How to bid on construction projects

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A critical skill you require if you are independently employed is bidding. Here is a simple guide on how to bid on construction projects and actually win the bid.

Broad knowledge of market conditions is highly effective in bidding. You need to have a vast knowledge of market conditions, materials and their price lists as well as competitor rates.

Your bids need to be reasonable if you want to land jobs. If they are too low however, you will be making losses on every job you bid on or at the very least you will not make any cash out of it.

How to bid on construction projects

Winning and losing while bidding on an opportunity is purely based on how you submit the bid on the construction.

It is really tricky in this bidding business, particularly if you are a new contractor in the business and aren’t familiar with the construction market.

If you are new in the business, you need to begin by bidding on smaller projects that you feel confident that you will land successfully with quality work.

Also Read: 10 tips to get a government tender

1. How to bid on construction projects: Prepare the Bid

A customised business plan is a way to go while creating a bid. You need to highlight how the company is able to fulfil the bid request.

As you make the customised plan, you need to consider the labour needed to complete the bid, the customised plan as well as consider the time frame required.

A bid is not always given to the lowest price bidder but is given based on a company’s best able to deliver on the given requirements.

Go through the costs, make sure they are accurate and justify the costs, based on project needs.

Be clear as to whether you are providing discount or premium services and why that is beneficial for the project.

2. Submit the Bid

Most government agencies seeking an RFP or a Request for Quote (RFQ) utilize online portals to submit bids.

Make sure you learn how the portals work and that the submission goes to the right place with the correct documentation attached in one combined PDF file.

The local Small Business Administration (SBA) is a good resource to help navigate government systems.

If the bid is for an organization in the private sector, find out the best method of bid delivery.

While digital formats are widely accepted because they are easily distributed to stakeholders, some organizations might want printed bids. Follow their rules to establish your professionalism.

3. How to bid on construction projects: Itemize material needs

Make a careful itemization of the materials that will be required for a job.

Price the materials and add on 10 to 15 percent for waste and as a service charge for acquiring them. Some clients will obtain the materials themselves.

This will cut into your profit margin, but shouldn’t eliminate a job from consideration.

Also Read: Performance bonds: What you need to know about them

4. Conduct your initial assessment

When a potential client approaches you for a bid, assess the location and conditions of the job that you will potentially be working on.

You need to say no to jobs if they will require too much commuting, will have difficult access or other troublesome situations such as extreme weather. Difficult materials, as well as hazardous situations, is a no, no?

Financially successful contractors need to manage to distinguish profitable jobs from money pits that will drain their resources before you begin projects.

5. Using construction bid estimation software

Construction bid software is commonly used by general contractors for cost estimation and budgeting when developing a bid for a new project.

This software was introduced over two decades ago and has had a major impact on the industry by making once difficult aspects of the process much faster and more efficient.

But perhaps the biggest benefit of estimating software is the way it automates job costing.

The software typically comes with a database of construction costs that are updated monthly by subscription.

Simply having material and labour costs at hand makes the estimator’s job easier. Estimators can also use the software to define a job’s materials and labour hours.

The software takes this definition and calculates the job cost from a database of labour and material costs.

6. How to bid on construction projects: Check on requirements

You need to have a bid sheet to bid on construction projects.

In the tendering process, all constructive companies need to to provide this document.

After getting the tender you might have to submit either the design out for other bids or use it to generate the construction bid proposal that is used now to request for the construction project itself.

Although many clients use a construction company in the two whole processes, some might insist on architects to do the first step.

7. Finance your contract

When biding for construction jobs you need to have a variety of financing options.

When you get the tender you will have to either deliver or get charged with either bid bonds or performance bonds.

A performance bond is a guarantee for the satisfactory completion of a project. This will require having a collateral property or investment to back up the requirements of the surety agency.

A performance bond is usually issued by a bank or an insurance company, both of which act as a “surety.”

While a bid bond is a debt secured by a bidder for a construction job, or similar type of bid-based selection process, to provide a guarantee to the project owner that the bidder will take on the job if selected.

The existence of a bid bond provides the owner with the assurance that the bidder has the financial means to accept the job for the price quoted in the bid.

This can be very harmful to your business as it makes you work on the deficit at a time that you do not have enough financial resources.

8. Determine the costs of a job

Multiply your hourly rate by the number of hours you estimate the job will take you.

Add on the cost of materials. Add a percentage to this total to cover overhead such as insurance, licensing, transportation and shop costs.

Take a look at the final number from the customer’s point of view and ask yourself if it makes sense. If your instinct tells you to adjust it up or down, do it.

Also Read: Facts about bid bonds and how they work

9. Getting the contract award

Be sure to find out when the contract will be awarded. While these timelines are subject to change, you’ll want to set your calendars and provide yourself enough time to make the necessary preparations to fulfil the contract.

Awarding agencies aren’t going to expect a project to start immediately after the award but you will need to start the dialogue on set start dates.

Be professional and deliver on time to increase your chances for future bidding awards.

Tip

You need to think about the construction bids you submit as well as be smart about the whole procedure. It is important to get a name for yourself in the industry but you do not want to end up losing money out of it. What this simply means is that you need to make smart and wise decisions that will work for your business plan and construction company.

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