Shadow bidding approach

with the City of Edmonton

The proper terminology for the shadow bidding approach is ‘Construction Consultant General Contractor’ (CCGC) Project Delivery Model . The City of Edmonton has been pursuing alternative forms of project delivery for its infrastructure projects with the intent of increasing the efficiency and effectiveness of infrastructure project delivery from planning through to construction completion . This delivery model effectively leverages the skills of both design consultants and construction contractors in a collaborative effort to achieve optimal value for delivering public infrastructure .

This is a relatively recent method of government acquisition for design . The key ingredient is for the contractor to work with the owner and design teams developing contract documents that work with materials and methods that are best suited to construct a successful project . The City of Edmonton, under the direction of Ryan Teplitsky, P . Eng ., Project Manager, Transportation Infrastructure Delivery, has been a major leader in improving this procedure in RFPs over the last three years .

This model is value driven, and the US Federal Highway Administration actively promotes CCGC “to identify and deploy innovation aimed at enhanced designs and reducing the time it takes to deliver highway projects, enhance safety and protect the environment .” While not heralded, this process is in use by transportation departments and public owners throughout North America .

Although similar to a Construction Management at Risk contract, the City selects the contractor (through an RFP) to provide only pre-construction services, not significant construction .

To date (2020), this service has proven to be far superior to typical construction management results . The bonus (carrot) for the contractors is they are provided an opportunity to bid for the project alongside a ‘shadow bidder’ that is a Quantity Surveyor . The ‘shadow bidder’ prepares the equivalent of a pre-bid estimate for the work specified . In addition, the ‘shadow bidder’ adjusts its estimate by collecting pricing from suppliers and subtrades during the bid period . If the contractor’s price is within a pre-set variance, compared to the shadow bidder’s single Lump Sum Tender Price, it has the opportunity to be awarded the construction contract .

In our early experience with the first CCGC project we worked on, it was difficult for independent cost consultants (ICC) to obtain actual subcontractor pricing . Subcontractors do not want to share their prices with someone who isn’t actually going to construct the work . In this case we had tremendous assistance from the trades .

For this $40 million project LCVM Consultant’s Inc . shadowed with the City of Edmonton, we had two shadow bidders (cost consultants) with Hanscomb Limited providing the ICC service as well . We collectively prepared a bidding procedure and with the encouragement of the City and support from the contractor LCVM set up procedures and an invitation form to explain our role to sub-trades and suppliers .

LCVM had multiple sub trade prices provided for over 80% of the unit rates requested, and Hanscomb advised their ratios were similar . All sub-trade bids had detailed cost breakdowns shown and, in this case, most were unit prices . The contract had over 600 unit prices .

A shadow bid takes place at the same time as a contractor’s bid in order to demonstrate a level playing field with confidential bidding for all involved . Individual trade prices are confidential to all the bidders, as is normal in the traditional bidding with contractors for Stipulated Sum bid projects .

This process ensures value for money and confirms that expenditures are fair and reasonable . In this case, it assured competitiveness for approval of release of taxpayer funds .

If the bid provided by the Contractor is within an acceptable range when compared with the independent third-party cost consultant estimate, the City can award the construction contract to the Contractor . This provides an exclusive opportunity to provide a firm construction price .