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#63177 - 03/10/06 03:24 PM Looking for opinions  
sparky 134  Offline
Member
Joined: Sep 2004
Posts: 91
Joliet, Il, USA
I am bidding a new residential housing project. The builder is requiring all subcontractors to guarantee their pricing for one (1) year. The project is slated to start in the Fall of this year.

I can understand his position of not wanting an increase in cost after he awards the contract but I don't feel the subs should shoulder this burden. Anyone else here ever deal with this type of situation ?

I can understand holding prices for a while but not 1.5 years. With the way steel and copper have fluctuated in the past who knows what the future holds....


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#63178 - 03/10/06 03:47 PM Re: Looking for opinions  
mshaw  Offline
Member
Joined: Jan 2006
Posts: 44
Fairborn, Oh, USA
No way, you could hold the labor prices but none of my subs will bid past 30 days because of material cost swings.


#63179 - 03/10/06 05:19 PM Re: Looking for opinions  
hbiss  Offline
Member
Joined: Dec 2003
Posts: 886
Hawthorne, NY USA
I can understand his position of not wanting an increase in cost after he awards

Oh sure, God forbid the scum loses some of HIS money. I'll bet my ass that his contract with the owner covers price increases so he's probably going to make MORE money on your loses.

-Hal


#63180 - 03/10/06 05:54 PM Re: Looking for opinions  
LK  Offline
Member
Joined: Jan 2003
Posts: 1,429
New Jersey
"I'll bet that his contract with the owner covers price increases"

If his contract does not cover increases, then you don't want to be part, of his circus.


#63181 - 03/10/06 08:31 PM Re: Looking for opinions  
Dave T  Offline
Member
Joined: Jan 2005
Posts: 155
Waukesha, WI, USA
In the early '80s we always based pur quotes on "BLS." It looks as if it may be the 'CPI' now.
Take a look at this index:
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=dropmap&series_id=CUUR0200SA0,CUUS0200SA0


Note that the index is based upon a based period of 1980-82 at 100%. In January '06 it was 190.8% which means if you bid $100 in 1982 the bid would be $190.80 January '06.
A bid submitted Jan '05 at and index of 184.1% would be 190.8% Jan '06.
So, if you wanted to, your pricing could be based upon the CPI March '06 index and adjusted per the U.S. Department of Labor
Bureau of Labor Statistics CPI table at the time the P.O. is submitted to you based upon an immediate start date and your quoted lead time for the project to be completed.
But, it then depends upon your competitors. Are they going to gamble and quote prices based upon the present market, stick to their prices of complain after the job finally starts that they have to withdraw their proposal or cry for more money.
Or, take a shot in the dark at what your cost will be in one year and take a calculated gamble.
Again, it depends upon the competitive makeup of the market you are in.

(edited to add link)


[This message has been edited by electure (edited 03-10-2006).]


#63182 - 03/10/06 09:01 PM Re: Looking for opinions  
e57  Offline
Member
Joined: May 2003
Posts: 2,876
S.F.,CA USA
Add a speculated calculated loss.... Itemize that item on your bid, and see how that goes down.

Just plain ol' overbid what you could loose by jacking up the mark-up. Spread that through the bid. If they ask why you are so high, tell 'em its adjusted for inflation. [Linked Image]

Or get the project awarded, purchase the material, and not take delivery until needed, and require payment for the mats right then. Or, in some states you could qualify for lien by just having the matierial dropped on-site right then... (If the project ever starts or not...) Don't forget to add the APR of that money to your bid right from the get go... (As if it were still in the bank....)


Mark Heller
"Well - I oughta....." -Jackie Gleason

#63183 - 03/10/06 09:32 PM Re: Looking for opinions  
Electricmanscott  Offline
Member
Joined: Jan 2002
Posts: 1,457
Holden, MA USA
Wow. What balls. This builder is trying to cover his rear end at your expense. No way would I go along with this. Just as sure he is not likely to offer a house at X dollars today and guarantee it to be sold at the same price when it is actually built in a year.


#63184 - 03/11/06 12:52 AM Re: Looking for opinions  
LoneGunman  Offline
Member
Joined: Oct 2005
Posts: 141
Florida
Scott, they do it down here all the time, sell a year or so before its even built. The market is booming so much down here people buy at pre construction prices then sell when its finally built at a 30% and up profit.



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