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Electrical contractors are in the midst of change in their industry. The most dramatic change recently is the increase in the number of “shovel-ready” public works projects created by stimulus funding. The landscape is now dominated by public works projects, some reaching well over $1 billion. In response to this, electrical contractors specializing in these types of projects are venturing outside of their local territories to get the business.

For many, this is a major departure from the way  local contractors have worked for decades. As might be expected, the new out-of-area competition is not welcome by the local contractors. The government and the taxpayers do, however, welcome and encourage more competition so that their dollars are better spent and the jobs properly completed. This presents a formidable challenge when it comes to getting the right large material package buy-pricing for the migratory contractors.

“Bidding on projects has become much more competitive in the past couple of years – we are seeing an increase of 300 to 400 percent more bidders on projects,” notes John Barnes, electrical division manager of Vaughn Industries in Carey, Ohio. He adds that there also is an increase in low-ball bids.

To combat the increase in bids, Vaughn Industries broadened its area to include bidding projects across the country, but found typical results. “We are seeing the same bidding trends across the country that we are seeing in Ohio,” Barnes states. Other contractors are making efforts to stay on top of this shift in demand to stay competitive. Bryant-Durham Electric Con­struction in Durham, N.C., decided to ex­pand its region of operations.

“We open­ed an office last year in Fayetteville, N.C., to better serve the needs for Fort Bragg, due to the increase in federal appropriations for the military,” says Donnie Martin, vice president of sales and estimating. “We also extended our reach to South Carolina and Georgia to general contractors with whom we are familiar. Both efforts have been successful.”

In addition to going beyond their traditional territories, Bryant-Durham Elec­tric and Vaughn Industries have some­thing else in common – both work with a non-local construction distributor to en­sure fair pricing. Often, these distributors employ a team of project veterans, many of whom are former manufacturer sales agents and younger technical specialists who are savvy to the current market levels for the products that make up these larger construction packages.

Electrical Bidding Simplified

Both Vaughn and Bryant-Durham note that this method has helped them win contracts. The distributor makes a deal up front on the package with only one elec­tri­cal contractor. The pricing is buy-pricing. There is only one round of negotiation. If the electrical contractor is successful, the job is awarded to the distributor at the price quoted.

This bucks the traditional wasteful trend where a street num­ber is put out originally and then the job is sort of auctioned off to the lowest bidder. The distributor starts at where that pro­cess ends up, saving all parties aggravation.

Lighting is the Wildcard

Because local labor rates are well known and typically the same for everyone, the labor cost estimated on major public works bids is not really something that is different between local and non-local contractors, and therefore inconsequential. In the bid, the contractors are making their calculations using a known hourly rate, leaving labor estimates to be similar. Com­modities, such as building wire and conduit, also will be taken off and estimated based on known parameters, and end-results should also be similar.

The lighting package is usually the wildcard. Failure to use the best lighting number may mean the difference be- tween winning and losing. Due to the complex nature of today’s lighting offerings, that number is not easily derived.

Distributors provide the migratory con­tractors with the buy-price they are looking for at bid time. This keeps them from being shut out of the bidding pro­cess by the local community who would rather see a local, usually less-effective contractor end up with the project. It also saves the contractor time and money by avoiding additional rounds of negotiation. Fin­ally, the best supplier – one who has a great deal of experience servicing large projects – is used and can reduce the waste created by those suppliers who have never pro­cessed such a project or have completed very few of them and are going up the learning curve.

Migratory contractors also appreciate the continuity of using one vendor over and over again. It is still a people business, and by having a contractor project management team working regularly with a distributor project management team, a familiarity and trust level are achieved.

Steve Bellwoar is president of Colonial Electric Supply, an electric and lighting solutions company. To learn more, contact This e-mail address is being protected from spambots. You need JavaScript enabled to view it. .