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New England Construction Blog

Buying In to the Buyout!

Suzette Joseph
May 18, 2017

“Buyout” is the transitional time between the preconstruction and the construction phases of a project. It is during buyout that purchase orders and subcontracts are issued. Working closely with construction management team and general contractors at this stage is crucial to the overall implementation, timing and budget of a project.

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After the estimate is fixed as a budget, the next step is buyout. This is an important step for the Project Manager (PM) to carefully review, as it will gauge the financial success of the project. At this point, the manager will uncover scope problems and create a clear path for purchasing––every cost that can be committed will be committed. The PM will review all the proposals for each trade, taking note of the exclusions and the holes by creating a bid comparison sheet. Scope review meetings and/or call-in will be scheduled with each subcontractor to review the scope of work created by the PM. At this time exclusions will be reviewed and negotiated into the contract if needed as well. Through my experience in the buyout process I have seen that there are important factors for both sides of the table to consider. My advice to subcontractors really focuses on being thorough in their approach to the initial bid as this will better prepare them for our buyout discussions. Here are a few tips I have gathered.

Important Bidding Tips for Subcontractors:

  • Meet with the General Contractor. Ask questions to get a full understand of the scope of work and the GC’s expectations.
  • Conduct/attend a walk-through of the job site and review the most recent set of plans. Make notes and take notice of unclear areas that may need additional clarifications.
  • Study your notes carefully. Calculate the overhead materials, costs and hours needed to complete the entire task.
  • Ensure your bid includes crucial information like names, addresses, and contact information, full scope of work, exclusions, clarifications, references and material lead times.

To complete the buyout process, the PM will formally congratulate the subcontractor on winning the project, the contact will be drafted, reviewed on both end and executed. After receiving the subcontractors’ certificate of insurance, safety manual and all other pertinent information the subcontractor can then mobilize to the job site.

Furthermore, in today’s excessively competitive market, early completion must be planned during the estimate. The goal of buyout is to maximize the desirable qualities of the project: profit, early completion, quality, safety, and customer experience. New England Construction focuses on these aspects during buyout and, while there are many ways to maximize our success in this process, one of the most critical aspects is “time,” ie. Where you spend it and where you save it! I hope this glimpse into this essential process in our project development is both informative and helpful. If you are a potential subcontractor who would like to work with us, click the link here for more information!

Topics: Education, Business Tips