How to Avoid 15 Common Construction Bidding Mistakes
The construction bidding process is an integral part of the construction industry. From residential construction projects to commercial construction projects, the winning opportunity goes to the most responsive bidder with the highest value provided to the project owner.
What is a bid in construction? A construction bid is a proposal submitted by a bidder to a project owner to complete a project under specific terms and timelines. The project bid includes a cost estimate with the contractorâs margin.
Bidding right takes time to master in an industry that sees hundreds of bids made every day across the world.
Often, a general contractor needs targeted guidance on how to make bids without compromising on profitability and sustainability.
How does construction bidding work?
As the bidding process becomes increasingly complex, understanding the construction bidding process is necessary to know how to bid on a construction job. While the bidding process is less formal for a private project, it is highly regulated for government projects.
Typically, the bidding process consists of sequential activities, including bid solicitation, bid submission, bid selection, contract formation, and project delivery. A solid bidding strategy can land you coveted construction project deals.
How can you avoid common construction bidding mistakes?
If youâre new to bidding on construction projects or think that your construction bids are not working, itâs time to take a pause. Bidding errors can make or break a deal in the construction business.
When you submit a bid to the project owner and realize a bidding error too late into the construction bid process, it may become difficult to withdraw or modify the bid.
From misplaced decimals and transposed numbers to incorrect estimates and bad value-adds, bidding mistakes are sloppy but stoppable.
As a construction contractor, you would want to present the best bid against prospective bidders to gain the construction contract.
Hereâs how to avoid 15 common construction bidding mistakes and get closer to the winning bid:
Choose the right projects
Respond quickly to the bid invitation
Use construction bidding software
Watch for inaccurate takeoffs
Always qualify subcontractors
Build trust with the project owner
Donât ignore proposal risks
Donât make uninformed guesses
Adhere to the bid deadline
1. Choose the right projects
Generally, a qualified contractor would be considered a more competent fit for a construction project that demands previous experience and specialized skills. Avoid bidding on a construction project that is outside your niche. Pick your projects wisely based on your experience and expertise.
As you know your strengths and competencies better than anyone else, itâs not worth risking your business reputation for a project that isnât a good fit for your business capabilities and project track record.
It is better to win a job youâre well equipped to do than bid on a job that may compromise your business reputation.
Why spend time, money, and resources on competing for non-viable construction jobs?
Select a project that youâre comfortable and confident in bidding on because your business success depends on your ability to make money while meeting project delivery expectations effectively. Â Â
Construction bidding is a time- and energy-intensive process. A competitive bidder gets a head start in the bidding process. Knowing your competitors in the construction industry will help you create a well-thought-out bid package and position yourself well for success.
The right information at the right time makes a difference between winning and losing the bid on a construction project.
Commercial construction contractors have to face stiff competition from other well-established contractors or new entrants ready to explore the ever-growing construction sector.
Sometimes, a contractor may intentionally set a low bid to undercut other bidders and win a construction contract by offering attractive low up-front costs to a project owner. Itâs better to pass on such an opportunity that focuses on simple capital cost rather than the quality of the bid.
Instead of offering the âlowest bid priceâ against your competitors, stay focused on providing overall lifetime value with a cost-effective bid that matches your credibility and construction expertise.
3. Respond quickly to the bid invitation
In a competitive bidding process, authorities governing public contracting projects usually carry advertisements to solicit sealed bids and award contracts to the most responsive and lowest bidders. In some places, publicly bidding contracts, especially construction contracts, is pursuant to a public contract code.
When you receive an invitation for bid (IFB), a request for proposal (RFP), or a request to tender (RTT), respond promptly to bid solicitation because non-responsiveness severely impacts your business profile.
If you wait too long to bid on a project, the client may have already decided on another contractor or construction management company. Donât be disappointed if the construction bid results arenât in your favor.
Be it a big commercial construction job or a small residential construction project, itâs important to be responsive and reach out to a wider network in the construction sector to grow your business.
While a project owner can waive minor irregularities, bidders have to stay away from material irregularities as these can cause bid rejection. Some bid terms solicit financial statements, additional information, or bid alternates.
