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Bidding Cabinet Work for School Jobs

Supplying cabinets for school construction or renovation projects is a rough business where it's easy for the small competitor to get beat. October 27, 2011

Question
We have been asked to bid a school by a contractor we have worked with successfully before. This would be our first school, and it is several times larger than any previous projects we have done. I really don't want to divulge my ignorance to this contractor, but I do have a few questions. Do these contractors usually give projects like this to small shops or do they automatically give the jobs to the large outfits? We have typically 3-4 guys in our shop and this would take most of a year to build. Do they typically install all at once? Are there generally draws that can be taken for the completed work in the shop? In short, this job is large enough that we would need to get periodic payments as we build. Is this typical on school projects? We have done work for other government agencies that do not allow any payments until the material is on site.

Forum Responses
(Business and Management Forum)
From contributor A:
Schools usually have a tighter schedule than what you could perform on. I would suggest you venture into this type of work on a smaller scale to start with. Most schools (public) have liquidated damages if you don't get done on time. Depending on the type or size of school, it will attract a lot of bidders and the price will be very competitive. You most likely need to be bonded.



From contributor J:
In our area schools up for tender go for very cheap to large outfits. There is one smaller guy doing them successfully, but he outsources almost everything. Basically he is an installer. The specifications will explain the payments and when draws will be available. Typically on a school you have a short period of time for install. In our shop (8 guys and CNC) we find it more profitable to stay away from large schools.


From contributor G:
We bid N. Texas schools. They will pay for cabinets on site. AWI specs. You will need deep pockets. Will need a drug and background check on your installers. Workers and general liability insurance. Yes, they like small companies. When they click their fingers, they expect you at the jobsite. GC is always a month or two behind. Schools open on schedule. Expect to work 7 days a week. Some schools like Dallas, very slow pay.


From contributor L:
I agree with everything contributor A said. The risks are high and around here the school prices are dirt cheap - bad combination. You will likely get hit with assorted charges for not delivering on time. One day late and they start the money clock. Toward the end of the job, the site is like a Chinese fire drill.


From contributor C:
Be very careful of union entanglements, especially on installation, and if this is anywhere near an urban area. If any jobsite is likely to be union only, these are. They will shut you down right in mid-install without warning, and will demand you use their workers to finish the job at their rate. Make sure you check this out thoroughly - the contractor cannot and will not protect you if this happens. This is not speculation, I've been there.


From contributor K:
As others have said, you have to have deep pockets and be on time and on schedule and expect to wait for your money. Although they usually have penalties for non-performance, they usually don't have one for themselves for non-payment of your invoice. If GC is paying you third-party, expect to wait. If it all works out different, congrats, you are among the few.

One word of caution... The fact that this is your first school and you are reluctant to tell the GC this, is a potential problem in the making on disclosure. Lay all your cards on the table. Your lack of experience in this arena, expectations and pay schedules, and see if you both still have a fit. If something goes awry, the GC then can't point the finger at you and say "I didn't know this was his first school." By telling the GC upfront, you give yourself a certain level of protection, but it is better if you are straight with him, and have him walk you through the expectations and potential pitfalls from start to finish. Sometimes when we look at a large job that we think will put us two steps forward, if you are not careful and upfront, it can put you three steps behind.



From contributor W:
A while back I got involved with a fairly large project in a school. Long story short, got behind on the schedule and ended up paying $500/day liquidated damages for 65 days.
Proceed with caution.


From the original questioner:
Thanks for your responses. We will take it all into advisement and make a decision today. Great forum for this type of thing.


From contributor I:
I have many clients (our software users) that do quite well on schools, but it is only a game for a well run company with lots of production and reasonable automation. Some of these posts make it sound like nobody makes it work... That's just not true.

But if you're a small cabinet shop like the original poster, by all means do not bite off more than you can chew, whether it's a school, hospital, mansion work, etc. It's a certain way to lose money in this business. There's nobody watching out for your interests except you.



From contributor B:
I advise you to be very careful if you want to tackle this project. I once worked for an outfit that was quite successful in the niche we had been working. We had been growing by baby steps, then some very large commercial projects came up. The owner wanted to jump into the big league. He bit off more than we could chew, the company folded, he lost his house, cars, and wife. I'm not saying a project like that can't be done successfully - obviously people do it. Just don't fall off the carousel horse reaching for that brass ring.


From contributor Y:
We have done about 30 schools. The margins are small. The GC is never on schedule. He may give you one, but it is only a guideline. Payment is usually about 35-40 days after you invoice. Payment only made for material on site.
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