Construction projects can be demanding and time-consuming, meaning you cannot just buy a project straight off the supermarket shelf. But customers are still looking for the best value for money, whether it’s choosing their new phone or building a new house.
This is where the construction bidding process comes in. Following preconstruction, a project may be released into the world for contractors to bid on. Put simply, construction bidding is the process in which contractors submit competitive proposals to win contracts for construction projects.
Prior to starting the construction bidding process, the first step is to define the project's scope, create a construction cost estimate, and outline specific requirements. Once this is finalized, it’s time to initiate the bid solicitation process.
When the client is ready to receive bids on a project, it's time for them to choose a tendering method. Below you will see 4 different types of tendering. Out of these, the most common are open, negotiated, and selective tendering.
This kind of tendering allows anyone to submit a bid on the project in an open and transparent manner and is mainly used on government projects. Open tendering is a method that generally drives the prices down by creating the most competition for a job. It's not uncommon that public projects are required to use open tendering when soliciting contractors.
Negotiated tendering means that the client finds a single contractor that can perform the work, and negotiates the contract with them. This procedure is commonly used in highly specialized projects and has in certain cases been considered anti-competitive due to the narrow selection of contractors with a similar degree of specialisation.
This form of tendering, sometimes referred to as restricted tendering, is the midpoint between open and negotiated tendering. It's a method where the client (property owner) invites a small group of predetermined contractors to bid on the project. Selective tendering can be faster and less wasteful compared to open tendering. The reason being that only suppliers known to be a good fit for the proposed contract are invited, which means that a pre-qualification process isn’t necessary.
As the name implies, this method is used in situations when the client is soliciting bids for a series of projects over time. It's commonly used for clients who have multiple projects that are similar, which can be undertaken by a single contractor.
Although it may be tempting as a contractor to offer the “best price possible”, a client who’s opted for the Design Bid Build route won’t necessarily be looking for the cheapest choice.
While cost is undoubtedly a significant factor, the lowest bid can often indicate a contractor's willingness to cut corners or compromise on quality to win the project.
Instead of just looking at price, it's crucial for clients to evaluate bids comprehensively, considering factors like the contractor's experience, qualifications, past performance, and understanding of the project's unique challenges.
After tailoring your bid to match the project, scoping out the competition, and highlighting your experience, there’s one thing that many general contractor bids are missing: clear pricing.
One of the biggest mistakes that can ruin your bid is trying to hide or disguise your pricing in the hopes that the client won’t think about it too much. Unfortunately, this tactic only makes them think about it more! Make sure to have clear and transparent pricing, giving clients increased confidence and understanding of your construction methods and planning.
It's not uncommon for construction projects to exceed the initially estimated bid amount. Whether it’s customers changing their minds without thinking of the cost, unavailable resources, or changing regulations, several factors can contribute to this:
To mitigate these issues, contracts often include provisions for change requests and contingencies to account for unforeseen expenses. Proper project management and communication can also help control costs, further increasing your chances of staying within the estimated bid amount.
Contractors often find themselves juggling multiple bid opportunities simultaneously. Managing multiple bids can be challenging, but it's essential for success in a competitive industry. If you want to get the most out of your opportunities, here are the best ways to succeed:
Though similar in some senses, construction bidding for government projects differs significantly from residential projects.
While both sectors employ open bidding for transparency, commercial projects often use invited or selective bidding for specialized work, whereas government projects do so less frequently.
Design-build bidding is common in both, but competitive sealed bidding is primarily in government projects, prioritizing the lowest responsible bid.
Meanwhile, negotiated bidding is occasional in commercial projects but rare in government projects due to transparency requirements.
Most importantly, construction bidding for government projects is more regulated to ensure fairness and transparency. These projects require bid bonds, performance bonds, and payment bonds and may prioritise Minority and Women-Owned Business Enterprise (MWBE) participation. They also enforce bid transparency requirements, like public bid openings, to ensure equitable competition.
Construction bidding software is significantly improving the construction bidding process by centralizing data, providing document control, automating repetitive tasks, enabling real-time collaboration, and facilitating bid analysis.
Some popular bid-specific software’s include:
These tools enhance efficiency, accuracy, and communication among contractors, subcontractors, and clients during the bidding process. But when it comes to executing a project once you’ve won a bid, you’ll want to boost your productivity as much as possible with Buildbite.
Buildbite offers a revolutionary approach to construction task management. Whether you need to gather information for optimal contract creation, ensure seamless project execution within contract specifications, or generate project estimates, Buildbite is your answer.
By simplifying documentation, enhancing communication, and facilitating transparent project management, Buildbite can transform how you manage construction projects. Download Buildbite today to experience how it can improve your contract creation and project planning capabilities.
The simple answer is no. It is preferred that you submit your RBI with your bid, however, it's not required. In some cases, you might be required to submit your RBI within a specific timeframe, if you are the apparent low bidder.
Bidding is part of the tender process, where bidders participate and compete to get the tender. Tender is the whole process where a client invites other parties to submit a proposal or bid.
Generally, you should include:
The total cost of executing the project, including:
Subcontractor expenses
General Contractor's costs
Overhead profit
Project's scope (scope of work)
Information about the company, date, name of the project and more
Direct costs: Expenses held by materials, labor, and equipment
Indirect costs: Expenses not associated with your construction activities, such as admin, quality control, permits, utilities, etc.
The compensation or hourly rate allocated to the team, projected expenses for each individual task, and potential overtime.
An estimation of the expenses for the subcontractors - including labor, materials, and equipment.
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