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How to Bid and Win Jobs as General Contractor (2022 Guide)

WHAT IS A CONSTRUCTION BID?

Construction bidding is the process of presenting an amount or giving an estimate by the contractor or the sub-contractor to the owner or the client as a scheme to conduct or lead a specific construction project. A construction bid differs from a simple estimate because it tells a potential client what services you are offering them and how much it will cost, including the expenses and profits.

The bidding procedure is an essential and significant part of a construction program or a project that enables firms and companies to hire contractors and sub-contractors and hand over their projects to keep their businesses thriving.

KNOWING AND NOT KNOWING HOW TO BID CONSTRUCTION JOBS

The knowledge regarding how to bid construction jobs is significant for a construction contractor or a sub-contractor as it can make a significant difference between success and bankruptcy. Not knowing how to bid on a construction job will eventually cost the contractor his chance of turning a profit. Since cost matters to all clients, contractors tend to submit the lowest bids for a particular project while simultaneously earning profit. It is because overlooking either side will make the business suffer. 

LIFECYCLE OF A CONSTRUCTION BID

A construction bid has the following steps in its typical lifecycle:

  1. Solicitation: A bid solicitation means a formal request for bids. A client solicits bids on a project. They provide or supply the interested contractors with the relevant plans, specifications including completion time, penalty, pre-qualification details, and scope of work.
  2. Due diligence: It reviews the bid details from a selection of builder, build site, delivery method, your compliance forms, financial assessments. It’s an overall analysis where one makes sure he understands the project’s scope.
  3. Submission: After reviewing the project documents, the contractor contacts the sub-contractors to crunch the numbers. Later, they submit their bids by the given deadline.
  4. Selection: After the client has received all the qualified bids, he chooses the winning contractor—the decision of who to give the contract too often comes down to the cost.
  5. Formation of contract: It means that the client and contractor are negotiating and then collaborating to confirm all details. A contract usually has the offer, acceptance, and certainty of terms, and intention to build legal relations between the client and the contractor.
  6. Delivery of project: This is the execution part where the contractor, his team/crew, and their equipment move to the building site and start to deliver the required work that the client has asked for.

DECISIONS IN THE CONSTRUCTION BIDDING PROCESS

To know how to bid construction jobs, one must understand the three major structural decisions that shape the overall construction projects. Any of the following choices that an owner will make will translate into different tasks, costs, risks, and financial benefits for the bidder. While bidding, one should know how these elements affect the bid that you are putting together.

PROJECT DELIVERY METHOD:

Four of the common delivery methods share the same goal: helping the owners build new construction on time and on budget, ensuring quality in the demands.

1)    Design-Bid-Build or Design Tender (DBB): The following method is commonly employed to construct non-residential buildings, those that are under the government programs. In a DBB process, the client hires an architect on his own. It is executed by the contractor who manages or conducts the project. When the architect completes the outline, the bids are then obtained from the contractor by the client so that the plan or the outline can be executed.

2)    Construction Management at Risk (CMAR): It is an alternative method to the Design-Bid-Build process, which helps in reducing the cost. In this process, the construction and the design are both handled by different businesses. The construction supervisor is involved from the start of the program, helping choose the architect for the program. Later, both Construction Manager and Architect move the project forward. CMAR is primarily employed for complex programs where the construction manager is chosen by the client based on their qualifications instead of the minimum cost benchmark.

The bid of the construction manager to the client is a guaranteed maximum price (GMP). GMP is a fixed maximum price that has been set already, and the contract sum will not exceed it. This helps the owner to save money. The savings are then shared amongst the owner and contractor. The cost consists of the following:

  • Pre-construction assistance.
  • The actual building of the project.
  • The payment of the Construction manager.
  • Possible incidents.

After designing is completed, the construction manager obtains the bid from the contractor to see if the actual expense exceeds GMP or not. The burden will not be on the owner since the maximum price has been set already. If the project is constructed below the GMP, the owner’s saving will be shared amongst both the owner and the CM as per the agreement between them.

3) Design-Build (D-B): In this process, the client gives the contract to one body that can handle the outline and conduct the project. Here, one amount covers both of the phases of building the project. This single body is called a design-builder or a design-build contractor. The design-builder is the one who is then accountable to the client for all areas of the construction program.

4) Integrated Project Delivery (IPD): This is also said to be “an integrated team method.” It is one of the newly introduced projects delivery methods. This process employs the client, architect, and the contractor, all of them as a group, and the risk are then equally shared by all.

