Let’s hope this never catches on here…
As low-bidding debate continues, the spectre of reverse auctions looms over the demolition business.
For the past few weeks, Demolition News has dedicated page after page of coverage to the near-suicidal bidding war that is raging throughout the US demolition industry (and which will almost certainly be mirrored this side of the pond).
But while the damage of this “work at any price” approach is entirely self-inflicted, a new danger now looms large on the horizon from clients and developers eager to squeeze every last ounce of profit from the demolition profession’s coffers.
That threat comes in the shape of reverse auction bidding (or a race to the bottom as it should more properly be known). In a reverse online auction, invited contractors and/or subcontractors are given a password to a dedicated Web site created to handle the scheduled auction. At the appointed time, competing contractors log on and list their prices. If a competitor has already placed a lower bid, participants can either back out of the auction altogether or place an even lower bid.
The auctions generally allow competing companies time – often just minutes — after each bid to counter with a lower price. After a period of no bidding activity, the auction is closed and the lowest bid becomes binding.
At a time when US contractors have seemingly switched tried and tested pricing methods and common sense for short-termism, the reverse auction is a matter that should be fought against by all concerned.
And I sincerely hope that this is one industry development that never makes it across the pond!
Click here for further details.
Our thanks to Robert Kullinski for bringing this to our attention.
Posted: September 2nd, 2009 under General.
Tags: auction, bidding
Comments
Comment from John Woodward
Time September 3, 2009 at 11:12 am
Mark, E-tendering goes on over here as well and has done so for some time. Most demolition packages on Tesco stores are done on this basis and the only option is to drop out when you get to the point that you agreed is your lowest bid. The problem is though that auction fever cuts in and you want that job so you go a liitle bit lower, as do your competitors and the only winner is Tesco. I would question as to whether it is CDM2007 compliant as a contractor should state under CDM if he is unable to carry out the works, or if he is under resourced.
We will not stop the practice as more companies want work than are prepared to say too low is not for me.
Comment from admin
Time September 3, 2009 at 11:26 am
Thanks for your clarification John (and for dragging yourself away from the pool/beach in Malaga!!)
I was aware that the likes of Tesco have forced through these practices (in much the same way as they have abused their buying power with farmers and food producers). My bigger concern is that this will become more widespread, particularly at a time when everyone is desperate for work.
To my mind, this is a matter for the various national and international associations to take a stand against as, ultimately, it will be to the detriment of this industry.
Comment from admin
Time September 2, 2009 at 9:08 pm
As if US contractors need any help in committing financial suicide!!