In the construction industry, every phase holds significant importance. From project conception and consultation to implementation, every process demands accuracy and reliability. Among the construction phases, the bidding process is one of the most critical steps for general contractors and subcontractors. Without the bidding process, contractors can miss various opportunities and ultimately lose the competition in a competitive construction landscape.
The success of any construction project depends on well-prepared bids that exhibit the company’s capabilities. Whether for public infrastructure or private construction, successful bidding requires a blend of precise estimating and compliance with technical and legal specifications.
Before mastering the art of bidding on construction projects, one must possess sufficient knowledge to navigate the bidding process. This blog will provide information regarding the bidding process, its types, and the pertinent strategies to win more bids and secure more projects.
Understanding the Construction Bidding Process
The construction process is a formal procedure that involves submitting a proposal to complete a project for clients such as contractors, government agencies, and corporations. This process helps the clients choose the most suitable contractor based on the criteria such as expertise, credibility, cost, and experience.
Key Stages of the Construction Building Process
Several stages are involved in the construction project bidding process. Here is the detail of the key stages.
- Bid Solicitation
- Bid Submission
- Bid Selection
- Contract Formation
- Project Delivery
Bid Solicitation
The initial stage of the bidding process is called the bid solicitation. During this phase, the property owners will send an Invitation for Bid (IFB), Request for Quote (RFQ), or Request to Tender (RTT) to a particular group of contractors.
The property owner will identify the project specifications and plans, requirements, contract type, delivery method, and any recommendations.
For the public project bids, the invitation is given to any contractors who are currently registered to work on government projects. On the other hand, for the private projects, the invitation is sent to the group of contractors in a non-competitive bidding process. There may even be certain instances where the owner posts the job on bid management platforms such as PlanHub or Procore.
The solicitation will generally ask contractors to showcase their qualifications, expertise, and past projects to help the owner choose the perfect candidate for the project.
Bid Submission
In this stage, the general contractor will solicit bids from subcontractors to perform certain parts of the project. During the bid submission process, contractors are required to submit documents regarding the project timeline, scope, requirements, takeoffs, and overall costs. All the general contractor and subcontractor information will be submitted within one bid. To produce an accurate estimate, contractors should factor in the following items, including labor, materials, equipment, overhead, and profit margin. After assessing the project requirements, a bid is generated.
It’s important to remember that bids should be as organized and easy to follow as possible. Like a resume, the bid sheet is the first impression that will hopefully lead you into the bid selection process.
Bid Selection
The bid selection process is quite simple. In this stage, the owner selects the bid with the most competitive price. For instance, for a public project, the owners only take into account the factor of cost factor. On the other hand, for private projects, owners also consider cost, expertise, credentials, and safety protocols to maintain the integrity of the project. If an owner solicits bids from multiple contractors, they implement a scoring system to determine the best candidate for the job.
Contract Formation
Once the owner has the desired bid, they start working with the contractor to generate a construction contract. Although the contract type has already been determined, contractors may have the opportunity to negotiate specific terms of the project and the final pricing structure.
Project Delivery
However, this stage is not officially a part of the construction bidding process, but it plays an important role. Some project delivery methods are developed to start the bidding process, while certain project delivery methods are designed to boost the project efficiency.
Construction manager at risk
In this method, the maximum price is written in the contract. The manager negotiates with the owner to ensure the project’s feasibility.
Design-build
The estimating firm deals with the construction and design. Bids are only received from the subcontractor to help with a specific part of the project.
Design-bid-build
Solicits bids from general contractors based on takeoffs from an outside firm.
After bidding, the project delivery method often shapes contract negotiations. For example, with the construction-manager-at-risk method, there is likely a guaranteed maximum price in the contract, which the construction manager will want to carefully negotiate to ensure project profitability.
Types of Construction Bids
There are different types of bids for construction projects. Here is the detail of these types
Open Tendering
Negotiated Tendering
Serial Tendering
Selective Tendering
Open Bids
Open bids are those kinds of bids where anyone is permitted to submit a bid on the project. Such type of bidding is mostly used for government projects and publicly funded works. It is generally used to generate competition for the job, ultimately bringing the price down for the owner.
