multiple prime bids vs. single prime gc bids. about the concerned contractors of pennsylvania the...

Multiple Prime Bids vs. Single Prime GC Bids

About the Concerned Contractors of Pennsylvania

The Concerned Contractors of Pennsylvania is an advocacy group organized to protect and promote the rights of plumbing, electrical, HVAC and general contractors


We are comprised of open shop and union shop contractors and trade associations that have come together to represent the many small business owners and construction workers across the state


The mission of the coalition is to bring unfair and needlessly expensive bidding to the attention of the parents, students, school board officials, legislators and the media.


The Concerned Contractors believe that by eliminating construction waivers to go single prime, thousands of small business owners will then have the opportunity to participate in local projects

The Separations Act

Since 1913, the Separations Act requires a minimum of four (4) prime contractors – General, Electrical, HVAC, and Plumbing – for every public building construction project exceeding $4,000

Multiple Prime Contracts are required for Public Projects

To keep the process of spending public funds open and clear of any possible manipulations;

To assure that the expenditure of public funds stays in the hands of the public officials charged with that duty;

Multiple Prime Contracts are required for Public Projects

To assure that work is awarded free of personal interest, bias and prejudice;

To protect materialmen and subcontractors from the whim of a general contractor in both the award of work and payment for work done

Single Prime General Contractor (GC) Bids

Less competition results in higher costs

Seven recent Single Prime GC bids came in over 14% above Architects’ estimates

Single General Contractor Bids versus Budgets

$5,5

88,0

00

$3,0

84,0

00

$17,

999,

000

$19,

127,

000 $3

4,40

7,00

0 $43,

083,

000

$50,

990,

000

$3,0

00,0

00

$5,1

56,3

25

$15,

108,

390

$21,

500,

000 $2

7,91

0,00

0 $35,

100,

000

$45,

000,

000

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

$50,000,000

$55,000,000

WILSON SCHOOLDISTRICT NEW

OPERATIONS BUILDINGBid 8/13/08

MARTIC ELEMENTARYSCHOOLBid 4/21/08

SPRINGFIELD LITERACYCENTERBid 7/3/08

ERDENHEIMELEMENTARY SCHOOL

Bid 9/9/08

HOLLIDAYSBURG SENIORHS RENOVATIONS

Bid 6/1/08

OWEN J. ROBERTSMIDDLE SCHOOL

Bid 6/26/08

HAVERFORD MIDDLESCHOOLBid 9/8/08

Single GC Bids - $174,278,000

Budget - $152,774,715

Wilson Martic

Springfield

Erdenheim

Hollidaysburg

Owen J. Roberts

Haverford

Multiple Prime Bid Savings

Five Projects from $1.3 – 30 Million were bid as Single Prime GC and as Multiple Prime

Total Multiple Prime Savings for Taxpayers $7,152,718

Hollidaysburg Senior High School

Single Prime GC Bid 6/1/08 $34,407,000 Over Budget by $6,497,000 Rebid Multiple Prime 9/30/08, still over budget 5%, but Multiple Prime

bids were 14.8% less than lowest Original Single GC Bid Multiple Prime Savings over Single Prime GC bid was $5,085,000

Multiple Prime Bidding creates more competition & less cost to taxpayers

Multiple Prime Bids versus Single GC Bids with Budgets

$34,

407,

000

$21,

645,

000

$18,

710,

000

$13,

680,

000

$1,3

47,6

60

$696

,700

$9,9

00,0

00

$18,

436,

180

$16,

605,

000

$27,

910,

000

$29,

321,

400

$20,

831,

700

$18,

643,

440

$12,

567,

400

$1,2

73,0

02

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

$20,000,000

$22,000,000

$24,000,000

$26,000,000

$28,000,000

$30,000,000

$32,000,000

$34,000,000

$36,000,000

SOUTH WESTERN SD ADD.& ALT. TO THE TRANSP.

FAC.Bid 5/20/08

JUNIATA VALLEY JR/SRHIGH SCHOOL (RENO/ADD)

Bid 8/7/08

FERGUSON ELEMENTARYSCHOOLBid 8/6/08

WILLOW LANEELEMENTARY SCHOOL

Bid 5/21/08

HOLLIDAYSBURG SENIORHS RENOVATIONS - REBID

Original Bid 6/1/08Rebid 9/30/08


Budget - $73,547,880

Multi-Prime Bids - $82,636,942

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Limited Single Prime GC competition

No GC submitted a Single Prime bid at A.M. Kulp ES, but three GCs submitted Multi-Prime bids for the same project

Only one GC submitted a Single Prime bid at the South Western SD Transportation Facility, Ferguson ES, Juniata Valley Jr/Sr HS

Two GCs submitted a Single Prime bid at Haverford MS

Three GCs submitted Single Prime bids at Owen J. Roberts MS, the 3rd bidder was over 10 million dollars higher than the low bidder

Three GCs submitted Single Prime bids at Erdenheim ES, Hollidaysburg Sr. HS, Springfield Literacy Center

Single Prime Bids Limits Competition

Few Pennsylvania GCs are capable of bonding an entire school project as a Single Prime.