For example, a public agency may solicit bids for a portion of the project rather than the entire project to stay within budget. A bidder can provide a base bid for the core portion of the project and alternate pricing for additional portions to comply with the agencyâs project bid requirements.
If a contractor doesnât comply with the advertised terms and conditions, there is an increased risk of bid rejection. Submitting a bid goes beyond providing a price.
A contractor has to be flexible enough to adapt to the complicated bidding process and fulfill essential criteria, including minimum qualifications and license requirements.
5. Use construction bidding software
A building construction contractor requires a trustworthy construction bid source to identify new project opportunities. However, a contractorâs bid may suffer if something goes wrong with the arithmetic. Construction estimating mistakes cost you money and business goodwill.
An erroneous bid amount leads to a greater possibility of withdrawing the bid or forfeiting the bid bond. Thereâs a solution. Construction bidding software eliminates costly errors and streamlines workflow.
Previously, a general contractor had to deal with cumbersome communication (email/fax solicitations) to qualify subcontractors or depend on manual work processes.
Currently, advancements in construction data management make it easier for a construction company to use cloud software to manage subcontractor databases, optimize the pre-construction processes and do much more in less time.
Choose from a variety of online construction bidding software options that offer value for your money.
6. Watch for inaccurate takeoffs
Inaccurate takeoffs are detrimental to your bid. Furthermore, imprecise construction costs cause financial distress. Takeoff software meticulously calculates construction takeoff components, including quantity and material requirements for a project.
If youâre planning to work on a commercial construction project, you can greatly benefit from construction takeoff software to boost business success.
Itâs really easy to bid on projects with takeoff softwareâs excellent features such as auto-count, linear measurement, area measurement, volume measurement, predefined assemblies, and plan overlays.
Data-driven takeoff software gets your detailed cost and schedule summary ready in minutes. You would be able to bid confidently with a comprehensive understanding of material and labor costs.
7. Always qualify subcontractors
Whether youâre hiring subcontractors for the first time or have been employing them for years, itâs always a good idea to review subcontractor pricing and proposals.
Prequalifying subcontractors helps in evaluating their past projects for quality and performance and removing any incompatible profiles.
Before requesting from subcontractors, you should clearly define the scope of services to prevent duplication of work.
Furthermore, get a minimum of three competitive subcontractor bids for the work you would like to be completed to hire the best contractor to meet your work expectations efficiently.
A site visit shows you existing site conditions to factor in equipment, labor, and transportation costs. Imagine seeing the site for the first time after getting the contract award for a construction project.
Would you be prepared to deal with unknown site conditions such as limited road accessibility or high location access costs?
Skipping a site visit at the start of the construction phase does more harm than good. If youâre subcontracting the work, you can recommend a site visit to the subcontractors as well.
In fact, many bidding opportunities allow prospective bidders to visit the construction site after attending a pre-bid meeting. It is useful to determine the topography, take measurements and soil bore samples during your site visit.
A site visit is not only necessary to understand environmental concerns and project scope but also protects you from incurring additional costs in the course of project management.
Ensure your equipment is in top operating condition prior to submitting your bid. Overestimating your equipment capabilities can impede your progress in completing the project awarded to you.
You donât want to incur random costs on repairing or renting equipment when you should focus on getting the work done without any delay.
10. Build trust with the project owner
Make the most of the construction bidding process in building trust with the project owner. The project owner could be a general contractor, a government entity, or another organization.
The construction industry thrives on mutual collaborations and strategic connections.
Investing extra time and energy in nurturing friendly connections goes a long way in creating a strong impression of your construction management company.
Do you want to deliver value without missing out on connections that matter?
Get to know the project managers and the estimators during the bidding process for optimal results. These construction experts may well open the doors to mission-critical insights and pave the way for future partnerships.
If youâre new to the construction industry or havenât had a chance to connect with the project owner, a well-timed follow-up with the client does wonders to demonstrate your readiness and reliability.
11. Donât ignore proposal risks
A contractor bid proposal may overlook the risks that come with every construction project. Determine potential risks early and evaluate them fully to develop a risk mitigation plan. A low-probability risk is easier to manage than a high-probability risk.
