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Line Out: List Plus Cost

The roles of audiovisual system designer and the specialty contractor have long been in some dispute. They are part of a system and a nonsystem that many

Line Out: List Plus Cost

Sep 1, 2004 12:00 PM,
By Tom Corbett

The roles of audiovisual system designer and the specialty contractor have long been in some dispute. They are part of a system and a nonsystem that many will defend in public and dispute in private. Although we might complain, protest, and drive each other crazy with frustration, design and construction activities are deeply embedded within the fabric of how this country does business.

Bid specifications have a boilerplate clause requiring a complete and working system. That clause may seem silly, but it does require that the contractor not only supply devices but also verify the design, coordinate installation with all the unseen players, and train the owner.

The bid process functions as an alternate set of eyes that reviews the system configuration. Contractor verification is required so that all devices will work — and work properly — in the context of the other specified equipment. This verification is a free design review service required of all bidding contractors. It also protects the installation contractor from being responsible for a system that doesn’t work or works poorly.

Bid results can produce a successful bid award or a non-award. If all bid prices are outside the client’s budget or the consultant’s estimate, the job may not be awarded to any bidder.

There are other bid result possibilities. One is that all bids are discarded and the system is redesigned and rebid. The redesigned system is usually smaller (to fit within a budget), and when the job is rebid, all bidding contractors invest more time in an effort to get a smaller job. Another scenario is that the client or the prime contractor calls the low bidder and negotiates. That means that the lowest total price bidder gets a chance to shave his or her price to meet a cost projection or a prime or secondary contractor’s estimate.

However, when the contractor is asked to reduce the scope of the work and the bottom line price, he or she is not asked to reduce the guarantee of the system or to omit any of the complete and working system boilerplate requirements. The contractor’s bottom price is obtained by trimming, substituting, and otherwise shaving to prepare a “competitive” quote. How can a lower bid possibly supply a system that would make it through the warranty period? How low can it possibly go?

In an effort to find a way to review bids, a local consultant has typically required individual prices using a specification list of major devices. The consultant also requests dollar amounts for taxes, freight, field installation labor, shop labor, and a separate number for general and accounting expenses. If any of the device prices approach list price, the bidding contractor is in trouble. Herein lies the term, list plus cost. The underlying expectation is “give me discount pricing on all devices” — and don’t charge for the incidentals.

All products, procedures, and training that are part of an installed system require cost reimbursement plus adequate markup. The contractor must charge a fair price for all parts, supplies, labor, shipping, and taxes. Contractor purchasing methods have tremendous impact on how the job is priced. What products a contractor carries and what products are two-stepped, quantity pricing, and even freight charges have a significant impact on the final job price. The contractor needs to stay in business and stay profitable — for the good of both the client and the contractor.

List plus cost? Yes. The consultant, the contractor, and the owner all have the same goal — a reliable installed system that works, and works well.

In addition to his 21 years experience in the audiovisual field, Tom Corbetthas 25 years of theatrical production and facility design experience. His projects include educational facilities, training rooms, theaters, corporate auditoria, and public assembly installations including houses of worship, conference rooms, and ballrooms. The contractor needs to stay in business and stay profitable — for the good of both the client and the contractor.

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