Developing a winning bid doesn’t always involve going for the lowest bid. Construction contractors negotiate tough challenges in fixing cost estimates—the leading cause being a passive adoption of technology in the bidding process.
A construction project becomes a win-win when a contractor gets his worth whilst the owner-client doesn’t feel they’ve paid more than they should have. Most contractors battle rising direct costs of building a construction site with the amount of competitive pricing offered by other contractors at the same level of efficiency and quality. When they begin costing lower than is financially viable, they hurt their bottom lines, ultimately making room for quality deficits with sub-standard materials used to meet thin cost baselines.
Submitting accurate, well-developed, and true-to-project bids will get you more projects than simply bidding low.
In order to end this vicious cycle of low bid-high win mentality, it’s important to note effective bidding mechanisms that won’t place your business on the backburner.
Construction Bidding Starts With Compiling a Takeoff Accurately
A construction takeoff is prepared by quantifying materials and other input costs directly mapping to the design specifications and construction plans agreed upon. Before getting down to actual business, contractors must ponder which projects really align with their expertise. Too many bids fail because bidders don’t honestly evaluate if they should be pursuing certain projects—and only take them on because it involves a big opportunity to turn around business reputation by beating competitors. That mentality is going to drown your business in financial debt sooner than you think if your baselines aren’t comfortably met while serving the needs of the project owner-client. Approach projects with fewer competitors and leverage an edge no one is, which will truly set you apart in the long run.
Once you’ve chosen your project to bid, create a carefully thought-out inventory of tasks, materials, resources, and tentative hours to be spent to build an accurate takeoff. Under the Design-Bid-Build project delivery method, clients may choose to obtain resources and materials since they will be considerably involved in on-site work. This could reduce your profit margins but shouldn’t discourage you from pursuing such bids. It’s always advisable to mark up your costs to cover for any potential damages, service charges you’re paying the city, and other incidentals not factored in. It would help to remember that your price should truthfully reflect your effort since you’ll be including any subcontractor costs, overheads, and profit margins—you don’t want to seem to be over-charging in the name of covering your costs.
To increase your construction bid takeoff accuracy, review project scope thoroughly as most owners find overestimated work when contractor quantity takeoff sheet shows mistakes in material amounts and durations. This will need you to go back to construction plans and specifications to assess misaligned capability mapping with the architect and owner. Making your takeoff development process consistent will get you better results and strengthen your overall bidding process.
Bidding Contractors Must Evaluate Site Conditions
Two of the most critical factors that make contractor job bidding successful are understanding site conditions and measuring associated direct and indirect costs.
Several contractors make the universally frowned upon error of not visiting job sites. Before actual construction can begin, sites need to be prepared, excavated, and levelled, which needs considerable man-hours and earth-moving equipment with accurate cost estimates. When contractors jump this step, they’re missing critical information about site conditions that will dictate the future course of action when choosing the type of materials, manpower, equipment, and timelines necessary to carry out construction.
Becoming a financially sound contractor will place you on the radar of project owners who dismiss those with a poor credit and bid record. You need to make every buck count to make a project successful, and it starts with knowing if site conditions are conducive for you to execute project expectations.
Bidding Using Construction Bidding Software
Construction bidding is invariably optimized with cloud-based bidding software.
It increases accuracy, reduces lengthy bid calculation procedures to a few minutes, and moves processes along efficiently. As we saw earlier, contractors can arrive at fair estimates only when they’ve fairly reviewed contractual documents and site conditions—there’s a catch. These estimates are the contractor’s direct costs internally incurred by them, while what they’re bidding is the price charged to the client which includes all cost breakdowns. Procore technologies neatly points out differences between an estimate, quote, and a bid so that when you’re taking on a bidding job, you’re assured that you’re conceptually accurate to present a compelling bid package.
A construction bidding software will automate this process as it connects you with an integrated network of bidding systems and latest industry information. Collating information from past projects into a centralized database, bidding technology can pull up comparable variables from previous projects to outline cost structures for ongoing and potential projects. Such an output can cut lead times by half for contractors, and get them moving from project to project much faster than earlier deemed possible. Having a cloud-management system can yield invaluable insights into bidding patterns that will help you track data and analyze your win ration by project size, location, and sector. Leveraging trends focuses your bidding on the most optimal projects while increasing your chances of winning them.
Fostering enduring relationships with subcontractors is crucial to any contractor prospecting bids as they look to expand their business. To this end, bidding technologies have empowered them with streamlined communications organizing project documentation and data in a way that promotes collaborative efforts. Subcontractors love GCs who provide accurate information and step in at the right time to aid crucial project delivery tasks.
Relying on construction bidding software has become second nature, and doesn’t make contractors think twice about what they bid with the level of efficiency and quality brought into bidding management.
Closing Comments
The construction bidding process is standing at crossroads with innovative technology breaking new ground. To position a solid bid strategy is to increase your odds of winning and become a recognizable player in a market that has seen a flat productivity graph for over two decades. Get started on your journey to win more bidding jobs!