Winning bids in the construction industry do not come without comprehensive and accurate proposals. The more proposals or bids you win, your company and reputation will grow. Now, the question is, where does a construction company find such opportunities?
In this blog, we’ll dive into the nitty-gritty of the construction bidding process.
What is the Construction Bidding Process?
The construction bidding process involves multiple stages, steps, and checkpoints. Many stakeholders are involved, too, such as the project owner, general contractor, subcontractors, and more. Below is a quick overview of how the bidding process works:
- Bid Invitations: The first step in this process is triggered by a project owner. To start, the project owner posts or sends out bid invitations. These include common project information such as plans, specifications and a request for proposal (RFP).
- Bid Package: Once the general contractors see the RFP, they will request quotes from laborers and subcontractors for the work requested by the project owner. These quotes can be in the form of a bid package that includes project drawings, specifications, addendums, and more.
- Subcontractor Quotes: Subcontractors submit their quotes to the general contractors.
- General Contractor Estimate: General contractors consolidate these quotes to create estimates that they will adapt to finalize their project bids.
- Bid Submission: Once bids are finalized, general contractors submit their consolidated bids to the project owner, who adds them to the bid list for that specific project.
- Winning Bid Selection: The construction project owner reviews all the submitted bids and selects a winning bid with the corresponding general contractor.
What Details are Included in a Construction Bid?
A construction bid covers the total cost of the labor and materials needed to complete a project or a specific portion of it. For full transparency on prices and computation, a full breakdown of the material schedule in construction is also included. Depending on the contract’s coverage, the bid will typically be submitted as a lump sum amount. This includes general contractor costs, subcontractor costs, overhead, and profit.
As a rule of thumb, everyone involved must make money; otherwise, their businesses would fold. This makes bidding very tricky, as different contractors have different manpower costs and relationships with suppliers.
Common items included in a bid are supervision costs, man-hours, machinery costs, materials, engineering fees, subcontractors inclusions, insurance, and mark up. All these items can be negotiated with labor forces, suppliers, rental companies, etc.
However, you must also consider other items that can impact the success of a bid, such as:
- Previous relationship
- Alternate building materials
- Crew planning software
- Reduced schedule
- Reduced profit
How Does a Contractor Get on the Construction Bid List?
General contractors usually get recommendations on bid lists or through referrals to the project owner. Having a good reputation and doing good work will help you get on a bid list and network and know key decision-makers within the construction industry.
Once general contractors are included in the bid list, the client sends a bid invitation or RFP to the contractors on the construction list. Creating a thorough and competitive bid will help you stand out from your competitors.
How Do Construction Companies Find Potential Projects?
Finding construction jobs requires work; they don’t just fall from the sky. Companies need to bid on projects to get work done and grow.
Construction companies can use various avenues, including networking, bidding websites, word of mouth, and more, to find potential projects to bid on.
In the United States, here are the top construction bid sources:
Construction Bidding Websites
Bidding sites for construction professionals are some of the fastest ways to find construction jobs to bid on. These sites give you access to projects in specific areas you are looking for. You can create a free or paid account and filter by industry, location, project type, and more to find your ideal bidding opportunity.
We recommend saving your preferred ones, checking them regularly, and setting up notifications when new project opportunities are posted. Most sites even allow you to customize your notifications for projects that are a good fit for your construction company.
Online Construction Platforms
Since new project-sharing platforms can surface on the web anytime, it is vital to stay up-to-date to find more bid opportunities for your construction company. Look for new real developers and bidding websites, save them to your browser’s bookmark, and check them regularly for new opportunities.
Moreover, keep tabs on your competitors online. Visit their websites to check their project portfolios or case studies. Record their past projects and build a relationship with selected developers for future projects you may be suited for.
Cold Communication
Project owners and real estate developers may not know about you unless you put yourself out there and try to build a new connection. If you want to create new partners, don’t hesitate to email, call, or reach out over their LinkedIn profiles. Find out who the project decision-makers are and set an informal meeting to learn more about their company, upcoming projects, and needs.
Networking
Sitting behind your office desk is not the only way to find new construction jobs. Attending events and conferences can help grow your professional network and present opportunities that may never have opened up to you if you stayed in the four corners of your office.
Word of Mouth
Last but not least, another way to secure construction jobs is through word of mouth. This ties cold communication and networking; the relationships built from building new connections can open up construction bid opportunities for your company.
How to Increase Your Chances of Winning Bids?
In the construction industry, winning bids often leads to winning more bids. The phrase “the reward for good work is more work” is a promise the industry grants its people.
A great bid-hit ratio is a good starting point to build your company’s reputation and win even more bids. Generally, a bid-hit ratio is the win rate for the projects you’ve bid on. It measures how many bids you’ve submitted against the number of bids you’ve won.
The industry’s rule of thumb is that starting with accurate cost estimates and going for the lowest bid amongst your competition is not always the right approach. Having the lowest bid does not mean you’re bidding competitively and correctly. A winning bid focuses on proper construction crew scheduling, timeliness and quality of building materials and service delivery.
Here are more tips to increase your chances of winning a bid for an upcoming project.
Connect with Potential Clients
Meeting with the clients before submitting a bid is a great way to gather more information about their expectations and what they want on that specific project. Schedule a virtual or face-to-face meeting during the bidding process to make accurate bids.
Be the One to Bid First
Bidding first allows your construction company to make a statement, set the bar, and ultimately stand out. Dialing in your bidding process and strategy is essential to generating accurate, quick, and strong bids. Estimating software can improve the bid creation speed so you can be the first to submit bids.
Know Your Competition
Knowing who your competition is and the criteria they use on bids can be a learning opportunity and will allow you to adjust accordingly. You’ll be able to highlight better and present your competitive advantage. Describe in detail what qualities your company offers that make you the best fit for a specific project.
Consider including your areas of expertise and the tools you use. This can be done by adding the following references to your bid:
- Project portfolio
- Descriptive testimonials
- Construction crew scheduling software
- Certifications and awards
Understanding your competition also opens the door to places they don’t or won’t go. What are projects or areas they refuse to tap into or bid on? Are these locations you can go to? Are these areas in which you have expertise and could excel?
Create Accurate Construction Bids
Your profit is the difference between your estimated expenses and your final bid amount. Bidding accurately can benefit everyone involved in a project. If you’ve overestimated your bid, this significantly decreases your chances of winning the project. However, if your bids are underestimated, this increases your chances of going over the approved budget or causing financial friction between all parties.
Using a construction crew scheduling software that collects the same operational data used to create project estimates is one of the best strategies to increase bid accuracy. Pro Crew Schedule is a forerunner construction management software that keeps scheduling, productivity, and all project information for better forecasting and estimating on future bidding. Once the bid is won, the Pro Crew Schedule can be accessed by all parties involved for full visibility into project progress, timeline, and equipment location in real-time.
