1. Why is there such a wide range of bids for the foundation installations ($4 m

Question

1. Why is there such a wide range of bids for the foundation installations ($4 million between the lowest and second lowest bids; $30 million between the lowest and highest bids)?

2. How does the selection of a line and foundation installation contractor compare with the selection of a pole manufacturer as far as difficulty of choice is concerned?

3. What are the advantages and disadvantages of splitting the erection and foundation contracts?

Case 6-2 Moren Corporation (B) Moren Corporation was building three additional generat- suitable contractor to do the foundation work, erect the ing stations to serve the rapidly expanding energy market. poles, and string the lines. To link these stations with the total area grid, a new method of carrying the power lines using ornamental tubular poles currently with the search for a fabricator, because Moren instead of towers had been adopted. Moren lacked experi- wanted to get started on the line by the fall. Gordon Yarrow. ence with poles and decided to subcontract the design engi- supervisor of materials purchasing, was responsible to the neering, fabrication, and erection of the new line. [For com- vice president of supply, John Carter, for this contract pany background and line projection information and the selection of engineering consultants see Moren (A) case.] CONSTRUCTION SELECTION Purchasing and engineering had been pursuing this con- Having selected its consultants for its first 345 kV transmission line and placed its order for the fabrication of the poles and hardware, Moren was ready to locate a One company, T.D. Rapier, had done almost transmission work for over the last five y r, had done almost all Moren's five years, but, with

Explanation / Answer

Answer (1) – The bids were proposed by the individual contractors and they have worked the bids based on their incurring cost and percentage of margin they are expecting from this business. So the high difference in the bid from 4 millions to 30 millions, is basically may be due to following differences in their input cost and impact on their expecting margin as below

1.    High cost of resources

2.    High operating cost for the bidder

3.    Use of expensive construction equipments and advance technology

4.    High margin rate

5.    Expensive management

6.    High cost of raw materials or use of high quality material.

Answer (2) –

·       The selection of line and foundation installation contractor compare with the selection of a pole manufacturer – The pole manufacturers is basically skilled in the pole design and manufacturing where he is skilled in making good basement and erectness of the pole, so that the pole maintains the parallelism and weight balance though out the length of the pole, so that it stands erect and do not fall down. So the pole manufacturer got some skill which can be utilized by the line and foundation contractor as, the foundation contractor also needs to develop the structure of the foundation which calls for the proper beam and column which are similar to pole designs.

·       Basically both are having the expertise in the similar construction field and are co-related with each other’s work requirements.

·       There is no major difference for a person of the similar fields, as they can perform this work, with limited guidance or information sharing with expert hiring.

·       Expert hiring process can help them to eliminate the difference between the two fields.

Answer (3)

Advantage – Following are key advantage in splitting the erection and foundation contracts.

Disadvantage – Following are key advantage in splitting the erection and foundation contracts.

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