Construction Bidding is an integral part of the construction industry. The bidding process may be challenging to understand due to its technicalities. If you are also new to the bidding process and want to learn more about it, jump into this article! We are here to discuss the steps involved in bidding on a beginner level.
Understanding Construction Bidding
Bidding refers to a process where a firm presents its proposal to the client to win the client. It includes project estimations and the profit of the contractor or estimator. Estimation is done before the bidding process. The chances of bid winning depend upon how accurate your estimates are. Construction estimation and bid proposals are different steps, but they influence one another. A bid is a proposal based on predicted costs for a project. A low bid represents that fewer resources are going to go into the project. Winning a bid has many perks for the agency, such as
- More revenue
- Attracting clients
- Expanding business
- Good Reputation
- Client feedbacks
Many contractors choose to outsource bid creation to other professional estimating services. How to Use Construction Takeoff Services to Improve Project Bidding? SMA MEP Estimate is an estimation agency that provides good quality bids to their clients.
The Process of Bidding
Securing more bids requires a deep understanding of the bidding process. The more knowledge you have, the better bids you can create. Are you interested in gaining more information about the bidding process? Well, dive right in! Construction bidding can be divided into the following parts.
Bid Solicitation
In this step, the client reaches out to contractors and requests bids on construction projects. Bid solicitation can be private, where only certain contractors can bid, or public, where it’s an open house for qualified contractors. In bid solicitation, clients usually issue
- Invitation For Bid (IFB)
- Request For Quote (RFQ)
- Request For Proposal (RFP)
The bid package also contains specifications of the project. For example, a client may want a Piping Fabrication Cost Estimation for their construction project. A contractor can go through them and learn what the clients want. This helps to create bids according to the client’s requirements. Other than that, the clients may also ask for the qualifications of the contractors. This can help to make a pre-assessment.
Project Estimation for Construction Bidding
The contractor can analyze the specifications of the project and then decide whether to bid on it or not. Contractors usually bid on projects that are within their expertise.
For example, a contractor may be interested in MEP Cost Estimation as they are adept in it. If the professional chooses to bid, then the construction estimation process starts. A financial budget for the construction project needs to be made. This budget should be accurate and precise. The estimation process can be tricky. A comprehensive guide to estimating construction costs for contractors can help you to create accurate cost projections.
Bid Submission
After the estimate, the contractor submits his bid proposal to the client. A bid contains documentation of the predicted expenses of construction. It generally includes
- Material takeoff
- Material cost
- Labor cost
- Equipment cost
- Overhead expenses
- Profit margin
This can vary according to the requirements of the construction project. A bid needs to be easy to understand. Construction bidding should be transparent and to the point so clients can readily appreciate your view. The key to a reasonable bid is providing good quality material at minimum expenses. In some cases, contractors may need to submit bid bonds. A bid bond guarantees that the contractor can complete the project according to the bid proposal.
Selecting a Bid
The clients will now evaluate the submitted bids and pick the one that is the most suitable. One can say that this step is the result of construction bidding. The client will eliminate the extreme bids that are too high or too low. Generally, the lowest bid in the mean range or the most competitive bid wins. But in some cases, clients go beyond just looking at the price. They account for the qualifications, experience, and records of contractors.
Negotiation Between Client and Contractor
After selecting a bid, the client and contractor will negotiate with each other to form a contractor. The terms of the contract need to be decided by both parties. They should actually agree with each other to work together on the construction project. In most cases, clients have a backup bid proposal if there are problems in making the contract. A contract is significant in construction bidding so that there are no ambiguities in the future.
Conclusion
To sum it up, construction bidding and estimation go hand in hand. If you want to excel in either, you must learn about both. If you wish to strive in the construction estimating industry, you need to have extensive information about the construction process. Then, you will be able to create accurate and precise cost estimations. These cost estimations will aid in creating a good-quality bid. The bidding process can be uncertain, but it’s essential to keep a positive attitude throughout. Even if you don’t win the bid, don’t fret over it. Move on to the next project!