Tightening Your Tendering
by Len Loewen
As 2020 ended, we were neck deep into another wave of COVID cases and the most stringent lockdown regulations to date. What was communicated to be a short-term adjustment has stretched out for almost a half year now. These new site safety expectations have likewise stretched our capacity to endure change, but in many cases the mandatory wearing of masks and physical distancing has been overshadowed by the aggressive inflation that now dominates our every decision.
Not that plywood and 2x4’s were not valuable a year ago, but now a lift of paperface plywood is literally a stack of fifty - $100 bills. The rise in commodity pricing has been a dizzying and stunning ride. For those of us who are actively purchasing for projects, the only thing worse than the price is the absence of product. Finding the overpriced lumber is sometimes harder than writing the cheque to pay for it. Who saw this coming? Well, to some degree, I think many people saw this coming. You can’t give billions of dollars to people not producing anything or producing at a fraction of their historical rate and expect everything to work out without a hiccup. The drastic and sometimes out of control real estate market, not just here but across the country and continent, has spurred every other industry on to try and keep pace.
Everything costs more now. It is hard to think of a single thing that has not recently seen a price increase. Some things more than others, but almost everything without exception. Any money you have sitting in the bank is worth less every day. It is quite discouraging. Regardless of how I feel about this hyperinflation, life carries on as does our part in it. Knowing that there is significant work on the near horizon and seeing materials continue to rise, which affects every part of our companies’ overall costs, means contractors are seeking to sign form workers quickly now for upcoming work.
It’s not always so simple to know what your actual costs will be for an upcoming project. I guess that’s why they call it estimating and not knowing for sure. On top of that, there is the balance between our costs, hopeful profit margins and what the market will bear in any given tender process. It’s a dance that is less elegant and more ragged than it should be. Despite these pressures, I have noticed that some companies are still entering into projects with seemingly similar historical expectations of their outcome. The volatile nature of the inflation around us has not yet caught everyone’s attention.
Every company is responsible to tender projects in a way that will lead to success. Both their own success and the success of the project. Not realizing costs that are common to us all is not professional. Labor will see a rise, as employees experience the same inflation as their employers are facing. There are rumors of materials coming down with a decrease in demand over the next six months, but nothing is assured. There are several mechanisms we can employ to try and protect ourselves as we enter into new contracts that will start later this year or next year. I am not a commodities expert by any means, but as a long-time form worker, I understand the concept of risk management. We should expect our payrolls to increase and should allow for that in our bids. Certainly, we should cap our material budgets contractually so that the volatility of commodities is shared rather than held solely by us. Mostly, we should bid responsibly to what we know of ourselves and our abilities. We will likely not be much more efficient on the next project that we were on the last one. Bid accordingly.
I encourage us all to be extra diligent in our tendering, making every effort to account for all we know, and also for some of what we do not. The crazy ride is far from over and the BCFA desires to see our industry grow and thrive despite these serious challenges. This requires us to succeed not only in winning a contract initially, but to still be winning when the concrete is complete. We’ll see you in the trenches.