There are over 680,000 construction companies in the U.S. Every licensed general contractor may face competition for jobs of all sizes and budgets. However, as a construction company owner, if you’re familiar with the bid process and how bids work, you may make yourself more likely to land the construction projects you want and beat out the competition.
Construction companies and other trades businesses often submit bids to potential clients for projects they want to be hired to complete. For example, if a landowner wants a building added for retail stores, several construction companies would submit bids to the landowner. Because these jobs are often unique or otherwise difficult to put a standard market price on, professionals must provide their own estimates of the cost, timeline, and any other relevant factors for completion of the project.
The landowner accepts the bid for the construction company that offers the most favorable terms. Learning about the steps in the bidding process and how to get the contract will help increase your company’s winning bids.
Research and Planning
Before you put together a bid, conduct thorough research, and plan out how you would complete the project. This ensures the bid you submit is accurate and achievable. Consider the following:
- Influences on bid selection the client may be considering (for instance, start date, flexibility, or the involvement of government oversight, etc).
- Bid solicitation procedures for the project and whether your bid will be publicly shared.
- The scope and timeline of the project.
- Your company’s experience and resources and ways to highlight them.
- If you need to request additional information on the project.
Think about competitors in your industry and other bids the potential client is likely to receive for the project. Take note of what your company has to offer that your competitors likely cannot.
Preparing and Packaging the Bid
Bids are not one-size-fits-all, so you’ll need to do some customization when preparing your bid package for a project. Essentially, you’re providing the client with your business plan for project completion and the client is interested in:
- Your material costs.
- The time frame for each step in the building process.
- An overview of transportation and other resources you’ll need.
- Staffing requirements and information on any outsourcing you’re planning for.
In addition to explaining how you plan to complete the project, your bid package should also include important documents that show your company is qualified and prepared to take on the project. The documents you must submit depend on the specific project, but may include:
- Proof of contractor’s liability insurance: You’re likely required to show you carry insurance to protect other parties in case of an accident.
- Bid bond: If you obtain a bid bond, it attests that the costs and timeline outlined in your bid are accurate and you promise to adhere to them.
- Surety bond: You may have been required to purchase a surety bond when you obtained your contractor’s license or for a specific project bid.
- Licenses: In addition to proving you’re licensed, you may need to provide proof that your contractors meet state licensing requirements; depending on the scope of the project or subcontractors you plan to hire, your bid package should include the appropriate plumber’s license, electrician’s license, or any other specialty trades that require licensing in the area where you plan to work.
When your bid package includes the proper certificates of insurance, bonds, and documents that are needed to begin work, the client knows you’re prepared for the job.
Be sure to break down and justify the costs in your bid so the client better understands how you calculated your bottom line. Highlight any discounts or additional services you’re offering that your competitors may not provide so your bid stands out.
Submitting the Bid
Follow your potential client’s instructions closely when submitting your bid. Government projects usually have their own online portals that allow you to submit bids virtually. Take the time to answer questions thoroughly and submit all documents that are requested.
In the private sector, you may be asked to email your bid package in a digital format to the project manager. In some cases, you’ll be asked to turn in your bid package as a paper hard copy.
If the potential client asks for a hard copy of your bid, print and bind it professionally so all the pages remain in order and it’s easy to read. The more professional your bid appears, the better impression you’ll make on the client.
After a client reviews your bid, you may be asked to meet with project managers to present the bid in-person or through an online meeting. In most cases, when you’re asked to present, the client has already reviewed the bid so your basics, such as the timeline and project costs, are already known. However, you should be prepared to provide details on every aspect of the bid.
It may be best to offer a visual presentation of your bid using Microsoft PowerPoint or similar software to break down your resources, costs, and timeline. Be prepared to answer questions, including inquiries about how the costs and timeline would be altered if certain changes were made to the scope of the project.
Your client is also likely to ask if there’s any way to adjust the budget to decrease the bottom line. Consider what you can offer to change the cost of the project or to provide a more aggressive timeline for completion. If you have flexible options to present, the client may feel you’re a better fit for the project than your competitors.
Getting the Contract
If you’re awarded the contract, it’s crucial to ensure you and the client are on the same page and that you can deliver everything you outlined in your bid. Once you’re chosen for the job, you may be required to obtain a performance bond, which protects both you and the client by ensuring you’ll complete the job and the client will pay you, as described in the contract.
Review important project specifications with your client before getting started, including the following:
- The project start date.
- The deadlines for certain aspects of the projects.
- Communication methods and expectations between you and the client.
- Any changes the client wants to make to the project.
If the client does want to make adjustments to the scope of the project, create a new contract reflecting these changes. This ensures you both understand and agree on how these changes affect the timeline and costs.
When submitting a bid for a project, it’s crucial to provide as much information as possible on how you plan to tackle the project. Highlighting aspects that make your company a good fit, such as discounts or an aggressive timeline, ensure you stand out from other companies bidding on the same project.