It doesn’t pass the smell test
The trouble with suspicion is that it is so easily aroused and so hard
to put to bed. Here is a contract process that highlights this problem.
The engineering company identified a serious problem in an small
seven-year-old low-rise condo apartment building. Water was penetrating
the building envelope because of poor water drainage from the balconies.
The engineering company specified the work that had to be done and
specified that the bids had to be sent to the corporation by mail in
The property management company tendered the contract and received
three quotes by fax. The three quotes were submitted to the board.
Notice how these two quotes, from two different companies, are
identical in every detail.
This bid is 10% cheaper than the other two so unsurprisingly, the board
awarded this company the contract by a vote of four to one.
(The one dissenting director thought that something did not seem right
with the bidding process and wanted to put the contract up for new
Since the companies that bid on contracts have to pay the same for the
materials and any equipment that they need to rent, and usually their
labour costs are fairly close, a board should expect competing bids to
vary between 5-10%. The lowest cost bid for this job is within 10% of
the other two bids.
However, it does seem odd that the two higher bids came in at exactly
the same price and the breakdown of the separate prices are identical
in every category.
Check the dates
This quote was dated December 7, 2011 but the faxed quote was received
at the property management office on Dec 06, 2011. Again, a small point
but it is another indication that something may not be right.
Is this common?
I asked experienced property managers and construction superintendents
they ever saw identical quotes submitted for a $1.6 or $1.8 million
project. They have never seen this before.
What should have
The consensus is that the job should have been re-tendered, with other
contractors, with strict instructions for sealed bids to be mailed
directly to the corporation's board of directors.
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