The term “production work” used to make me cringe, conjuring up images of low-quality materials, poorly fit joints, and a heavy reliance on caulk. But when my company bid on — and won — the contract to renovate 50 kitchens in a high-rise senior center last fall, I knew my three-man crew would have to adopt a production approach if we were going to be profitable. At the same time, I was determined to maintain our usual standard of quality.
Prior to this project, our multi-unit work had been limited to condo buildings of five stories or less, where we’d installed individual components — primarily windows — in one-off situations. By contrast, this job required the complete removal and replacement of all the cabinets and countertops, as well as drywall repair and painting, in 50 kitchens scattered throughout a 19-story building.
We were invited to bid by a local architect whom we’d worked with in the past. His firm was responsible for the design and administration of the project, which was being funded with federal stimulus money. For bidding and scheduling purposes, 200 apartments in the building had been broken down into four blocks of 50 each; this bid was for the third of four phases in the overall project.
The building was owned by a local governmental housing agency, so past and present bids were all a matter of public record. We used this to our advantage, looking up the bid prices on the first two phases of the project and developing a baseline for our bid based on this information. We felt confident the winning bidder of Phases 1 and 2 would use similar numbers for his bid on Phase 3, but there was also one other contractor bidding, because federal law requires a minimum of three bidders for government-funded projects.
Although we couldn’t predict what the third bid would be, we could determine where we felt our price needed to be to win the work. Then we took a hard look at all of our numbers to see where we could trim expenses. The materials were specified by the architect, and since we’d already been provided with substantial volume discounts from our suppliers, there was little — if any — additional savings to be had in those areas. The only subcontract labor was plumbing and electrical (which we aren’t licensed or insured for), and we’d received what we considered to be fair pricing from those subs, so their numbers, too, we inserted as fixed-line items. That left our labor as the single largest line item; controlling those costs by working efficiently would be the key to making money on this job.
When we were awarded the contract, we had to secure a performance bond for the full amount of the job. Issued by an insurance carrier for a small percentage of the estimated job cost — about 2.5 percent in this case — a performance bond acts as a kind of credit check on the contractor, and guarantees completion of the project.