| ▲ | pjc50 4 hours ago | ||||||||||||||||
> When you put a design contract out for bids they have to go big. They have to deliver for $54M even if things are harder. Yes - and they also have to deliver for $54m if things are much easier. The tender process often imposes an overhead of several million $ per bid, which has to get rolled back into the margin on the projects. | |||||||||||||||||
| ▲ | bluGill 4 hours ago | parent [-] | ||||||||||||||||
You would be a fool to not ensure that things will go at least a little easier in even the worst case. The other option: cost plus bids (that is you pay their actual costs plus a fixed amount of profit) is even easier to game because you can add costs in so many ways. That is why most large bids are fixed cost despite that downside - they are much harder to hide extra costs in. There is no alternative to carefully watching your suppliers. Some are more honest than others (and you should blacklist the worst). | |||||||||||||||||
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