The low bid for OJ Roberts MS was over 43 million, Haverford MS was over 50 million. How many GCs out there have the bonding capacity to take on a 50 million dollar project?

Small and mid-sized GCs, the local GCs, that have performed school construction for years will be pushed out of the business by Single Prime bidding because they won’t be able to bond the entire project.


When the local GCs exceed their bonding capacity the door is open for out of area and out of state GC brokers to move in and enjoy a virtual monopoly

We have just seen Single Prime bid results where only one and two prices were received. On one project nobody bid the Single Prime contract. On a recent multi-prime project there were 11 bidders on the plumbing alone

Single Prime is a step in the wrong direction. If PA is serious about saving school construction costs then General Construction work should be broken down further into multiple primes. The major subs like masonry, roofing, site work, should be prime contracts too then school districts would get more bids at lower cost

Multi-prime is a growing trend nationwide because it saves money. Construction Managers know this and promote it and nobody knows it better than General Contractors. That is why few GCs perform their contracts with their own workforce, they hire subcontractors


Limited GC competition on Single Prime projects increases the potential for bid collusion and price fixing

We have already seen scandalously high prices with Single Prime. Just imagine what the prices will look like when most of the GCs reach their bonding capacity and the competition is even thinner.

Single prime bids benefit a chosen few at the expense of everyone else

Thousands of PA contractors that are qualified and bondable should have the right to bid on the school construction projects that their tax dollars and their employees tax dollars fund. Instead, Single Prime gives this work to a handful of well financed GC brokers at the expense of the taxpayers.

Single Prime Bids Add A Middleman

When has adding a middleman to a process ever resulted in lower cost?

GC brokers markup the subcontractor’s bid prices on bid day

GC brokers markup all subcontractor’s change order proposals

GC brokers must add the cost of “subcontractor coordination”


Under single prime bids, subcontractors still need to have on-site supervision

Nearly every project is custom made, comprised of millions of pieces, hundreds of systems, assembled on location, by dozens of trade contractors and hundreds of skilled trades people. The same amount of supervision will be required if HVAC, Electrical, & Plumbing work is done Single Prime or Multi-prime.


Subcontractors submit artificially inflated bids to GC brokers because of bid shopping, a longer wait for payment, a longer wait for answers, unjustified back charges, & many GC’s “shut-up & eat it” mentality with their subcontractors

GC’s will take the lowest Sub bids on bid day and then go “shopping” among other Subs for a lower price. If successful, all of the savings add to the GC’s profit, not the School District’s

Lost Savings to Taxpayers from GC Bid Shopping

Any savings from GC bid shopping on Single Prime projects occurs after the bid & benefits only the GC and not the taxpayers

We are talking about over 5 million dollars in the case of Hollidaysburg HS alone.

Single Prime GC Bid $34,407,000 Multiple Prime Bids $29,321,400 Potential from GC Bid Shopping $5,085,000

of additional profit for the GC

Multiple Prime Contracting provides a Fair & Open Bidding Process

For nearly 100 years PA Taxpayers, School Districts and Contractors have benefited from a fair and open HVAC, Electrical, & Plumbing bidding process

Single Prime bidding hides the HVAC, Electrical, & Plumbing bid results from the view of the School District, Taxpayers, and Contractors. With Multi-Prime everyone knows the value of each contract and the number of bidders. The low bidder can start to plan for their work

Strong competition from qualified, bondable HVAC, Electrical, & Plumbing Contractors on Multi-Prime bids keeps prices low!

Multiple Prime Contracting Provides a Fair & Open Bidding Process

Multi-Prime bids generate lower prices because the HVAC, Electrical, & Plumbing bid results are known on bid day

On Multi-Prime bids, if a HVAC, Electrical, & Plumbing contractor needs work, he may bid less to fill a gap in work. If he doesn’t get today’s bid, he’ll continue to put out lower bids until he gets a job.

However with Single Prime the subcontractor cannot continue to bid low because he won’t know if he got the first job he bid until the GC awards it months later.

Timely information available with Multi-Prime bids is critical to all contractors and ultimately benefits the School Districts and the Taxpayers!

Single Prime Bids will go to Out of State GC Brokers

The national construction unemployment rate is over 22% Bonding limits will result in large out of state GC brokers

who will bring in many of their out of state subcontractors Single Prime will bring more out of state construction

workers and take jobs away from PA residents At the completion of the project the out of state GC brokers,

subs and workers leave PA taking our tax dollars with them Multi-Prime bids keep PA’s school construction jobs and our

tax dollars with PA resident workers and contractors

Multiple Prime Contracts Provide Owner Control of the Project Costs, Quality, & Schedule

On Single Prime jobs subcontractors don’t have to provide a bond to protect the School District’s Financial Risk

If a bond is required, it protects the GC Broker, not the School District

On Multi-Prime projects HVAC, Electrical, & Plumbing contractors are required to provide a bond and to submit prequalification statements which protect the Owner


Single Prime GC’s don’t select their team of subcontractors before the bid. The Single Prime GC’s are forced to use the lowest price subs on bid day regardless of their financial condition or qualifications if they want to have a chance at getting the job. The low subcontractor may not employ competent workers duly trained and skilled in their crafts through a state bona fide apprenticeship program.


