If you are a general contractor or subcontractor, it is a good idea to periodically take a close look at your bidding process to find opportunities for accuracy and efficiency. In this guide, you’ll learn what it takes to land lucrative opportunities that will soar your business
What is Construction Bidding?
Construction bidding entails connecting with a potential client to express your interest in a job and provide quotes. In short, it’s a proposal that outlines your construction plan, what you can offer, and at what price.
Typical Life Cycle of a Construction Bid
Below is a breakdown of the life cycle of a construction bid or the bidding process:
- Solicitation: The client requests bids for a construction project. The solicitation includes specifications and plans you’ll need to prepare a proposal that accurately reflects the costs you’ll incur to complete the project.
- Submission: Draft up your proposal and submit a bid to the client for review.
- Selection: The client reviews all qualified bids received to select the best option. Although it doesn’t always come down to cost, it often plays a significant role in the decision.
- Formation of Contract: You’ll connect with the client to finalize the contract if your bid is accepted.
Common Items Included in a Bid
When creating your proposal, it’s important to consider all the costs you’ll incur to complete the project.
- Engineering expenses
- Drafting costs
- Machinery costs
- Materials needed to complete the job
- Skilled labor costs
- Overhead costs
- Estimation software expenses (if applicable)
- Necessary insurance and bond premiums
- Storage costs
- Supervision costs
- Mobilization expenses for your company vehicles, fuel costs and insurance coverage
- Markup needed to turn a profit
Factors That Can Affect the Success of a Construction Bid
1. Previous Relationship
You’re more likely to win a construction contract if you have a prior relationship with the client and they like your work.
2. Projected Schedule
If you can demonstrate to the client that you have ample availability to focus on their job and aren’t preoccupied with several current projects, your odds of submitting a winning bid could be higher.
3. Reduced Profit
While not all submissions come down to a hard bin scenario, the cost is always a consideration. Depending on your familiarity with the GC, you may reduce margins to access and new book of business.
How to Bid On A Construction Job
- Review the solicitation and be sure to follow the instructions when submitting your proposal.
- Account for all applicable costs you’ll incur, including overhead, if you win the construction job. In short, you want to create accurate cost estimates to avoid money issues later on down the line.
- If you’re unsure about anything regarding the construction project, consult with the client right away for clarification.
- Keep all correspondence related to the construction project organized so it’s easily accessible at all times.
- Your proposal should be thorough and demonstrate to the prospective client that you’re the right subcontractor for the job.
- Ask past and current customers for testimonials and include them in your proposal. It’s also good to mention any credentials or awards you’ve earned.
- Create a spreadsheet to monitor your success rate when bidding on construction projects. Analyze winning proposals to determine how you should approach future solicitations.
How to Finance Materials After Winning Construction Jobs Bids
Submitting winning bids can make or break your construction business. However, it’s equally important to have the funds on hand to complete the job. Unfortunately, covering material costs before being paid for your work on new construction projects can cause cash flow issues in your business.
Frequently Asked Questions (FAQs)
Below are some frequently asked questions related to bidding on construction jobs.
It can be tempting to bid on as many construction projects as you can to ramp up profits. But not all are a good fit for your business. So here are some questions to ponder when you run across a lucrative opportunity that will help you decide if you should submit a proposal:
Are you qualified to work on the project? Even if a job seems too lucrative not to bid on, you’re better off passing up the opportunity than winning a bid that’ll cause you to take on more than you and your team can handle from a skill perspective.
Do you have the manpower to get the job done in a timely manner? Beyond having the experience to work on the project, it’s equally important that you have tradespeople on hand that are seasoned and able to handle the duties that come with the job.
Contact your state or local government agencies to learn more about construction opportunities that may be available to you. The federal government also releases RFPs (requests for proposals) for government projects on a regular basis, allowing you to possibly level up your construction business. Government construction jobs can also be found on construction bidding websites.
If you’re having trouble submitting winning bids, there are strategies you can employ to position your construction company for success moving forward. Start by examining your bidding process and identifying ways it can be done more effectively and efficiently. For example, you may need to invest in software to simplify the construction bidding process and create
highly accurate cost estimates to free up time for other pressing tasks. Plus, you’ll avoid the frustrations and financial challenges that come with pricing a project too low.
Also, be selective when choosing jobs to bid on. They should be within your area of expertise and add value to your company. It’s also helpful if you get ahead of the competition by jumping on opportunities as soon as you find them. That way, you’ll have a better chance of the owner, architect or construction manager seeing your bid first and before your competition has a chance to submit their proposal. But even if you’re not one of the first to submit, it’s vital to meet the deadline.
You can also try networking with general contractors even if you aren’t currently working with them at the moment. Building these valuable relationships can open the door to more referrals when construction jobs become available.
Most importantly, seek feedback that can help you improve your bids. Reach out to the party responsible for reviewing proposals to inquire about why yours wasn’t selected. They may share valuable information to help make your bids more attractive moving forward. Perhaps you failed to follow the instructions outlined in the RFP, submit the requested bid documents or references, highlight your background or break down the pricing structure. There’s also a chance that there are concerns about your safety record.
As mentioned above, it’s vital that you meet the submission deadline for your proposal to be considered. Otherwise, you risk the bid being automatically rejected by the owner, architect or other parties in charge of the project. That said, timely submissions that include all the required information are vital.
