When major projects arise on commercial or municipal properties, property owners and managers rely on outside contractors to submit Request For Proposal (RFP) bids to help them determine the best contractor to complete the task. Unfortunately, a significant percentage of property managers and owners simply choose the lowest priced bid, often with disastrous results. In today's blog post, we will look at four major problems that can occur when the lowest bid is the sole determining factor in awarding or granting a tree care or landscape contractor project.
Shortcuts On Labor and Workmanship
Contractors that submit significantly lower bids on RFPs will generally use shortcuts to save money on their own projects costs and increase their profit margin. Some bargain contractors hire unskilled workers and day laborers, resulting in substandard work, lax safety practices, and poor workmanship. Property owners may end up with landscapes or trees in poor health because of unskilled workers and their subpar work.
Low Bids Offset By Hidden Costs and Fees
If a contractor's extremely low bid seems too good to be true, it probably should not be trusted. A winning contractor may have the lowest initial bid, but they will usually try to make up the difference through hidden charges and fees for materials and service equipment not included on the original bid. "Unexpected" charges can result in property owners and managers paying an amount equal or greater than the highest bid originally submitted.
Greater Liability Risk For Property Owners
Low bidding contractors are often not properly licensed and do not carry sufficient insurance for Workers Compensation or General Liability coverage. These kind of insurance coverage oversight put property owners at a much higher liability risk in the event of a worksite accident, injury or property damage. Any revenue saved by choosing the contractor with the lowest bid is cancelled out by potential insurance claims or even lawsuits for major accidents, damages or injuries.
Improper Work Threatens Insurance Protection
When unskilled or unlicensed contractors perform tree work or landscape projects, their substandard work or improper installations can void warranties or even jeopardize insurance coverage. This can result in the loss of value for property owners, such as historic shade trees covered by insurance but maintained by untrained tree crews. Their poor work can threaten a tree's health and also any insurance value associated with that historic and valuable tree.