Should I Bid This HDD Project? Things to Consider Before Bidding on HDD Work
There are many factors a contractor must consider when evaluating whether to bid on a horizontal directional drilling (HDD) project.
Besides considering their current backlog, potential opportunity costs and crucial business relationships the contractor must estimate the profit they would generate if they were to execute the advertised work. With exception of change orders and other claims, the contractor must bid the work higher than it costs them to complete the work to make a profit.
Expenses can be reduced without sacrificing quality if a contractor is set up well for the specific HDD project. Mobilization requirements, union requirements, product pipe diameter, acceptable product pipe materials, quantity of work, bore length(s) and crew experience with similar installations are some factors that can influence a contractor’s ability to minimize expenses. The contractor must also understand the project’s risk profile. Identifying the risks, the probability of their occurrence, the consequence of the risks should they occur, the mitigation measures, and the cost of mitigation are the pieces of information required to evaluate project risk (Staheli, Hutchinson, and Moore 2017).
Constructability risks include risk factors that influence one’s ability to effectively complete the required work without damaging necessary equipment or materials, damaging existing infrastructure, or negatively impacting third parties. First steps toward evaluating constructability risk include evaluating the bore path geometry with respect to the anticipated subsurface conditions. Strater and Dorwart (2015) identify common deficiencies or errors in alignment selection, such as insufficient depth of cover or unrealistic bending radii. A contractor must be able to effectively identify these inadequacies when deciding whether to bid on a project.
To do so requires a sound understanding of the subsurface conditions and anticipated ground behavior, which can be gained by calling upon prior experience in similar ground and reviewing the subsurface data and reports.
Findings from subsurface investigations are often provided in a geotechnical data report (GDR). A well-done subsurface investigation will include subsurface explorations appropriately distributed along the alignment at reasonable offsets. Further, laboratory testing on ground samples will be tailored such that proper equipment and tooling can be selected and drilling progress accurately estimated.
A geotechnical baseline report (GBR) may be produced, although not as common as it is for tunneling installations. The primary purpose of a GBR is to establish a single source document where contractual statements describe the geotechnical conditions anticipated to be encountered during underground construction (Essex 2007).
Although not every HDD project needs a GBR, the GBR can be effective at informing the contractor what to expect underground, at which point the ground conditions constitute a differing site condition, and what they need to know about anticipated ground conditions and challenges of the work (Brierley and Soule 2014). With a thorough understanding of the ground conditions and anticipated behavior, the contractor can better evaluate constructability risks present along the alignment.
Ensuring a sufficient workspace for the HDD operation is also important. The contractor must understand the implications of the workspace constraints and ensure they have a plan that works well given those constraints. Figure 1 og pg. 43 highlights an efficient use of space within a tight construction easement.
Besides constructability risks, the contractor must understand their responsibilities as outlined in the contract documents and the contractual risks that accompany them. Key locations to identify a contractor’s contractual risk exposure include baseline statements (often within a GBR) and requirements within technical specifications.
The contractor is responsible for including costs in their bid to perform the work in conditions equal to or less adverse than the baseline statements. The owner is responsible for providing compensation for encountered conditions more adverse than the baselines, that also negatively impact the contractor’s expenses.
Technical specifications that are not tailored to the project at hand, include contradictions, do not use clear language, or place the responsibility of the design and the bulk of the risk on the contractor in a design, bid, build scenario are not characteristic of well-written specifications (Wallin 2021). Contractors should proceed with caution when pursuing projects with specifications such as these or with overly conservative baseline statements.
Pricing the Risks
Once project risks are identified the contractor must consider how to price those risks and ultimately decide whether bidding the project aligns with their business goals. For each risk identified as the contractor’s responsibility, it is recommended to estimate a probability of that risk occurring and the consequence that risk coming to fruition would create.
Estimating the probability is founded on a thorough understanding of the project conditions and the contractor’s ability to effectively execute the work plan. Quantifying the cost associated with fixing a realized risk can be especially challenging. Some factors to consider when quantifying cost of risk consequence may include: the propensity of the owner or engineer to cooperate and find a fair and equitable path forward in lieu of litigation should an adverse situation arise; knowledge of the owner or engineer in the HDD method, and/or their receptivity to learning; damage to equipment, materials, or surrounding infrastructure; availability of remedial equipment, supplies, or materials; impact to schedule; ability to save the existing installation without a redesign; ability to regroup and execute a plan B should the original design need to be abandoned; the availability of above or below ground space to execute the original design or plan B; fines; impact to available credit lines; and financial impacts due to injury, death, or increased insurance rates. If a project has a risk profile outside a contractor’s willingness to manage it, the contractor may wish to refrain from bidding the project.
The contractor must consider their ability to make a profit when deciding whether to bid on an HDD project. Synergy between the contractor’s strengths and project requirements, as well as an understanding of the project risk profile, are paramount to success. Numerous publications are available through organizations such as NASTT, NUCA, ASCE, ASTM, PRCI, and industry magazines to aid in evaluating HDD risks. Further, authors of these publications are often willing to provide consultation.
Brierley, G. and Soule, N. (2014). “To GBR Or Not To GBR; Is That The Question?”, Geo-Congress 2014 Technical Papers, American Society of Civil Engineers.
Essex, R.J. (2007). “Geotechnical Baseline Reports for Construction – Suggested Guidelines”, The Technical Committee on Geotechnical Reports of the Underground Technology Research Council, The Construction Institute of the American Society of Civil Engineers, American Institute of Mining, Metallurgical, and Petroleum Engineers.
Staheli, K., Hutchinson, M., and Moore, B. (2017). “Risk Mitigation in Trenchless Design and Manifestation in Construction”, North American Society for Trenchless Technology, No-Dig 2017 Conference Proceedings.
Strater, N.H. and Dorwart, B.C. (2015). “WARNING! Do Not Bid On This Project”, North American Society for Trenchless Technology, No-Dig 2015 Conference Proceedings.
Wallin, K. (2021). “Watch Your Language! How Poorly Written Specifications Can Undermine New Installation Projects”, North American Society for Trenchless Technology, No-Dig 2021 Conference Proceedings.
Matt Olson, P.E., is a project manager at Lithos Engineering.