Manufacturers are from Mars, Engineers are from Venus!

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?!?