Pros
It encourages competition and leads to lower pricing
Promotes fairness and transparency
Allow all types of contractors to participate
Cons
Time-consuming evaluation process
Attract unqualified contractors
May show a preference for the lowest bid
Close Bids
In this kind of bid, only selected and a few qualified contractors are invited to submit bids. It is common for residential projects and the private sector.
Pros
Allows the owners to choose the qualified bids
Better control over quality than quantity
Efficient evaluation process
Cons
Exclude less-known firms
Less competitive
Negotiation Tendering
In negotiated tendering, the property owner identifies a particular contractor to perform the job after negotiating a contract with them. The contract carries information regarding terms, scope, and pricing. This approach is generally used during specialized projects.
Pros
It encourages collaboration and contractor involvement
Better alignment on the budget
Streamlining the process effectively
Cons
Low transparency and competition
Requires trust between parties
Selective Tendering
Selective tendering is the middle ground between open and negotiated bids. This approach refers to the property owner inviting several contractors to submit bids on their project. This option is offered to balance competition and quickness in the bidding selection process.
Serial Tendering
When the property owner requests bids for a series of similar projects during a specified period, it is called serial tendering. For example, a housing owner may need hundreds of residential homes built over two years. This option helps make the selection process easier by removing the need for soliciting bids on similar projects.
How to Find Construction Projects to Bid On
| Sources | Description | Best For | Access Type |
| Online Bid Platform | Aggregate project databases with filter and research tools | Public, residential, commercial, and multi-region projects | Subscription-based |
| Government Agencies | Public-sector procurement | Federal, state, and municipal work | Registration fee |
| Industry Networking | Building collaborative relations for referrals and inside information | Long-term growth and work | Free or event-based |
| Builder Exchanges | Local associations sharing plans and bid invites | Small-to-medium contractors | Membership is required |
| General Contractor websites | Direct listings from large GCs and prequal opportunities | Subcontractors seeking repeat GC work | Free or registration |
| Social Media | Informal lead sharing, job posts, and community connections | Small projects, local subcontracting | Free |
| Newspaper | Classified ads, awarded bids, and new project announcements | Local public projects | Free |
Prequalification and Eligibility Requirements
In the bidding process, prequalification and eligibility criteria are also crucial, ensuring that your project remains in the hands of experts and professionals.
Prequalification
Prequalification is a screening stage where the contractors submit detailed information about their business and services, including bonding capacity, financial statements, insurance coverage, experience, qualifications, credentials, and expertise. The ultimate purpose of prequalification is to evaluate the financial and technical capabilities of the contractor and to understand its suitability for private and public projects. Many public-sector projects use a prequalification process to develop a list of eligible contractors for the projects.
Eligibility Criteria
Legal criteria
The contractors must possess legal registration for their businesses with valid licences. They are also required to have a clean legal record that is free of default judgments.
Expertise & Credentials
Expertise and industry knowledge also matter the most. Contractors with expertise and proven credentials have a better chance of winning the bids and tenders for the construction projects.
Financial stability
The bidders are required to provide an audited financial statement to show adequate capital and liquidity. In this regard, robust financial stability comes in handy. By using this financial stability, the contractors can manage the payroll, procure materials, and eradicate unexpected delays.
Compliance and Safety
Contractor’s safety record is also important as they must submit safety plans, incident rates, and regulatory approvals for a seamless bidding process. Moreover, compliance with building and labour codes, industry standards, and environmental regulations is also important.
Insurance criteria
Contractors must carry performance and insurance such as general liability, builders’ risk, and workers’ compensation, protecting the clients from financial loss and accidents.
Technical capability
The eligibility criteria are also associated with the availability of qualified staff, resources, and equipment. Some bids demand in-house technical capabilities and collaboration with subcontractors.
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How to Prepare a Winning Construction Bid
Planning to prepare a winning construction bid involves accuracy, different strategies, and professional presentation. Here are the following steps to prepare well-crafted bids for the construction projects.