Integrated project delivery requires effective risk management and mitigation. Plan a step ahead with contingency measures in place.
A lot of planning goes behind making a successful bid proposal. Donât forget to take into account material prices and delays before submitting a proposal.
For example, a project owner needs a higher-priced product but doesnât finalize finishes or materials before the bid submission. In such a scenario, a contractor should verify whether submitting a proposal with midrange-priced products would be acceptable.
Similarly, limited material availability or delay forces a project owner to accept costly material alternatives or pay more to receive the preferred products.
When you are well prepared to handle any contingency situation, itâs easier to reduce bidding mistakes. Consequently, there will be few overpriced, non-competitive, or underpriced bids from your end.
12. Donât make uninformed guesses
Do you know that uninformed guesses eat up your profits sooner than you think? Before submitting your bid, it is crucial to have accurate and up-to-date information on every project.
When you consider job costs related to equipment, labor, construction materials and supplies, itâs also beneficial to consider overhead costs and soft costs such as engineering fees, legal fees, inspections, permits, taxes, and insurance.
Ignoring or neglecting such costs may wear or wipe away your profit. As a well-informed building construction contractor, you will save money on subcontracting work or renting extra equipment. The bidding process is a great way to optimize your costs while focusing on profitability.
Your bid price has to factor in costs for everything needed to do the construction job. Whatever project you want to bid on, stay informed to steer clear of expenses that drain your financial resources.
13. Donât rush your bids
No one can win all the bids! The rush to bid early can cause you to miss out on key details, set your price too low, or include inaccurate/incomplete information. Take your time to get as much bid information as possible.
Study plans and specifications of a residential or commercial construction project thoroughly prior to preparing the bid package. After all, due diligence pays off in the long run.
If youâre submitting a bid on your own or have a construction bidding team working for you, itâs crucial to analyze the construction documents and bid scope in detail.
Sometimes, a project owner receives a change order request from a contractor for extra charge claims related to potential delays, new material costs, or project scope modifications. This risky strategy causes mistrust. It is recommended to refrain from making such questionable amendments.
Bid submission rewards patience and precision. Compared to a last-minute bid, a well-crafted bid boosts your bid value and lets your bid shine in the bidding process. Professional bids crafted with care are sure to improve your bid-hit ratio.
14. Submit bid forms in full
Read the construction contract bid documents carefully because an incomplete bid form is subject to rejection. It becomes quite challenging to move forward when things donât add up.
Follow the guidelines if the construction project mandates prequalification or pre-bid conference participation.
Do you know that âa stitch in time saves nine?â Seek clarification sooner than later if you have any questions on the bid terms and conditions or scope of work.
If necessary, you may consider a pre-award bid protest to address defects in the solicitation specifications or terms.
Double-check your bidding documents for typographical and bidding errors, incomplete or inaccurate information. A tender bid with spelling or other errors may not disqualify you but doesnât create a favorable impression either.
If you want to make your construction bid stand out from the crowd, highlight your competencies and present your bid in the most professional way to the project owner.
15. Adhere to the bid deadline
Last but not least, adhere to the bid submission guidelines. If your bid is not submitted by the stated deadline, it may be rejected by the project owner. Time management and proper planning help you stay close to the target of submitting your bid on time.
A tender advertisement includes general information on bid submission. If it requires you to submit your bid at a particular location and at a specific time, please follow recommended instructions to prevent bid disqualification or rejection.
When it comes to a construction bidding environment, bidding mistakes can make you lose a dream construction deal. From the bid opening to bid submission, establish your credibility as a reliable and responsive player.
Always aim for an honest and a realistic bid.
A trusted residential or commercial construction contractor stands a better chance of succeeding at the bidding process compared to other bidders and gaining the winning bid.
Whether youâre bidding on a private project or a government project, study relevant documents carefully before drawing up a strategic bid plan.
Your bid strategy should be clear enough to address the contract terms and conditions and also secure your bottom line.
When your bid is ready, submit it confidently for review. Itâs never too late to avoid common construction bidding mistakes. Start now for your next win.
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