Not All Bids Are Created Equal
The bidding process can be the beginning phase of creating a project roadmap and trusted relationship with the client, so there’s no greater feeling as a Land Agent than being awarded a project.
However, we must ensure we offer our services at a cost that does not undersell our value and the services we provide.
Far too often when clients are bidding out projects, the lowest bid is awarded the work. However, the client will then need the work redone because they didn’t receive the product they expected from the “lowest bid.”
Here, we outline the processes Dudley Land Company uses to ensure our bids include a fair price for our clients and ourselves while also providing a memorable product and service to the client.
It takes significant work to provide a fair and accurate bid. The below are items that constitute a good bid vs a bad bid. These are all part of the process we complete and if you are requesting a bid from a broker, it is important you ask if the bid took all of the information below into consideration.
Our job is to have a clear understanding of the type of work and deliverables the client needs so we can gather the correct information.
Some of the information we require to complete a bid include:
- Location - Where is the work being completed?
- Number of tracts/sections - How much work does the client need done?
- Timeline - Does the project have a due date?
- Historical information - Is this a “wildcat” area or a historically active basin? Have we completed work in this area previously?
- Scope of work - What type of work is being requested?
- Deliverables - What are the reporting requirements? What is the client expecting to be delivered as a finished product?
- Land Agent costs in the area
Number of Tracts
Identifying the amount of work being requested is one of the most important requirements of providing a client with an accurate bid. The amount of work requested isn't always as easy as pulling up a spreadsheet provided by a client to see that there are a certain number of parcels being requested.
Clients request bids in multiple ways (providing only maps or lease files) which require additional work to determine how many parcels or tracts are included in the request.
The client must provide a timeline in which they would like the work to be completed.
This information is necessary for our bid to provide an accurate number of Land Agents required to complete the project within the requested deadline.
The timeline also provides the necessary information to know how quickly a project will need to be staffed and the number of land agents required if awarded the project.
In which county or counties and districts is the client requesting work?
Although the location of the work seems like an obvious request, the amount of work required can vary greatly and require different timelines based on the complexity of title in one region versus another.
For example, a bid for a project in central Illinois would be much different than a project in southern Illinois where there has been previous oil and gas activity. In some regions, certain districts within a specific county can alter the time required for certain projects. This is a notable example of “not all bids are created equal.”
Each courthouse is also different and has different online and remote capabilities. The necessary research must be done to evaluate if boots on the ground will be required and what information, if any, is available online.
Online capabilities can alter the cost of a project tremendously, however, if all research cannot be done remotely, a diligent search for local agents available to complete the work needs to be done.
In some cases, like a few Midwest rural areas, there is simply not a pool of Land Agents to choose from, meaning travel and lodging costs must be factored into the bid. Hotel locations must also be researched to account for projected mileage.
These costs can add up quickly for a project.
An important part of the bidding process is using the tools at our disposal to give the most accurate information.
Dudley relies on 20 years of historical data kept within its proprietary land management systems to track all previous projects as well as utilize our other Prospect Managers to gather information if anyone has completed any projects in the requested county or any nearby counties.
This information is very helpful to obtain projected metrics for how long the project may take.
If we cannot find any projects in the area that have been completed previously, diligent online research is required to confirm if any exploratory work has been done in the past (based on the scope of the client’s requests).
Scope of Work
Finally, it is important to have a good grasp of the scope of work the client is requesting.
The scope of a project (full abstracts vs. limited title; mineral title vs. surface title) and the tasks of a project all require different amounts of time to complete and can significantly alter the cost of a project.
For instance, clients will often ask us to complete bids and cost proposals on full abstracts for all parcels and a separate bid for a limited 30/40-year search so they can determine if the costs outweigh the risk of not having full title completed.
For instance, in the county shown above (McLean County, IL), a full abstract requires three to four days to complete. However, a good abstractor can complete four to eight 30-year limited searches per day.
Also, the broker needs to confirm if the project will require mapping, lease acquisition, curative, or any additional types of reporting.
We consider all this information when completing a bid.
Then, upon consideration of the requests, we discuss all of the above information with the client so we have a true understanding of the work and deliverables the client is expecting.
Essentially, we need to determine what the client needs with our result to help determine whether they need to complete full abstracts or if more limited searches would get the job done.
These initial conversations show the client we value their time and money and that we bring significant value to a potential partnership.
Land Agent Costs
The cost of land agents is an exceptionally good example of how not all bids are created equal. Land Agent costs must be considered when finalizing a bid, however land agents’ rates can vary considerably based on experience, the type of work being requested and the geographic location of the work.
Building The Bid
Upon gathering the information detailed above, it is time to start building the bid.
We use a simple Excel spreadsheet that outlines the information and breaks down the proposed costs.
We prefer to give a range to account for a project going faster or slower than we initially anticipated.
The Bidding Process At Work
The unfortunate truth of bidding is that you don’t win them all, but when we do win, it feels like a great accomplishment.
The true value of giving accurate information in our bidding process is being rewarded with additional work when the original bid is completed.
Clients appreciate when they can count on the information we provide. They rely on that information for future planning.
Honest communication and being able to rely on the accurate information provided is a great steppingstone to building a long-term partnership.
An accurate initial bid can open the doors of communication and build the trust needed to be partnered with the client for all future projects.
Trust Dudley Bids
The above are all things that can constitute a good bid vs a bad bid. It’s important when sending out bids to ask, “is your broker doing this?”
All bids are not created equally – and it is important to know you are not comparing apples to oranges. If you want to project your costs accurately, then going with the lowest bidder may not be the best strategy.
The areas highlighted above should be considered for every bid. We do all these things, and it is important you ask for them. Identifying these items within a bid proposal can help know the difference between a good bid from a bad bid.