Understanding Project Scope
The first step involves understanding the project scope. For this, the contractors must review the bid documents such as drawings, specifications, and contracts. If it is possible to visit the site to understand the condition of the site, challenges, and associated costs.
Conducting Detailed Quantity Takeoff
Once the scope of the project is completely understood, the next step involves conducting detailed quantity takeoffs by using software such as PlanSwift and Bluebeam.
Accurate Cost Estimations
A successful bid depends on accurate estimation of materials, labor, equipment, and contingencies. By employing the cutting-edge software, these direct and indirect costs can be calculated. Besides cost estimating, it is also important to include timeline and resource planning. A winning bid does not show competitive pricing but also exhibits the contractor’s ability to deliver on time and manage the labor force effectively.
Analyzing Competitor Landscape
It is also important to identify the strengths and weaknesses of the competitors. You need to decide the area of competition, including cost leadership, value-added services, and contract specialization.
Showing Contractors Credentials
Bids should highlight the contractor’s qualifications, including experience with construction projects, safety records, licenses, and client testimonials. This builds trust and differentiates the bid from others.
Realistic Project Schedule
Preparing a realistic timeline and including it in the bid can impress the client by showing preparedness and reliability. It includes completion dates, milestones, critical path activities, and timelines for delays.
Presentation
Presentation is also important. A well-organized and professional-looking bid package develops a positive impression. It should involve a clear breakdown of costs, a project schedule, a cover letter, and value-added services the contractor can offer to fulfill the requirements of clients.
Common Mistakes to Avoid When Bidding
To prepare successful bids, it is also important to avoid certain mistakes.
- Failing to submit all the documents and certificates and overlooking project specifications can hamper the successful completion of bids. Therefore, it is important to create a bid checklist and conduct a final review.
- Failure to understand accurate costs, including labor, material, and equipment, can also damage your project. It is essential to consider all direct and indirect costs.
- Taking on a project that exceeds your workforce capacity, technical expertise, and financial timeline is also problematic. Therefore, it is essential to assess your capabilities before bidding.
- Misinterpreting the project scope and requirements is also a main hindrance. So it is necessary to conduct pre-bid reviews and visits.
- Ignoring contract clauses and terms also reduces the chances of winning.
Tools and Software for Construction Bidding
In today’s construction industry, winning construction bids requires efficiency, accuracy, and speed. This can be possible through the advanced tools and software for construction bidding. Here is the detail of these tools and software.
Advanced Estimating Software
Estimating the cost of software helps contractors to generate accurate cost projections by evaluating the material quantities, equipment charges, and labor costs. Several software programs can assess the precise costs during the bidding process.
ProEst
It is a cloud-based software that allows for digital takeoffs, proposal generation, and cost databases.
PlanSwift
It is highly suitable for contractors who need precise cost estimations, measurements, and bid proposals.
Bluebean Revu
This software offers PDF-based takeoff and estimation. It is used for the design plans.
Buildertrend Estimating
This software combines cost estimating with client communication, offering a collaborative partnership.
Bid Management Platforms
Bid Management platforms are used to streamline the bid invitation, submission, and tracking process. By using these platforms, such as SmartBid, iSqFt, and BidClerk, the general contractors can send invites to the clients and subcontractors and manage the various responses. On the other hand, subcontractors can capitalize on these platforms to submit the bids directly on time.
Digital Takeoff Tools
Digital takeoff tools help measure materials and labor from project blueprints. Tools involve On-Screen Takeoff (OST) and Stack, allowing contractors to perform quantity takeoffs from PDF and CAD files without printing physical blueprints. These tools deliver automated measurements, area calculations, and easy markups that speed up the estimating process.
Project Management Integration Tools
The integration of bidding software with project management tools helps in a successful transition from preconstruction to project implementation. By using these tools like Procore and Autodesk Construction Code, the estimators can not only manage estimates but also deal with budgets, schedules, and bid tracking.
