Construction bidding holds the key to successful projects; without accurate bids, contractors can't even get a foot in the door on new opportunities. It involves providing a project owner with a proposal to build a structure. For example, an owner wants to build a new grocery store and requests proposals from contractors to gauge how they would complete the project and approximate costs to get it done.
Across the industry, contractors report a bid/win ratio of 5:1, meaning they will bid on many more projects than they win. Developing a streamlined process for creating the best possible bids can help contractors win more work, create more accurate construction budgets, earn more profit, and set the stage for happier clients.
Improving the bidding process is a matter of understanding the steps involved in creating a construction bid and then working to improve each for greater efficiency, accuracy, and collaboration. Digital tools like construction management software can help on all three fronts to deliver better bids overall.
Let's explore the stages involved in bidding, the traditional methods contractors use to create their bids, and how to improve this process with the help of tech.
The Bidding Process Explained
A construction bid is basically a contractor's pitch to take on a new project. It's their way of showing the owner why they're the right fit for the job. The bid typically highlights the contractor's experience with similar projects, explains how they plan to manage the work, and outlines the expected costs involved. Think of it as a proposal that helps the owner decide which contractor is the best choice for the job. As with all aspects of construction projects, contractors need a clear and specific process for bidding that standardizes the process for greater success.
The bidding process can take a few weeks to a couple of months and might involve a site visit and an information package from the project owner, which could be an individual, a business, or a public entity like a municipal government. These steps follow a typical order of events.
1. Bid Solicitation
After an owner has worked with an architect and developed a project design, the next step is to invite contractors to bid on the project. The owner will research and vet contractors to figure out which ones are a good match for the job.
The contractors that make the cut are then invited to submit bids and are given a bid package. This package usually includes the project designs, specs, and any other important details the owner thinks the contractors need to know. Sometimes, the owner will also invite the contractors to a pre-bid meeting, where they'll go over the project in more detail, answer any questions, and maybe even take a tour of the site.
2. Bid Preparation and Submission
Once contractors are qualified, they get a set amount of time to put together and submit their bids. During this period, their estimators dive deep into the details. They'll look into things like labor and material costs, figure out what permits are needed depending on the project's location, and review similar past projects to get a better sense of what each phase might actually cost. All this info helps them create a good cost projection for the entire project. It takes a lot of research to ensure the bid is accurate and competitive.
A completed bid will include estimated costs, early schedules, how the project will be managed, and lists of the materials the contractors plan to use.
Contractors often say they need to put in about five bids for every project they land. That means a lot of time and resources go into preparing bids, and most of the time, they don't end up getting the job. But even so, bidding regularly is crucial for keeping a steady flow of work and maintaining profits. This is why having an efficient bid process is key to a contractor's success — it helps them stay competitive and keeps the projects coming in.
3. Bid Review
Now, it's time for the project owner to review the bids. A lot of the time, the contract goes to the contractor with the lowest bid, especially on publicly-owned projects. But it's not just about the price. Contractors also need to use their bids to prove they can actually get the job done. This means showing off past projects they've completed successfully, demonstrating they can manage the project budget, and proving they have enough labor and equipment to take on the work.
4. Contract Formation
Finally, the winning bid is selected, and the project owner finalizes the details in a construction contract. General contractors and subcontractors sometimes make the mistake of simply skimming and accepting the agreement the owner has drawn up, but it is very important for all parties who sign a contract to read and understand all of the terms. There could be areas worth negotiating — like payment schedules, how change orders will be handled, what each party's responsibilities are, and liabilities. The goal is to make sure the contract protects both the owner and the contractor throughout the whole project.
The Challenges in Construction Bidding
While consistent bidding is make-or-break for contracting businesses, many teams still rely on outdated, manual systems that make the process messy and time-consuming. Take using spreadsheets for estimates, for example. It creates extra work, is prone to mistakes, and doesn't take full advantage of data from past projects that could help streamline future bids. Here are some of the other typical hurdles in construction bidding.