CONSTRUCTION PROCUREMENT METHOD:

Following the selection of the project delivery method, the next step is the procurement method by which the building services are acquired. Following are the classifications of this method:

1)    Best Value Method (BVS): In this process, the contractors and the buyers are given a contract that is based on amount and performance. The records which are taken into consideration include the previous performances, robust management method, qualifications of the employees, and the other particular factors.

2)    Negotiated Tendering Method: In this process, the contractors are chosen without any type of advertisement or any type of competitive bidding. A potential constructor is first selected, and then he is negotiated with reference to the amount and the technical criterion. The contractor then puts forward a favorable plan which is then considered by the government. This plan is not put forward publicly.

3)    Sole Source or Direct Select: It is a single-source acquirement method. It is a non-competitive process that uses a sole provider who can keep up with all the plan’s demands.

4)    Low Bid: This is one of the traditional acquirement methods. According to this, the government and public building bodies are built. Competitive bidding with the lowest out of all the bidders is the main principle which is behind the low bid acquirement method.

THE CONTRACT MODEL:

The contract design which is put forward in the construction bidding procedure must be cautiously developed. The client suggests the kind of contract that he wants to make. The contract which is developed then determines how the expense and the profit are looked after.

The traditionally used contract types are given below:

1) Cost Plus Fee Contract: This is a type of contract in which the contractor is paid for all the project expenses, including the supplies, material, equipment, labor travel expenses, vendor fees, etc., along with an additional fixed fee for the contractor’s profit.

2)    GMP Contract: This contract sets a limit on how much the client will pay. The contractor will solely owe an explanation for any sort of excess unless any scope change is formally negotiated. If the program is costing less than the GMP (Guaranteed Maximum Price), the client retains the amount that has been saved or may have agreed to share with the contractor. 

3)    Time and Material Contract: This type of contract is in which an agreed-upon cost is already set, which is based on the time and equipment that are used for the program.

4)    Fixed Price Contract: A type of contract where the contractor accepts a total sum for all the activities involved in the program. This is usually used for those programs that have well-stated amounts and components. The additional cost may be put as incentives for early completion of the project or as penalties for the delay in the project. 

5)   Lease Leaseback: A contract type during which the first leases the property to the contractor is required to build a building on the property. Later, the original client leases it back and gains the title back to the property at the end of the leasehold.

HOW TO BID A CONSTRUCTION JOB

Just knowing how to bid construction jobs is not enough. One should know the tips that make the bid stand out. All the competitors follow the same cycle of bidding. Therefore, the accuracy and efficiency of a bid are essential.

Following are the few tips and pointers that will guide you in the process to know how to bid construction jobs or improve your chances of success with construction bids:

  • One should follow the bid instructions very carefully and studiously.
  • One should adequately account for all their overhead costs.
  • One should work only with those sub-contractors who are reliable and skilled.
  • One should always ask the client for clarification whenever necessary.
  • One should always keep their information in an organized manner.
  • One should provide every detail that is necessary or is crucial while starting your case.
  • One should include testimonials from happy customers.
  • One should share the relevant awards and certifications.
  • One should track the bidding results so they can improve their process.

BIDDING ON GOVERNMENT PROJECTS

Government construction is the best place for any business looking for bidding opportunities. Whether it is an office, school, transportation center, utility building, malls, etc., you will always find government projects. The other projects may close down, but the government projects are always on the go. The bidding is rich for the government projects, but these are more heavily regulated than the non-government jobs. There are loads of paperwork and documents required. Therefore, one must be careful while putting up documents and information, or else the bid will be dead.

BIDDING ON LUCRATIVE PROJECTS OUTSIDE GOVERNMENT

Many construction companies prefer to work in the private sector as the competition is not as fierce as it is in the government sector; the process in the private sector is more streamlined, too, as compared to the government sector. Ensure that you invest enough time and thoroughly analyze the project before submission. The bid should include all the documents and the details with your company’s differential.  

HOW TO WIN MORE CONSTRUCTION BIDS

Following are some tips or pointers that can guide you in knowing how to win more building or construction bids.

  • One should know how to use construction lead generation services since they can help to connect the general contractors with sub-contractors.
  • Tip two is that one should invest their time in the process and physically go and meet up with their potential clients.
  • The third tip is to call everyone on the list; usually, what happens is the people you have worked with before have more confidence in you, and since they know your work, they can be the best leads.
  • The fourth tip is estimating as many projects and as fast as you can because the more bids you put out in the market, the more, the higher percentages you will have to get them.

CONCLUSION:

This article is a helpful guide that a person will need while knowing how to bid for construction jobs. One should know about their thought processes to take the tips on making your bid stand out to be better than many. In this way, they can then get a grip on how to win bids effectively.

In this 2022 guide, all the necessary details are discussed that will help you get familiar with bidding and winning in this era.

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