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4 Strategies for More Effective Participation in Construction Bidding

Bidding is a crucial step in a construction project, as it decides whether the contractor will get the job or not. Unfortunately, although many contractors follow a construction bidding guide, only a few win the project. You can click here to know more about the construction bidding by Bridgit.

According to a study, general contractors only win 1 out of 6 construction bids, meaning they only win once for every six bidding proposals. Such a low bidding rate significantly affects the construction company’s profit margin.

One reason behind this low bidding trend is a lack of strategy-making for bidding. This also results in wrong construction estimates. So, if you’re a contractor looking for the secret behind effective participation in construction bidding, this article will tell you about 4 strategies you must integrate into your bidding method.

What are construction bidding and estimating?

Smaller construction companies usually have the same person who completes both the bidding and estimating process. However, this approach can be one of the reasons clients reject a bidding proposal.

Bidding and estimating are two different tasks and require different expertise. Here’s how both differentiate:

Bidding

Construction bidding refers to managing the project and sending the construction proposal to the client. So it’s more towards calculating the external costs related to managing the construction project.

Bidding on a construction project requires the knowledge and capacity of the company. Therefore, when contractors bid on a project, their decisions must be strategically sound and return value to the business.

Estimating

Estimating a construction project is more focused on the costs. It includes the construction expenses, which include the following:

  • Subcontractors – They are the actual workers who put effort into different project domains, like plumbing, cementing, and deploying the electric system.
  • Procurement – The leasing or buying of equipment for construction
  • Wages – Salaries payable on an hourly basis to masons and laborers

The person who estimates a construction project must know the latest construction expenses to prepare a reasonable budget.

4 construction bidding strategies

Now let’s look at the following five strategies to participate more effectively in the construction bidding:

1. Know the process

The first step is the most important one, which requires you to gather knowledge of the construction bidding. It’s a research-based procedure because, without understanding the bidding process, you can’t prepare a bidding proposal and estimate the costs.

The construction bidding process has the following six phases:

Bid solicitation

The bid solicitation phase is specified by the client or the project owner who wants a contractor to bid on the project. Remember that a contractor can either be a company or an individual.

The client publishes a document known as RFP (Request for Proposal), which includes the following project specifications:

  • Plan – Some clients already have a construction plan they want contractors to stick to throughout the project.
  • Requirements – Project requirements such as workforce, equipment, and technology.
  • Contract type – Clients and contractors agree on the type of construction contract before making any transaction.
  • Delivery method – The client will specify how they need the milestones and the project to be delivered.
  • Requests – Additional requests that might occur during or after the construction.

You might also see two other documents from the client side—i.e., a Request for Tender (RFT) or Invitation for Bid (IFB). Both documents are similar to RFP and eligible for bid solicitation.

Subcontracting

Contractors spread the word regarding the construction project and contact several subcontractors to complete the project milestones. Since there are different construction activities in a project, like concreting, excavating, and carpentry, contractors look for each skill in the subcontractors.

Bid submission

Contractors prepare a bidding proposal and submit it against the client’s RFP before the deadline. The earlier you submit your proposal, the more chances you will have to win the job.

Bid selection

The bid selection process is different in the government and private sectors. For example, government authorities focus on the lowest bid to avoid corruption and favoritism. On the other hand, private companies look for the lowest bid and other factors, including:

  • Capacity – The client or the project owner must search for the contractor’s capacity, like financial strength and networks in the industry.
  • Experience – Clients usually go for experienced contractors because of their competency and skill set.
  • Technology – The contractor should be well-equipped with modern construction methodologies.
  • Quality – While working on each milestone, clients want the contractors to focus on quality.

So, private construction projects do look for the above factors while selecting the contractor’s bid.

Contract formation

The contract formation comes after the bid selection when the client holds a meeting with the contractor to finalize the agreement. The contractor can negotiate in this meeting as the client has already selected their proposal.

Project delivery

Contractors choose a project delivery method and start working on the construction project.

2. Bid on the right job

Contractors do lose more projects than win them, which makes them desperate. That leads them to bid on every construction job even if it’s out of their capacity. That’s why you must always bid on the right construction project. But how to find the right project for bidding?

You can search for construction projects on commercial websites like BidClerk and Find RFP instead of spending thousands of dollars on advertising. These websites provide the project requirements and budget range to solicit construction bids from contractors.

3. Evaluate the construction job

Don’t forget to evaluate the construction job once you find it. The evaluation phase is necessary for your company’s credibility because money is not everything. You must understand the technicalities of a construction project before bidding on it.

Here are the aspects you must consider for every construction job before bidding:

  • Client
  • Designer
  • Other bidders

You must prepare a checklist for the above entities to check the feasibility of the construction job. If you don’t fulfill every requirement of the bidding evaluation checklist, drop the project and make the bidding preparations for other jobs.

4. Prepare your bid

Start working on your bidding proposal as you have now understood the client’s requirements and checked the project’s feasibility. Remember to keep tallying your proposal with the RFP to better understand the bidding process.

Clients expect to see a professionally prepared bid for their construction project. So, draft the proposal, create a document, and highlight all the required details mentioned in the RFP.

Conclusion

The above five strategies for effective construction bidding are easy to implement and don’t require any additional investment. So, follow the strategies and win the jobs to boost your construction business.

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