With thousands of construction projects planned worldwide, there has been a steadily rising demand for construction project services over the last few years. Construction projects are diverse – they can go from simple kitchen renovations, custom horizontal homes to full-blown vertical projects and infrastructure. There are hundreds of potential clients looking for general contractors or subcontractors to take on their projects every day. As such, the clients need to be familiar with choosing the suitable delivery method and the process that comes along with it.
For construction project managers, the delivery method dictates the overall management style. It provides crucial details on the relationships, roles, and responsibilities of all parties involved, the work breakdown structures, and the payment methods. Likewise, the delivery method defines the project scope and the strategies for executing the project for contractors.
There are several delivery methods prevalent in the industry, each with its advantages and disadvantages:
- Design-Bid-Build (D-B-B)
- Design-Build (D-B)
- Construction Management at Risk (CMAR)
- Construction Project Multi-Prime (CMMP)
- Public-Private Partnership (PPP)
- Integrated Project Delivery (IPD)
The Design-Bid-Build (DBB) is the oldest and traditional delivery method in the construction industry. Yet, it is still most commonly used by clients to award construction projects, even up to the present time.
Today’s article will focus on the design-bid-build delivery method. We will also tackle the ins and outs of the construction bidding process – that every contractor should know to take the project successfully.
Defining the Design-Bid-Build (DBB) Delivery Method
As discussed earlier, this method is the most popular in the construction industry. Thus, it is essential for the client, the design team, and the construction team to be familiar with the design-bid-build method to clearly understand their roles and assignments.
This project delivery method aims to separate the design team from the construction team. As such, two contracts are being utilized. In this section, let us define the three phases.
The client has the freedom to choose and engage with a designer and form an owner-to-designer contract. The design team – usually comprises an architect or engineer reports and works directly under the clients. They should have a complete and comprehensive idea of what the client wants – visualize it and transform it into a workable set of blueprints. The plans, specifications, and final output should be clearly defined and evaluated. Once these are available, the client proceeds to the second step.
In the bid phase, the owner and the design team sends out invites for bids to multiple contractors, along with the complete set of plans. The proposals are thoroughly reviewed and evaluated, and these involve a long series of steps and complex negotiations. Once a contractor is selected, the client directly engages with him and forms an owner-to-contractor contract. Now, we can finally proceed with the final step of the method.
The third and final step of this delivery method is the build phase. The winning contractor commences with the construction based on the project scope, prices, and duration specified during the bid phase.
Advantages and Disadvantages of the Design-Bid-Build (DBB) Method
Of course, like every other method or option, there are some advantages and disadvantages to using the DBB Method. In this section, we listed down everything you need to know when choosing this delivery method.
- Generates competitiveness between contractors
- Clearly defined roles for each party
- No overlapping of design and construction timelines
- More control on the phases and processes
- Ensures lowest prices for required specifications
- Costing available after bidding may result to over-budget
- Any possible change orders with cost implications not considered
- Longer timelines for the three phases
- Prone to miscommunications
- Contractor unable to give valuable inputs to the design
Understanding the Ins and Outs of the Construction Bidding Process
General contractors and subcontractors need to undertake projects to sustain and grow your construction business. Having a clear understanding of how construction bidding works is a vital tool in helping you win more projects. Here is a list of the simplified steps in a construction bidding process.
Invitation and Solicitation of Bids
There are two ways to start the bidding process – the invitation and the solicitation of bids. When the project designs, blueprints, and other important documents are already available, the client can send or post invitations to bid for the project. Here, the client must lay out the full details of the project to ensure that the bids to be submitted will be accurate and complete.
Call for Subcontractor Work Package Bids
Once the general contractor decides to participate in the bidding, the initial step is to break the project into specific work packages per trade like mechanical, electrical, plumbing, and fire protection. Further, convert the work packages into an outline of the scope of works.
In turn, the general contractor will invite bidding for subcontractors with different trades. The contractor will select the winning bids per trade, include them into his bid document for submission to the owner, and enter into a contract depending on the bid outcome.
Submission of Contractor Bids
Once all pertinent documents are complete, the contractor must submit the bid on or before the deadline. The contractor submitting a proposal even seconds after the deadline is immediately subject to rejection and cancelation.
Evaluation and Selection of Contractor Bids
The evaluation and selection of bids are dependent on the client’s considerations. However, the total project cost is not the only factor to consider when evaluating the proposals. Choosing the lowest bid may result in substandard works and materials when not checked thoroughly. The contractor’s experience, understanding of the project, construction portfolio, management skills, and monitoring systems are some items to consider.
Formation of Contract for the Project
Once a contractor is selected from the pool of bidders, both parties must agree on a contract. Here, the project duration, final price, and terms and conditions will be negotiated and finalized.
Commencement of Project Construction
Lastly, the project construction will start. The contractor must deliver the project based on the agreed terms, final output, within budget and duration.
How Can You Make Your Construction Bids Work?
Since this is a highly competitive environment, there is no guarantee that you will win every project bidding. Winning the bidding process is not guaranteed, even if you are an experienced contractor with 20 years worth of projects in your portfolio or a new construction start-up company. Unfortunately, participating in bid projects often consume a lot of time, effort, and money – resulting in significant losses if you lose the bid. Your construction bids could be failing due to the following:
- Incomplete definitions of the project scope
- Inaccurate material and price estimates
- Your construction portfolio is underwhelming
- Missing documents and information
- Your proposal is vague and unclear.
This section has listed a few tips and tricks to help you get that project with your construction bids.
Evaluate the Projects You Can Bid On
Not every contractor should participate in every bidding process available. Every project requires different requirements, maybe a specific amount of cash flow or the number of workforces. There is nothing more embarrassing than backing out of participation due to not being able to afford the project.
With today’s technologies readily available, you can use construction management software to monitor your company’s capabilities.
Review and Understand the Bid Packages
Having a comprehensive understanding of the scope helps you to be able to plan out the management of the project. There is a lot of available software to accurately map out the workflow, set up the correct tasks and activities, manage your crew, and plan out construction timelines and milestones.
Make Sure to Submit Bid Documents
Ensure that you submit the correct and complete documents. One missing section or one small error can lead you to disqualification for the bid. Always recheck and review your work thoroughly and explicitly.
Show a Cohesive Teamwork With Your Colleagues
Clients often look for a contractor that maintains open communication and shows great teamwork with his partners and subordinates. It shows that the contractor is reliable and, at the same time, easy to work with in terms of collaborating with all the parties involved, which can impress the client. You can achieve this by using a cloud-based document system to ensure that everyone has the same access to every little detail of the project.
Keep your Track Record Spotless
One way to help boost your reputation in the construction industry is to keep your track record spotless. Often, a contractor’s reputation depends on how you meet the terms and conditions specified in the contract. Always aim to deliver the projects in high-quality output and promptly – exceeding the client’s expectations.
Show Simple and Uncomplicated Presentation
A contractor should be able to present his bid accurately and straightforwardly. Not all project owners have a technical background, so it is essential to deliver the critical facts efficiently and visually appealing – avoiding confusion and help them understand your strategies and vision for the project.
With hundreds of clients looking for contractors to undertake their projects, not every contractor should bid on every construction project available. You must gauge your capabilities if you can afford to compete in the project to minimize your possible time, effort, and money losses. Having a clear understanding of the bidding process and whipping up an accurate and comprehensive bid is crucial in winning your projects.