Reverse Auction
Reverse Auction
(OP)
We are going after a project where instead of a bid opening the customer is going to have a reverse auction. Is this exactly what the name implies....you start at a certain price and then the contractors keep lowering their bids until everyone else gives up? What else should be expected?
Comments from anyone with experience on this would be appreciated.
Comments from anyone with experience on this would be appreciated.





RE: Reverse Auction
Then, some inexperienced bidders may bid too low, and they run out of money to finish the project, so you have to pull someone else in. That happens a lot.
A Reverse Auction doesn't always guarantee the lowest price possible, just the lowest price the bidders are willing to go to at the time.
RE: Reverse Auction
When that happens something has to give. It’s usually the quality of the work.
Then the owner ends up with less quality then he thought he was getting and pays more in the long run.
You get the best long-term price in conditions where both the owner and the contractor have full knowledge of what is in and what is out of the contract.
Getting cute may appear to save money in the short run but in the long run will cost you many times over.
Stick to the tried and true contracting models.
Since you are a bidder I on this work, I’d be concerned that the owner will get cute in other areas and be a pain to deal with. I’d take a pass on this one or simply give your best price once and refuse to participate further.
Rick Kitson MBA P.Eng
Construction Project Management
From conception to completion
www.kitsonengineering.com
RE: Reverse Auction
I personally feel the owners best interest is served by a publically opened pproposal by selected contractors who have been given ample time and information to carefully make their best proposal. The reverse auction is a problem waiting to happen.
RE: Reverse Auction
Now, for a project, I foresee to much risk.
On a project, you commit yourself on one date but the contractors will do a continous work afterwars. What if he, having half way done, fails? (This is an impossible situation on material procurement, where what you see on that moment is what you need/buy)
rgds, javier
RE: Reverse Auction