How Bidding Differs for Subcontractors vs. General Contractors
| Aspects | General Contractors | Subcontractors |
| Role in the project | Act as a primary contractor who is responsible for delivering the complete project to the owner. Responsible for submitting main bids to owners | They specialize in a specific trade and work under the aegis of general contractors. They submit individual bids to GCs. |
| Scope of Work | GCs bid on the entire project, and they take into account all trades, permits, and overheads. | They only bid on specific trade packages, excluding general project costs and cross-trade coordination. |
| Bidding Process | GCs respond to owner and public bid invitations. They collect bids from multiple subcontractors and suppliers and submit the final version to the owner. | They respond to invites from general contractors while competing with other subcontractors. |
| Estimating and Takeoff | GCs conduct detailed takeoffs for all the CSI divisions | They perform accurate takeoffs on the specific trade relevant to their scope. |
| Risk | They assume the major share of risk for delays, cost overruns, and quality control. | They are responsible for their work, labor, and safety. |
| Bid Timing | For GCs, the bid deadlines are usually firm and publicly known. | For subcontractors, these are not firm as they submit multiple bids on the same project. |
| Bid Bonds | They are required to submit the bid bonds and be prequalified by the owners. | They do not submit bonds unless they are requested by GCs. |
Strategies to Improve Your Bid Win Rate
There are certain strategies through which you can improve your bid win rate.
- Understand the Clients’ Needs
It is important to understand the requirements of clients; if you cannot understand, it will be difficult to solve their issues. Therefore, always conduct a pre-bid analysis and consultation meeting.
- Qualify Opportunities rigorously
It is not necessary to qualify every bid. Therefore, always use a bid matrix to understand the requirements of your bid.
- Build strong relationships before bidding
Networking in the construction industry opens a plethora of opportunities for GCs and subcontractors. So stay in touch with influencers, decision-makers, and owners.
- Craft compelling bid proposals
Unlike generic bids, custom bids secure more funding. Therefore, always customize your value proposition according to the client’s goals.
- Improve estimating accuracy
Always use accurate quantity takeoffs to deliver winning bid proposals. Besides direct costs, it is also important to factor in indirect costs.
Legal and Contractual Considerations
Types of Construction Contracts
Lump-sum
Lump-sum contracts are very common in the construction industry. In this type, contractors take on a greater deal of risk since cost overruns or changes in project scope can threaten the project’s financial viability, leading to higher costs for the owner.
Unit-Price Contract
Unit price contracts are popular on projects that are somewhat modular and possess variable quantities. Work is divided into units (i.e., time, phases, length of highway, etc) with a cost attached to each component. The downside to unit pricing is that the total project’s cost can be unpredictable.
Cost-Plus
In this owners bear the most risk. Under a cost-plus agreement, the client will reimburse the contractor for their material and labor expenses and then pay an additional amount for profit. This offers a reasonable amount of flexibility for both parties.
Time and Materials Contract
If a project’s scope is undefined, contractors will use this type of construction contract. The owner will reimburse the contractor for material costs and also pay an agreed-upon hourly or daily wage for labor. This type of contract simplifies negotiations.
Essential Contractual Clauses
- Scope of work
- Payment terms
- Change order provisions
- Timeline
- Warranties
- Dispute resolution mechanism
- Termination clauses
- Legal risks and liabilities
- Regulatory compliance
- Documentation
Are You Looking for an Expert Company for a seamless Bidding Process?
Are you looking for a professional company that can help you in the construction bidding process? Look no further than Cost Bidding. We are among the renowned companies in the town. We specialize in delivering accurate and reliable bidding services by using advanced tools. Our contractors have been equipped with years of expertise in the construction industry and possess in-depth knowledge of the bidding process. If you are looking to build a new house and are clueless about how to bid and make a proposal, contact us now for detailed and precise bidding.
Conclusion
No one denies the importance of an accurate and seamless bidding process for your new build. By utilizing our top-notch services, you can pitch winning bid proposals, avoid cost overruns, reduce hidden surprises, and improve financial planning. If you are looking for a professional and reputable estimating firm to help you in bidding, we are the right platform. To explore further services, visit our website.
