Beware of Low Bids

Work is picking up but like past economic recoveries, prices are slow to come back. Some prices are really low, some are just stupid low. I think we can all agree capitalism is good but allowing price to be the sole driving force in any industry tends to be problematic. For the construction industry, which requires skilled workers, it is nothing less than catastrophic.

Bidding or pricing goods and services below cost is really dumb. Why would someone even do that? Contractors who bid too low have various reasons to explain why. Some want to just keep employees employed; some make mistakes in job take-offs; others feel they can make it up with extras. Some feel they can make detail alterations to the plans or “value engineer” the project. Some are entering new regional markets and simply buy work. Others are entering new work arenas and unaware of the costly learning curve ahead. Then some are just bad business people and just don’t know what the real cost of doing business is.