Construction projects are won by responding to solicitations or requests for proposals with a construction bid. It can often feel like a lot of work for possibly no return, but there’s a way to make a construction bid that doesn’t break the bank and sets your organization apart from the competition.
Managing the construction bidding process and expanding your customer base without breaking the bottom line is a delicate art. Whether a seasoned professional or new to the business, there’s always more to learn about submitting a construction bid!
What is a Construction Bid?
A construction bid is part of the process of submitting a proposal for a construction project. The construction bid shows potential customers that your organization is the right contractor for the job—meaning building and/or managing their building or structure.
Construction bidding describes the process between a construction company and their customer, but it can also describe how subcontractors get work from the contractor once a job has been taken.
A construction bid lives or dies on accuracy. Using blueprints, construction plans and material quantity takeoffs, the bidder must estimate a realistic cost (including a profit margin) to make the job viable.
Is a Construction Bid an Estimate?
While a bid is an estimate, they are not exactly the same thing. There is no hard and fast rule, but most of the time when a contractor is talking about an estimate, they are referring to the costs of materials and labor for their project. The construction bid is what is sent to the customer as the final, fixed price for the whole job.
Regardless of the difference, estimates need to be accurate in order not to lose money if the bid is accepted.
How to Win a Construction Bid
The construction bidding process is a competitive one. There can be dozens of businesses vying for one job. How do you differentiate yourself and win the work without losing money in the process?
Know the Competition
It helps to know who else is bidding on the job. Know the competitors and what they’re doing. It doesn’t hurt to network or join building trade groups to keep updated on what others in the construction industry are doing. When there is a proposal, it doesn’t hurt to be the first one to bid, so keep an eye on marketplaces where bids are posted.
Be Judicious With Your Bidding
Although it helps to be the first to bid, it’s not great to bid on every job out with a proposal. Spend time making the best proposal for the job while also ensuring it fits what your organization can do at a profit. Cultivate a niche and look for work that will result in repeat business.
Business is done better with strong relationships, so build relationships with people who are in a position to make decisions on awarding work to your company. Identify the individuals responsible for pulling the trigger on new work and develop trust with them.
Accentuate Your Strengths
When in the construction bidding process, don’t be bashful. Promote the qualities your business has that make it the right fit for the customer. Show off the team, and be sure to let them know you have the experience necessary to do the job right. Sometimes value is more important than the price tag.
Take Your Time
Take time when making the bid. Do the homework and explain how you can give them the best return on their investment. If you know anyone who has worked for the customer in the past, talk to them. Get an idea of what they want.
The Construction Bidding Process: Explained
When involved in the construction bidding process, have accurate estimates and a low bid. Many customers will only look at the bottom line and go with the lowest bidder. However, don’t bid yourself out of business.
Keeping that in mind, it’s best to follow these steps in the construction bidding process.
- Solicitation: Referred to as a request for proposal (RFP), this is when an owner puts out a request for bids for a project they want to execute. This means asking companies to bid with all the materials listed in the previous section.
- Subcontract: The general contractor will solicit bids from subcontractors for parts of the project, though this can often wait until the contractor has won the bid.
- Submission: The proposal will have a deadline. Once the contractor has detailed the information required by the customer, they submit the bid prior or on deadline.
- Selection: There’s a period of time when the customer goes through all the submitted bids. They will then choose the one which best fits their needs, which will be the winner of the bid.
- Contract: Because of the details of the bid, it can be used by both parties as a legally binding contract once agreed upon. However, it is more likely the customer and the winner of the bid will finalize the terms and conditions sketched out in the bid and create a legal contractual agreement they both sign.
- Project Begins: After all this, the project will begin, following the agreed-upon schedule and pricing of the bid.
What’s Included in a Construction Bid?
There is no one-size-fits-all style to a construction bid, however, certain elements are required when submitting one. When making a construction bid, be sure to include the following:
- Contact Information: This might seem obvious, but a bid will be discarded if there’s no contact information for the construction company that submits it or the potential customer it’s addressed to. The basic information being name, address, phone and/or email and a place for signatures, either to acknowledge receipt or agreement on the terms. Include the location of the construction project as well.
- Scope: Next comes an overview of the project, before getting into the details of pricing. Here, outline the scope of the project, the services provided, the schedule for the work, necessary materials and other features required to get the job done. This section should be detailed and include customer expectations, any subcontractors that will be hired, removal of trash, visitor rules, safety protocols and more.
- Existing Conditions: This is where to describe the job site as it currently is after conducting a preliminary site assessment. List the conditions of the site as it stands now, what action will be taken to respond to these conditions and who will be responsible for what. Also, note how conditions discovered after the start of the project will be dealt with and who will decide on the scope and cost of any remediation.
- Cost: Estimate the price for the entire project here. Break down the total cost in subsections, including labor and materials. Add a section on costs if the project goes over scope to manage the customer’s expectations.
- Terms of Payment: Detail the manner in which you’ll get paid for the job if selected by the customer. Most will not pay the total cost upfront, so decide what down payment you require and the frequency of installments for the balance. These payments can be tied to various milestones in the project, which should be identified.
- Relevant Documentation: Because of the size of most construction projects, it’s critical to the bid that any and all sub-projects are identified, detailed and an owner who is responsible for them determined. This will help the customer know who is responsible for what when the project begins. It also defines who has legal authority when it comes to signing documents.
- Schedule: The work schedule will be detailed here, from the start to the end and all milestones in-between. It’s a good idea to determine the extent to which you’re liable for any events that cause delays in the execution of the project. Those events could be inclement weather, delayed permits, etc. Block out the calendar, noting working days, vacation, supply lead time, zoning approval and other third-party processes that can impact the timeline.
How ProjectManager.com Helps With Construction Bids
ProjectManager.com is award-winning software used to organize plans that are productive and easy to share. Building your bid is akin to starting a project. You need to define a budget, manage resources and create a schedule, then be able to show it to your potential customer and wow them into accepting your bid.
Lay Out Your Project on Gantt Charts
When you’ve done the due diligence and are ready to create a schedule, our online Gantt chart is there to organize all your tasks. Add a start and end date to each task and they populate a visual timeline that shows you the entire project on one page.
Create Dependencies and Milestones
At this point, you can link all four types of task dependencies to avoid bottlenecks that can delay the execution phase of the project. Plus, set milestones as diamond icons on the timeline to mark when one phase ends and another begins. Milestones can also be used to mark any important dates you don’t want to slip through the cracks during the heat of the project.
Unlimited File Storage for Documentation
Construction projects are complicated and involve lots of documentation. Our cloud-based tool has unlimited file storage that acts as a central hub for your project paperwork, making it easy to find when you need it. No more messy desks or cluttered email folders to search through. You can share the project with your customer and, if they accept your bid, they’ll be notified by email and in-app alerts on the project’s progress.
ProjectManager.com is a cloud-based tool that gives you live data for better decisions. Keep your customers updated with a real-time dashboard that automatically calculates project variance, costs and more and displays them in shareable graphs and charts. Plan, monitor and report on your construction project, while getting instant status updates from the job site. Try our software today with this free 30-day trial.