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Question:  In an economic climate that has fostered intense competition for construction projects of all sizes, is there still a benefit for owners to pursue a negotiated contract rather than put a project out for hard bid?

Answer:  Absolutely. While hard bid has become more common across the board, with more contractors competing on every one of fewer projects in an uncertain economic climate, owners still can reap multiple benefits from early contract selection, or negotiating, as opposed to going for the hard bid.

An incorrect assumption is that a hard bid always brings the lowest possible price tag. The reality is that a low cost presented at the beginning can be deceiving. While negotiated projects might present a slightly higher cost up front, a well-managed project with the right team should result in the lowest cost by the end of the project.

With hard bid, the potential for change orders is high, both with the general contractor and with subcontractors. With a negotiated contract, risks are discussed up front, and owners know their many options, and their real cost, at the start of the project rather than be subject to surprises at the end – when they’re least prepared to handle them.

Another perceived benefit of hard bid is competition. But while hard bid may attract lots of options for owners, taking the route of negotiated projects means the owner assures the right competition, with the option to request prequalified contractors – and prequalified subcontractors -- to ensure the best team for the job.

The bottom line is that, in this slowly recovering economy, owners with an eye on the big picture still should consider engaging in the negotiated contract process. That’s still the best way to maximize team and project quality while exerting maximum control over long-term costs.