How Sharp Is Your Pencil?

Plenty of work...plenty of competition. That's what we're hearing from contractors as the season starts to get busy. In what could be a repeat of last year, property managers seem to indicate they have work to be done (and money to pay for it) because they are putting out a lot of requests for bids. Whether this will result in contracts being let steadily throughout the season or managers waiting until summer's end before pulling the trigger remains to be seen. But either way the good news is the work seems to be out there. Now the bad news: Contractors appear so focused on getting work they are bidding jobs they likely wouldn't have pursued years ago and are bidding way too close to the bone in hopes of getting it. I've heard this type of comment from contractors throughout the country, but one East Coast contractor can serve as a good example. Each year he uses home shows to pitch his sealcoating and paving services, and each year he is one of two or three pavement maintenance contractors with a booth. This year he's one of 10. And because there are so many bidders in his market the bids are very tight. "Usually I build in a cushion just to protect ourselves in case something goes wrong on a job. This year I've taken that cushion out," the contractor says. "So if we're out on a job and we're waiting at the end of a day for late truckload of mix, and the crew is on overtime, that could be the difference between a profitable job and a job that's a loss. That's how close these bids are." He adds that with some long-time customers he gets a "last look" at bids and often just shakes his head when he sees what he's competing against. "I've seen bids, total bids, that are the same as my material costs, and there's no way a contractor can do a profitable, quality job for that kind of money." And it's not just in private work, either. Two weeks ago the Chicago Tribune reported that at least a few Chicago suburbs are getting work done for much less than the expected bid. According to the Tribune, Tinley Park accepted a $1 million bid to repave 35 side streets -- $68,000 lower than the estimate. Schaumburg officials accepted a $2.7 million bid for road repairs -- less than the $4 million initial estimate. "Contractors are hungry for work right now," Dan Gallagher, vice president of Gallagher Asphalt in Thornton, IL, told the Tribune. "The market has become very competitive. The idea is to keep our guys working."

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