GC brokers can actually profit if an unqualified sub goes bankrupt on the job

Generally, subs have completed a month or two of work before they receive their payment. If the sub goes bankrupt the GC may have half of the sub’s work complete without having made payment. The GC can bring in a replacement sub to finish the remainder of the project at half the cost & pocket the difference


With Multi-Prime bids, the HVAC, Electrical, & Plumbing contractors police the quality of construction on a project

If the predecessor work is not fit and sufficient to receive the next work activity in the sequence then it is the responsibility of the HVAC, Electrical, & Plumbing contractor to point out the problems and get them resolved before proceeding. This important check and balance happens regularly on Multi-Prime projects, but on Single Prime projects the subcontractors will be told by the GC to keep their mouth shut and to eat any extra costs. Unfortunately, the subcontractors will end up working in the interest of the GC broker who signs their check and who they depend on for future work.


GC brokers are not qualified to coordinate the work of HVAC, Electrical, & Plumbing contractors

The GC’s Project Superintendent and Project Manager typically have a background in one of the general construction trades. Consequently, they lack the knowledge to make informed decisions affecting the work of the HVAC, Electrical, & Plumbing contractors


Every Mandate Waiver Application reviewed was “supported” by a letter from an Architect enumerating the purported Cost Savings and Convenience of dealing with a Single Prime GC

Not one of these Experts offered a discounted fee to the School District for all this Savings and Convenience

The Architect on one Multiple Prime project which came in $6 million under budget actually requested a higher percentage fee because of the savings!

There are no administrative savings if the architect charges the same fees and if a construction manager or clerk of the works are still needed

The long term maintenance and repair costs of poorly constructed buildings will be astronomical

Single Prime will not fix Design Problems, Change Orders or Claims

Change Orders result from:Design Errors and OmissionsUnforeseen ConditionsOwner Requested Changes after bid day Change Order costs will be incurred regardless of

which bidding method is used, if contract conditions change

When an individual subcontractor is responsible for their Change Order cost they are held accountable for the cost by the owner


Claims typically result from one or more of the parties not fulfilling their responsibilities under the contract. These responsibilities are defined by contract and simply need to be enforced consistently to avoid claims

Claims will be more likely with single prime because of the inexperienced and unbonded subs and the typically longer wait for answers


Change orders and claims submitted with single primes will be larger because of the GC markup for Overhead & Profit

If a Single Prime GC goes bankrupt all the subcontractors will have claims and the project will grind to a halt

The Owner will have no contractual relationship with the subcontractors to continue until another GC arrives

Multi-Prime Bid Day Savings Exceed Single Prime Administrative Savings

The administrative savings touted by Single Prime proponents are based on their own fictitious estimates and are not based on facts

These are the same “experts” who missed the budgets on the seven Single Prime GC bids by over 21 million dollars or 14%

The contractors who bid and perform the work are the experts in construction cost, not the GC brokers and architects

There is no way to prove administrative savings

Multi-Prime Bid Day Savings Exceed Single Prime Administrative Savings

Architects are paid a percentage fee based on the overall value of a project and have an incentive to drive up the cost, not produce taxpayer savings

With Single Prime, architects provide less service but appear to charge the same fees

Architects would have to lower their fees by millions on single prime projects to offset the bid day savings proven by Multi-Prime bidding

The Task Force Recommendation to Bid Both Ways was a Success

Since the Task Force Report, Multiple Prime bidding has saved multi-millions of taxpayer dollars on school construction projects

William Tennett HS saved $5,076,760 Bancroft ES saved $3,644,535 Columbia Jr/Sr HS saved $1,089,600 Muhlenberg MS saved $200,000

Recent Multiple Prime Bids versus Single GC Bids with Budgets

$62,

335,

400

$24,

237,

671

$15,

900,

000

$10,

920,

000

$10,

720,

000

$14,

810,

400

$20,

593,

136

$57,

258,

640

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

$50,000,000

$55,000,000

$60,000,000

$65,000,000

William Tennent HighSchool

Bancroft ElementarySchool

Columbia BoroughJr./Sr. High School

Muhlenberg MiddleSchool


Multi-Prime Bids - $103,382,176

Taxpayer Savings:

$5,076,760

Taxpayer Savings:

$3,644,535 Taxpayer Savings:

$1,089,600


Taxpayer Savings:

$200,000

Waivers of Section 751 of the PA School Code should be Prohibited

Every Multiple Prime Bid has resulted in Significant Savings over a Single GC Bid

The Mandate Waiver experiment has failed to produce any purported savings & should not be renewed

multiple prime bids vs. single prime gc bids. about the concerned contractors of pennsylvania the...

Documents

prime contractors general

ferguson elementary

general contractors

martic elementary school

erdenheim elementary

kulp elementary school

roberts middle school

haverford middle school