August 27, 2008

Tendering

Ottawa Construction Association calls for faster bid approvals

Reaction to rising material costs

PATRICIA WILLIAMS

staff writer

In conjunction with the General Contractors Association of Ottawa, the Ottawa Construction Association (OCA) has urged buyers of construction services to shorten the bid approvals process to 15 days or less from the usual 30 to 90-day period.

The recommendation comes in response “to a number of significant price escalations” in key commodities such as steel and copper and most recently, petroleum-based products such as asphalt.

“Contractors in many supply situations are only able to obtain quotes from suppliers based on a 15-day time limit,” the OCA said in a news release. The association represents more than 900 companies active in the Ottawa region’s $3 billion construction market.

“The risk to paving and roadbuilding firms is even higher as they cannot obtain any price guarantee on the supply of petroleum-based asphalt cement — the key ingredient for asphalt.”

OCA said buyers also would benefit from a faster approval process as contractors would not have to include premiums in bids to cover higher commodity costs.

As of Monday, the association had not received any response from owners, said OCA president John DeVries. The association sent out about 40 letters late last week. However, the release struck a responsive chord in construction industry circles.

Rob Bradford, executive director of the Ontario Road Builders’ Association, said his organization “fully supports” efforts to shorten the time frame between bid closing and contract award.

“In our case, the price of fuel, asphalt cement and steel are all going though the roof with no end in sight,” he said. “Contractors bidding road and bridge projects are often finding a major increase in the price of the product from the time a quote was received from the supplier at tendering and the actual cost of the product when it is ordered for the project.

“Supplier price increases rarely respect the timelines in the bidding process and the length of time that a quotation is valid is decreasing as price changes become more frequent.”

In the case of asphalt cement, contractors working on Ministry of Transportation projects receive “partial consideration” under certain circumstances for rising prices between the date of tendering and the time when the product is needed, Bradford said.

Clive Thurston, president of the Ontario General Contractors Association (OGCA) said his organization considers faster turnaround on bid approvals “absolutely essential.” But he questioned whether a 15-day time period is in fact achievable, at least in the case of public agencies.

For the past several years, OGCA has pressed more than a dozen municipalities, colleges and universities to speed up the bid approvals process, but to no avail, Thurston said.

Taking a different tack, the association has convinced some owners, however, to compensate contractors for price escalations “that are above and beyond the norm.”

OGCA now is meeting with the Ontario Association of Architects in an attempt to find a resolution to the issue.

For its part, the Ottawa association has asked that the matter be tabled for discussion at an upcoming meeting of the standard practices committee of the Canadian Construction Association.

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