Of course not! The low bid is simply that: a price submitted to gain the work being offered and it may not even reflect the vendor’s best product, just the product that may meet the minimum requirement of the project.
Important to consider is that the product/services submitted are generally the one that produces the greatest profit margin for the bidder. The client has to be sure that the product offered will meet or exceed the requirements of the project, not just the minimums. When involving ongoing services such as elevator maintenance contracts which are normally but not exclusively; a 5 years deal, it is important to look at the overall value of the bidder’s service history and local strength.
A bidder that submits a higher monthly cost may be doing that realistically to meet the contracts objectives and still entertain a reasonable profit for its owners. Nothing wrong with that. We desire the vendors to be profitable; that’s just good business. What is wrong is to submit a price that is known to be unrealistic to meet the contracts specifications and then attempt to “bill your way to profitability” or to not perform as required by the contract.
In a typical construction or modernization project, a 5 year maintenance contract may be a part of the bid package with the maintenance portion to be consecutive with the end of the warranty period. That maintenance price would have been itemized in the original bid so its price can be examined to determine that value to the client in the long term picture. Part of bidding process to chose a vendor includes the comparative of long term service relationship and initial construction costs to best select the winning bidder.
Suspect would be abnormally low construction cost far below that of the next few bidders. Elevator company to company comparisons show that materials and labor cost somewhat even the playing field. While union labor can substantially increase that cost for those vendors, efficient installation procedures with products developed to reduce the labor expended often offset the higher labor cost. Nonunion labor vendors may have the edge in labor cost but are likely to be non-manufactures of the equipment and will pay a greater amount for materials. Of course there are exceptions to both scenarios.
Abnormally high bids may indicate a poorly drafted bid specification or other factors that caused the bidder to protect themselves. It could be that their labor costs are significantly higher in that area or their product may have to be modified to fit the project.
Bids have to be clear and free of any ambiguous language. It’s to the clients benefit that the bid specifications are drafted to contain exactly what is required. That way the true costs are known and the vendor has the expectation of a reasonable profit in exchange for its services.
Separating the chaff from the wheat is the work of a knowledgably consultant.
Wednesday, November 18, 2009
Sunday, November 15, 2009
Elevator Inspections & Why It's Important
As business owner’s we are all concerned about the impediment of government regulations negatively affecting our bottom line. However in many areas those regulations are important in maintaining a safe environment for our employees and the public. I don’t know of any business owners that start each day with the intention of not maintaining a safe environment for those affected by the equipment used. But inadvertently and unknowingly it happens all too frequently.
The requirement to have elevator (and by definition: escalators) is not new: that requirement has been in effect for many years. What has changed is how that requirement is enforced and monitored.
In the past an inspector would conduct a safety inspection annually for most elevator equipment. If the equipments owner had a elevator serving only two landings and a current maintenance contract with a registered elevator company, a annual safety inspection is not required in the State of Florida. The annual fee is still required and a safety test has to be performed and witnessed by a inspector. While this reduces the cost to the owner, we always recommend a inspection be done at the same time as the safety test; cost will be minimal as the inspector is already there and it may prove to be a great benefit if a legal claim is brought against the owner for a injury. In that all too common event, you would have the inspector’s data for evidence of diligence on your part to ensure the safety of the passenger’s. You’ve gone above the requirement.
The inspection process is not difficult nor does it have to be unduly expensive to the owner. By doing some due diligence and common sense evaluation of the procedure the owner can greatly reduce both costs and liability. Let’s take a look at a common scenario involving an owner with a maintenance contract with an elevator company and the elevator equipment serving a four (4) landing building:
1. Annual safety tests and inspection is required.
a. Owner contacts the elevator company to ensure those requirements are being scheduled and carried out.
b. The responsibility and cost for the third party required inspector is determined between the owner and elevator company.
c. The inspection and tests are completed and there are some minor violations that need to be resolved before the State will issue new certifications. Violations listed are in two areas: the elevator companies and the building owners.
d. An action plan and schedule are agreed upon and work is under way for resolve. A date is set for re-inspection with that cost determined.
e. Re-inspection reveals that all violations are taken care of and a “clean” inspection report issued.
f. All is well and repeated next year.
That’s the almost ideal scenario. The best scenario is for no violations to be recorded. Skip all steps c thru e. The reality is this:
Violations are recorded and you get a proposal for fixing those.
