5 Things You Should Know About The Construction Bidding Process

Planning a big project? Congrats!

As you deepen your understanding of the construction bidding process, you’ll increase your likelihood of hiring the right contractor for your job.

For starters, there are two standard proposal methods: the design-build proposal and the construction manager at-risk proposal.

If you’re looking for a proposal that combines the architect and contractor as a unified team, you’ll want to request a design-build proposal. This will incorporate the price to build the project as well as the cost of architectural design. The design-build proposal can be considered the all-inclusive estimate for completing your project. In many cases, this method can be more efficient and reduce the overall cost of your project.

Option number two is the construction manager at-risk method. This proposal allows the contractor and architect to operate separately. The contractor, in this case, will serve as a liaison between the client and the architect.

Traditional bidding processes required heaps of paperwork. Modernized methods have led to the ability to streamline the construction bidding process with the click of a mouse. Through the use of online databases, clients can view, download, and print construction drawings in order to review a bid proposal.

Construction bidding software is another significant advance in the bidding process, used by general contractors for cost estimation and budgeting when developing a bid for a new project. Some companies have developed their own database for calculating accurate job expenses that reflect local costs and price fluctuations in the market. One major benefit of estimating software is that it allows business owners to compare bids with ease.

To fully understand what the construction bidding process entails, continue reading to learn our top 5 tips!

 

#1 A Bid is not an Estimate

The terms bid and estimate are often used by customers interchangeably. However, the two terms have different meanings when it comes to the construction bidding process.

Each term corresponds to different parts of the process. Estimates are all about costs. As a customer, you want to know what a project will cost. To provide a cost estimate, contractors will need to determine what expenses will be incurred during the project, things like materials and labor. The bottom line, a price estimate yields cost information to customers, but neither side is required to go ahead with the project.

Cost estimates are expected to be reasonably accurate. A preliminary assessment allows contractors to assess the basic feasibility or interest of a project. This is when project size and potential risk can be estimated. Once the cost estimate is considered and accepted by a contractor, a square foot estimate is the next level of project assessment. This offers an estimate of per-unit costs per square foot.

An assembly estimate can be used to refine figures and calculations by considering each element of a construction project. Think of the square foot estimate as a general ‘one-size-fits-all’ approach, whereas the assembly estimate considers project components such as flooring, windows, sanitation, and roofing.

A final estimate provides the most detailed and accurate approximation. This last estimate can form the basis for an official commitment made to a customer, which brings us to the construction bidding process.

In order for a project to move forward, a firm offer is made by a contractor in the form of a construction bid. This bid includes specific project details, prices, and time frames. When a client accepts the construction bid, a contractor is expected to carry out the work as outlined.

 

#2 Understand The Construction Bidding Process

There are several stages of the construction bidding process. To kick things off, a business owner will submit a Request for Proposal (RFP) or Invitation for Bid to a list of potential contractors. In this stage, the business owner will outline project specifications.

Once a contractor receives a request, a bid package outlining the scope of work is sent to a contractor’s team of subcontractors. The chosen subcontractor bid is submitted to the client for consideration. Depending on the project delivery method, a commitment may be made between the contractor and subcontractor.

Once the project proposer chooses a bid, a contract is formed and signed by both parties. Finally, project construction can begin.

 

#3 Evaluating the Bid

To choose the bid that best suits your project needs, it’s essential to understand how to evaluate a construction bid. Choosing the right contractor will ensure your project runs smoothly, saves you money, and is completed on time.

You’ll likely receive a variety of bids, with some being exceptionally detailed and others sparse in comparison. While it may be tempting to choose the lowest bid, you need to consider a number of elements in addition to the cost.

First, consider the quality of the proposal. Is it free of errors and professionally written?

Next, consider how the price is presented. Pay particular attention to how the budget is broken down and allocated. How this section is written can give you an idea about the level of professionalism exhibited by the contractor and their knowledge base of the project. Keep in mind an experienced firm will generally be more specific in their bid.

Finally, consider the scope of work discussed in the proposal. Does the contractor provide enough information to indicate they grasp the scope of work needed to complete your project? Look for an itemized bid that provides a clear breakdown of costs according to the extent of work.

Keep in mind bids that are extraordinarily high or low may be a red flag. Extremely low bids may be an indication that the contractor is missing some portion of the scope of work. This can result in additional costs after the project begins. A proposal with an extremely high bid may indicate the contractor doesn’t understand the project.

 

#4 Consider Credentials, References, and Certifications

The project bid may not include information about a contractor’s credentials, references, and certifications. However, these are essential aspects to consider along with project bids.

Once all parties have signed on the dotted line, you can expect to develop a long-term relationship with your contractor, which is why you need a reliable company. Before awarding a bid proposal, take some time to verify who you’ll be working with. To do this, ascertain the following information:

– Review Better Business Bureau Ratings and other customer reviews
– Check references
– Request their Experience Modifier Rate
– Verify their licenses
– If they belong to a union or trade organization, check that they are in good standing

 

#5 Request an In-person Meeting

While the construction bid proposal will provide a great deal of insight into a contractor’s ability to complete your project, an in-person meeting can give you a feel for how a company operates. Your ability to personally work with a company can make or break a deal.

During your in-person meeting, pay close attention to how the contractor and other staff members communicate both among themselves and with you. When working on sizable projects, communication is key to successfully achieving the desired end result. Ensure the contractor understands your needs and wants and that everyone is on the same page regarding the project plan.

At the end of the day, choosing a contractor can feel like a gamble. However, doing your due diligence and understanding the construction bidding process will go a long way in ensuring you pick the team that is right for you and your project.

We’re Ready To Place Our Bid!

Loder Construction has been serving the greater Sacramento area as general commercial contractors since the early 90s. Our firm is made up of a highly-skilled group of dedicated professionals with a passion for building. We take personal ownership of each project as if it were our own.

Our ability to work with remote clients and conduct complex and intricate construction projects led to a rapid expansion when Loder Construction digitalized our procedures and Plan Archive. We proudly work with architects, clients, and suppliers from coast to coast and can correspond instantly to our field representatives.

We believe the key to any successful relationship is trust. If you need skilled general contractors in Sacramento that you can entirely rely on, we are up to the task. Through years of practice and refinement, Loder Construction has become a premier General Contractor in the Sacramento area and has attained Excellence in Construction.

As a commercial general contracting firm serving the greater Sacramento area, our Mission is customer satisfaction in quality and cost. We are a group of dedicated professionals that are committed to quality, integrity, and community.

We offer precise and competitive bidding through our in-house developed software. We are continually improving our unique software to better accommodate client objectives and accurately estimate project needs.

We’d love to work with you—please contact our office to learn more about our construction bidding process!


JJ Loder

He received his first hammer at 4 years old, not that he wanted one but, because he kept “borrowing” his father’s. Construction has been a part of his life and being raised as a six-generation carpenter, it came naturally. As a boy he visited his father and grandfather on their construction site, and he learned what was being built. High school and college summers were spent soaked in sweat, at the end of broom as his apprentice skills improved. After graduating from Fresno State with a Bachelor of Arts in Communication in 2008, he started running small Tenant Improvements for Loder Construction and excelled in keeping projects on-time and on budget.