec is written on! As a bidder, I cannot afford to include anything
that is not specifically described in the specifications and hope to be
selected. I am certainly not going to see a statement saying ‘complete and
operable’ and think “Oh yeah, I should also include a platform in my pricing”
and assume all my competitors will do the same. I am going to be out of
business in a hurry in that case. In a competitive bid situation you have to
assume the bidders will provide only what they have to because they will assume
that is what their competitors will be doing.
From an
engineer’s perspective, if there are some different options in products that
can be used to meet a treatment objective making it difficult to write a fully
prescriptive spec, then perhaps there should be a pre-procurement process where
the engineer can evaluate proposals from process equipment suppliers and make
sure there is an apples to apples comparison in scopes of supply. Then select
the process equipment prior to going to contractor bid. That is typically how
the microfiltration/ultrafiltration system bidding process works where historically the equipment design has
varied between manufacturers (see Municipal Ultrafiltration Heads Towards Commoditization). The only thing a contractor can
do if a bid spec is vague is provide the lowest cost option that appears to
meet the specs or formally ask a question to have this clarified prior to the
bid close. Whether the response will be provided in a timely manner or the
question adequately answered is another issue, another opportunity for Venus
and Mars misinterpretations and another topic I could dedicate a whole post to…
I don’t have a perfect answer on how to
solve all the conflicts that arise from the design-bid-build procurement
process. Don’t get me wrong and think I am putting the blame for the conflict
on any particular party, as I think historically all parties have had some role
in creating this win-lose, protect your butt environment. I have also
participated in many projects where the relationship between engineer,
contractor and equipment manufacturer has been great. For some of these projects
we were given the opportunity to review a draft of the full set of
specifications prior to the bid (and not just a few days before release), which
was a big help in getting everyone on the same page on bid day.
Conflict
does not have to be inevitable for design-bid-build projects but it will take a
little more trust between the parties and a lot more communication throughout the
project to avoid it. Don’t be afraid to involve manufacturers and contractors
in the spec review process, then perhaps the catch-all statements would not be
needed, plus they may actually have some good ideas that can save
everyone some money – Heck, wouldn’t that be a win-win?!?