1. Are the violations repeated from previous inspections?
2. Are they responsibility of the owner or the elevator company?
3. Why are new violations recorded? Did code change and these are result of those changes?
4. Is the proper version of code being used? How up to speed on code is the inspector and elevator company mechanic?
5. Is the cost of corrections prohibitive? If so is there an alternative?
Let’s answer the questions:
1. If you note repetitive violations from past years, here may be the answer: in the not too distant past violations could be noted as corrected by sending a letter to the State elevator bureau stating that they were corrected and a certificate was issued. That was fine if everyone involved actually did the work instead of just the paperwork. “Paper-whipping the violations” was the term used. The State of Florida realized this was happening and now a re-inspection is required to physically determine the work was completed. So if the paper-whipping occurred you are now tasked with paying again for corrections: that ain’t right.
2. It’s always the owner’s responsibility regardless if you paid to have it done or not. You may have some relief from full responsibility if you can provide evidence of good faith in hiring professionals to do the work, but ultimately the bearer of burden is on the equipment owner.
3. Did conditions change in the building such as power, lighting, water intrusion are many variables. Was there code changes enacted that your equipment had to meet? If so your elevator company, in good business faith, should have made you aware of and a plan developed to deal with those changes.
4. All licensed inspectors are required to complete continuing education each year on code updates, as are licensed mechanics. I’s how this information is used and applied that makes the difference. We continually get questions about code that are prefaced with: “well, I heard that……or someone told me that…” Information regardless if accurate or not is passed from worker to worker without being verified. There are some grey areas in code but most are straightforward and simple but it does take some research and discipline to determine what applies and what does not. That research will make significant difference in cost. The owner can do much of that research themselves by following the links on our front page for code updates and information.
5. There may be alternatives to costly corrections that are available. Remember it’s the elevator company’s goal to separate as much money from you as legally allowable. That’s just business on their part. If they have two or more options available for your purchase isn’t it common sense that the most profitable one is the one that is pushed?
If properly applied for; there are some variances allowed by the State if otherwise a hardship is imposed on the business owner to make corrections straight away. Unsafe operation will not be allowed in any case, nor should it ever be. The equipments owner can apply for variances or hire a consultant or other professional to increase the odds of granting.
It’s regrettable but the reality of the inspection picture in Florida has been hit or miss. Good intentions that relied on the integrity of all involved.
Fact: inspections by a licensed third party was enacted several years ago by the State to ensure compliance in that all registered conveyances are inspected and meet code. The state employed inspectors simply could not keep up and elevators were go9ing several years without compliance.
Fact: the third party inspection business is very competitive in price that allows the profit per inspection to be slim. So some inspectors may attempt to squeeze in as many inspections and test witnessing as possible each day. They may not be as through as such and violations go unrecorded.
Fact: during the next year perhaps a more diligent inspection occurs or one of the State of Florida monitoring inspectors visits the location and finds more violations than the third part inspector and that third party inspector will increase the diligence of inspections. In any case the owner may find greater costs in doing corrections that may otherwise been absorbed over several past years and are now due in full. We also find that some inspectors have ties to former employers and while they may not intentionally grant lax inspections it can and does happen.
We find it behooves the owner, like all successful business owners, to have all costs (re: violations) known upfront so they can be dealt with in due course. Prompt thorough inspections reduce long term costs and in the case of litigation will establish a pattern of compliance and responsible ownership.
The requirement to have elevator (and by definition: escalators) is not new: that requirement has been in effect for many years. What has changed is how that requirement is enforced and monitored.
In the past an inspector would conduct a safety inspection annually for most elevator equipment. If the equipments owner had a elevator serving only two landings and a current maintenance contract with a registered elevator company, a annual safety inspection is not required in the State of Florida. The annual fee is still required and a safety test has to be performed and witnessed by a inspector. While this reduces the cost to the owner, we always recommend a inspection be done at the same time as the safety test; cost will be minimal as the inspector is already there and it may prove to be a great benefit if a legal claim is brought against the owner for a injury. In that all too common event, you would have the inspector’s data for evidence of diligence on your part to ensure the safety of the passenger’s. You’ve gone above the requirement.
