MEMORANDUM
TO:
FROM:
CHAIRMAN:
SUBJECT:
DATE:
CC:
DREW YANTIS
CONTEMPORARY CONSTRUCTION
PROJECT MANAGER: GUANGYAN SHAO (GRACE)
NEGOTIATION ON BIDDING DAY
2/18/2020
STEEL OF GA, BEST STEEL, STEEL SERVICE
Goal of Team: Budget: $2,000,000; DBE: $200,000; Schedule: 35 weeks.
Goal of individual: DBE: $200,000; Schedule: 30 weeks
Team Strategy: After discussion at first, we decided to see all the subcontractors’ bid documents
and the negotiation results. Then we would compare the results of the 3 subcontractors to come up
with the final winner. Because Steel of GA company was under budget and everything else met our
team goal except their DBE, we met them first. We also decided to be friendly and slightly indicated
our goal to the subcontractors and let them decide if they would change their bid for us.
Process: Steel of GA told us their budget changed into very high and they would not meet our goal
even after our hard negotiation, so we started to meet the next two companies. the conversation,
we were confused about their alternatives and the time was so limited that we could not finish the
talk. Then we started to meet the third company, Steel Services. Because they were a small service
company and they said they had no relationship with our company before, I tried to talk with them
about it would be a beginning of our relationship, if they could satisfy our wish, and they could
make all the money back on the next project that we might gave them. The talk with them worked
very well at last. They could finish the project in 30 weeks and make the budget under $1,900,000.
However, we did not sign the contract with them because of the limitation of time and our team
preferred to see the result of the other two teams’ inside negotiation. It was the most regretful
decision we made. Before we let next group come in, we were told Steel Service gave up their bid
and we lost such a good bid. After a hard talk with Best Steel, they offered us with 36 weeks and
1.95 million, which was bit over schedule, but acceptable. Because of the time limitation, the talk
got to end and we had to stop the negotiation. And we were told they could not manage to get
their qualification, so Steel of GA was our last chance. We had to sign the contract with them even
they offered us an over schedule contact.
Outcome: Steel of GA, 45 weeks, $1,900,000
Lessons Learnt: Every bid day and negotiation day with subcontracts should be very nervous and
prepared. Before the negotiation, general contractor should read every subcontractors’ bid
document very carefully, know their backgrounds, and have a specific team goal. We should not be
interrupted by our own title and our individual goal. First, we are a team. And then I am the project
manager. And if there is a company that meets our goal perfectly, be sure to catch the opportunity.
We will never imagine what will happen next. Besides that, when we sign the contract, it is also
necessary to make every alternative clearly written on the contract in case the subcontractor eat
his words later.