Most contractors are hired by firms and companies through a bidding process. Construction bidding involves the submission of a proposal by the contractor to undertake or manage the construction of a particular project.
The bidding process is important to get right, since it is the means through which contractors secure the majority of their work. Unfortunately, the mechanics of this process are usually learned on the job, with no proper training for how to develop a successful construction bid. This can result in costly mistakes and failed bids that adversely impact a business.
In this article, we will outline how construction bidding works so you have a better understanding of this complex and highly competitive process, allowing you to improve your approach and ultimately your chances of successfully landing winning projects. A construction bidding process will usually involve the following steps:
Bid Solicitation
This is where the client will solicit bids from various contractors by sending out a request for proposal (RFP), request to tender (RTT), or an invitation for bid (IFB). As part of this process, the project owner will send out documents detailing the scope of the work, outlining the project requirements and specifications. The American Institute of Architects (AIA) has created a standard format for the RFP process.
This phase of the bidding process can also involve a request for qualifications (RFQ). This type of qualification is commonly used by the government sector and requires applicants to answer specific questions to ascertain their suitability for the project.
RFQs can filter out bidders, eliminating those who do not qualify from going further in the process. They are an essential part of the bidding process and the first hurdle which any contractor needs to overcome before being accepted as a contender.
Make sure to thoroughly review the bid package, taking the time to properly review the documentation included in the bid package.
Bid Submission
Contractors must submit their completed bids within a specified period. The bid submission should include information such as work on previous projects, overheads, and a cost estimate for labor and building materials.
Attend pre-bid meetings and seek clarification on any aspects of the construction project you are unclear on. While the winning bid will be influenced by price, make sure to give an accurate estimation of the costs required for completion while factoring in a fair profit for your business.
Bid Selection
In government projects, the lowest bidder wins. However, on private projects, the client can award the bid based on other factors such as experience or the time it will take to complete the project.
Contract Formation
The winning bid will have been awarded by this stage and the deal terms and legalities for the project will now be finalized. Before the contract is signed, you will have the opportunity to negotiate any final matters such as pricing, timelines, and other terms stated within the contract.
Follow the guidance in this article and you will stand yourself in good stead. Remember, a winning bid should be more than just an application. It is an opportunity to showcase your skills and the value you can bring to the project.