The inspection process is not difficult nor does it have to be unduly expensive to the owner. By doing some due diligence and common sense evaluation of the procedure the owner can greatly reduce both costs and liability. Let’s take a look at a common scenario involving an owner with a maintenance contract with an elevator company and the elevator equipment serving a four (4) landing building:
1. Annual safety tests and inspection is required.
a. Owner contacts the elevator company to ensure those requirements are being scheduled and carried out.
b. The responsibility and cost for the third party required inspector is determined between the owner and elevator company.
c. The inspection and tests are completed and there are some minor violations that need to be resolved before the State will issue new certifications. Violations listed are in two areas: the elevator companies and the building owners.
d. An action plan and schedule are agreed upon and work is under way for resolve. A date is set for re-inspection with that cost determined.
e. Re-inspection reveals that all violations are taken care of and a “clean” inspection report issued.
f. All is well and repeated next year.
That’s the almost ideal scenario. The best scenario is for no violations to be recorded. Skip all steps c thru e. The reality is this:
Violations are recorded and you get a proposal for fixing those.
1. Are the violations repeated from previous inspections?
2. Are they responsibility of the owner or the elevator company?
3. Why are new violations recorded? Did code change and these are result of those changes?
4. Is the proper version of code being used? How up to speed on code is the inspector and elevator company mechanic?
5. Is the cost of corrections prohibitive? If so is there an alternative?
Let’s answer the questions:
1. If you note repetitive violations from past years, here may be the answer: in the not too distant past violations could be noted as corrected by sending a letter to the State elevator bureau stating that they were corrected and a certificate was issued. That was fine if everyone involved actually did the work instead of just the paperwork. “Paper-whipping the violations” was the term used. The State of Florida realized this was happening and now a re-inspection is required to physically determine the work was completed. So if the paper-whipping occurred you are now tasked with paying again for corrections: that ain’t right.
2. It’s always the owner’s responsibility regardless if you paid to have it done or not. You may have some relief from full responsibility if you can provide evidence of good faith in hiring professionals to do the work, but ultimately the bearer of burden is on the equipment owner.
3. Did conditions change in the building such as power, lighting, water intrusion are many variables. Was there code changes enacted that your equipment had to meet? If so your elevator company, in good business faith, should have made you aware of and a plan developed to deal with those changes.
4. All licensed inspectors are required to complete continuing education each year on code updates, as are licensed mechanics. I’s how this information is used and applied that makes the difference. We continually get questions about code that are prefaced with: “well, I heard that……or someone told me that…” Information regardless if accurate or not is passed from worker to worker without being verified. There are some grey areas in code but most are straightforward and simple but it does take some research and discipline to determine what applies and what does not. That research will make significant difference in cost. The owner can do much of that research themselves by following the links on our front page for code updates and information.
5. There may be alternatives to costly corrections that are available. Remember it’s the elevator company’s goal to separate as much money from you as legally allowable. That’s just business on their part. If they have two or more options available for your purchase isn’t it common sense that the most profitable one is the one that is pushed?
If properly applied for; there are some variances allowed by the State if otherwise a hardship is imposed on the business owner to make corrections straight away. Unsafe operation will not be allowed in any case, nor should it ever be. The equipments owner can apply for variances or hire a consultant or other professional to increase the odds of granting.
It’s regrettable but the reality of the inspection picture in Florida has been hit or miss. Good intentions that relied on the integrity of all involved.
Fact: inspections by a licensed third party was enacted several years ago by the State to ensure compliance in that all registered conveyances are inspected and meet code. The state employed inspectors simply could not keep up and elevators were go9ing several years without compliance.
Fact: the third party inspection business is very competitive in price that allows the profit per inspection to be slim. So some inspectors may attempt to squeeze in as many inspections and test witnessing as possible each day. They may not be as through as such and violations go unrecorded.
Fact: during the next year perhaps a more diligent inspection occurs or one of the State of Florida monitoring inspectors visits the location and finds more violations than the third part inspector and that third party inspector will increase the diligence of inspections. In any case the owner may find greater costs in doing corrections that may otherwise been absorbed over several past years and are now due in full. We also find that some inspectors have ties to former employers and while they may not intentionally grant lax inspections it can and does happen.
We find it behooves the owner, like all successful business owners, to have all costs (re: violations) known upfront so they can be dealt with in due course. Prompt thorough inspections reduce long term costs and in the case of litigation will establish a pattern of compliance and responsible ownership.
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