Manual Work
Whenever teams are manually entering numbers and formulas into a spreadsheet, there's always a chance for mistakes. And when it comes to construction bids, there are often multiple spreadsheets involved, with numbers that have to be added to each one. This just increases the risk of errors that can throw off the final bid and hurt the chances of winning the project. On top of that, with all the different documents, spreadsheets, and communications flying around, it's tough for contracting teams to keep track of all the bid opportunities, their details, and the deadlines. It's a lot to juggle, and it can lead to things slipping through the cracks.
Document Version Control
A big part of construction bidding is coordinating with subcontractors, getting material costs and availability, and starting the permitting process. Each of these elements requires constant communication and tracking to ensure the project stays on track.
However, when multiple teams are working on the same project, it becomes increasingly difficult to keep a traditional construction spreadsheet accurate. As new data comes in — whether it's updated pricing from a supplier or changes in subcontractor availability — old-school spreadsheets can quickly become outdated, leading to confusion or mistakes. Document version control is crucial, as it ensures that everyone is working from the most current information, reducing the risk of miscommunication and ensuring the accuracy of bids, costs, and timelines.
Modern project management tools that offer version control features can help track changes, provide real-time collaboration, and keep all project stakeholders on the same page.
Comparing Bids
Bids from different contractors often come in all sorts of formats, making it hard for owners to compare them directly. To make an apples-to-apples comparison, they have to go through a process called bid leveling.
But doing this manually can be a real headache. It's time-consuming, and there's a lot of manual input and calculations involved, which makes it easy to miss something or make a mistake. It's one of those tasks that sounds simple but ends up taking a lot of effort to get right.
How Technology Transforms Construction Bidding
Given all the challenges contractors face in putting together quality bids — and how important those bids are for keeping the business healthy — it's a relief that there's construction tech out there to make the process easier. With digital software, contractors can quickly compare all the numbers from different bids, helping them figure out which one is the most cost-effective and offers the best terms. It takes a lot of manual effort out of the equation, making the whole bidding process faster and more accurate. There are plenty of other reasons to make smart tech part of the construction bidding process.
Automated Bid Leveling
Digital tools can help take the guesswork and bias out of ranking bids, making it easier to objectively determine which ones should be prioritized. Instead of going off gut feelings or subjective factors, construction software can crunch the numbers and give a clear, unbiased comparison.
Construction owners get several bids at the same time, each with plenty of detail about the contractor's skills and experience, financial stability, and cost projections. With all the information from so many sources, it can be tough to assess the best bid for the process. Owners rely on bid leveling to organize construction bids so they can compare apples to apples to select the best one. Plus, it can even look at a contractor's resource capacity and scheduling, making sure the team's availability is never oversold.
Centralized Document Management
Using bidding software, contractors can stay on top of bid deadlines and quotes so that bid submissions are always on time for more bidding successes. Construction management software provides a central location to store construction documents so everyone can find and access up-to-date paperwork.
Better Collaboration and Decision Making
Project teams can access bid information anytime, anywhere, allowing for quicker decisions. Construction management software can track leads from beginning to bid for better organization and more consistent follow-up.
Less Data Entry
Software that integrates with other project processes means data won't have to be added manually multiple times, reducing the chance for errors and improving communication between project teams.
The Key to Quality Bids
For construction businesses, regularly putting together accurate bids is key to keeping the work rolling in. But with all the info, deadlines, and documents that go into creating multiple bids at once, it can get overwhelming. Relying on spreadsheets to track everything often just adds to the confusion, making it easy for teams to mix things up or make mistakes. It's tough to stay organized and on top of everything when you're juggling so many moving parts.
Construction software doesn't just help keep documents organized and deadlines on track — it can also help evaluate bid opportunities, send submission reminders, and even improve collaboration within the team. With the right tools, contractors can do away with bidding chaos in favor of an efficient and streamlined bidding process.
