Understanding Risks of Low Bids in Projects

LOW BID After more than three decades in this business, we’ve learned that the lowest bid often comes with the highest risk. Here’s what we’ve seen happen when price becomes the only priority: 1. Quality takes a hit. Low bids usually mean shortcuts—cheaper materials, rushed labor, or inexperienced crews. That leads to weak results, safety issues, and expensive rework later on. 2. The extras start piling up. That “low” number often leaves out key scope items. Change orders, added services, and delays show up fast—and erase any savings. 3. The schedule slips. Some low bidders simply don’t have the manpower or equipment to stay on track. Missed deadlines cause real disruptions to the rest of the project. 4. Vendor reliability becomes a problem. We’ve seen low bids from subs or suppliers who aren’t financially stable or don’t follow through. That puts your project at risk for compliance failures or even abandoned work. 5. You end up buying it twice. Many of the lowest bids are built for the short term—just enough to get through inspection. But that kind of work doesn’t last, and you’re back out to bid sooner than you should be. 6. It costs more in the long run. Focusing only on price can limit your flexibility, strain your vendor relationships, and drive up total lifecycle costs. We understand budgets matter. But experienced, qualified contractors build value—not just low numbers. Choose wisely, or you may pay for it twice.

The cheapest rate is never the best deal. A $75 freight “win” just cost a broker over $12K. If you skip vetting for reliability, you’re gambling. Here’s why low bids can destroy trust — and profit. I watched a shipper high-five their team over saving $75 on a cross-country load last month. This morning, that same load is stuck 800 miles from delivery, the receiver is furious, and the "savings" evaporated ten times over. Here’s the raw truth about chasing the absolute bottom dollar in freight. It often starts with pressure. Quarterly targets. Budget cuts. Procurement demanding lower bids. And a belief that transportation is purely a commodity – lowest price wins. So they squeeze. Push brokers for unsustainable rates. Award lanes based on pennies, not performance. Ignore warning signs from carriers they don't know. And they celebrate the initial "win" on the spreadsheet. Then reality hits: The bargain carrier's truck breaks down (no backup plan). The driver goes silent – no tracking updates for 12 hours. The delivery appointment is missed, incurring detention and rescheduling fees. The real cheap carrier turns out to be double-brokering the load unsafely. The customer relationship gets damaged because their freight is late. They didn't save money. They just deferred the real cost. They chased price – not value or reliability. Too many in logistics confuse "low rate" with "low cost." They think a cheaper quote automatically means a better deal. Here’s the hard truth for shippers AND brokers: If reliability isn't factored into the rate, the total cost will always be higher eventually. Understand the carrier's reputation. Prioritize communication and visibility. Build partnerships, not just transactions. In logistics, the cheapest price is rarely the cheapest solution. Have you seen a "cheap rate" blow up spectacularly?

Does Using the Lowest Bid Really Save You Money? In the world of HVAC projects, it’s tempting to gravitate towards the lowest bid, thinking it will save your budget. But does it truly save you money in the long run? The answer is more complex than it seems. The Real Cost of Low Bids 1. Quality of Work: Often, the lowest bid comes from firms cutting corners to reduce costs. This can result in subpar workmanship, leading to frequent maintenance issues and, ultimately, higher expenses over time. 2. Material Quality: Cheaper bids might involve using inferior materials. While the upfront cost is lower, the durability and efficiency of these materials are often compromised, leading to premature replacements and increased energy costs. 3. Hidden Costs: Initial savings can be quickly offset by hidden costs that emerge due to scope changes, additional labor, and unforeseen complications. A seemingly low bid can escalate into a costly endeavor. 4. Project Delays: Companies offering the lowest bid may be working on tight margins, impacting their ability to adhere to timelines. Delays in project completion can lead to operational disruptions and lost opportunities.