Creating a construction bid can be a daunting task. Trust me, I’ve been there myself.
The first bid I ever made was for a roofing project on a military base. I was just a young project engineer still figuring things out.
With some guidance, I was able to complete the project bid which ended up being awarded to the company. My reward… I got to run the project.
It ended up being a successful construction project, and it finished with a profit margin of over 20%. On a $1.5 million contract, it was a nice payout to the company owner.
That said, knowing how to prepare the bid estimate is essential for anyone in a construction management role. If your company doesn’t have active projects, they may expect you to bid on prospective jobs.
Link to the Construction Bid Template
Here’s the bid form template that you can use as a reference for your next project. Modify this document as needed to suit your company’s specific needs.
This is the bid proposal form that will be referenced later in the article.
I suggest having a more detailed terms and conditions page. This way the proposal can also act as the contract going into the project.
Some owners may still require the use of an AIA contract to perform the work. I still think it’s good to have the proposal as a contractual option.
Consult a lawyer to determine the terms to include in your proposal.
Construction Bid Template – Google Sheets Link
Construction Bid Template – Microsoft Excel Link
What is a Construction Bid Proposal?
A construction bid is a proposal submitted by a contractor that contains a price to complete a project. This proposal is one of many bids that are sent to a potential client for review and approval. The owner will select the winning bid and award the construction company with the project.
How do You Get the Opportunity to Bid?
This is dependent on the type of work that you’re looking for.
For federal government jobs, they have a web portal that you can use to bid on projects.
Click here to view federal jobs to bid on.
Other facilities will advertise their projects on their own websites. Let’s take the University of Missouri for example. They have a website that contains all their construction projects currently available.
You can click here you to go to the University of Missouri web page.
There are some online resources that you can use to find commercial work in your area. Here are five of them:
- https://www.bidclerk.com/
- https://www.construction.com/
- https://www.constructionbidsource.com/
- https://www.cmdgroup.com/
- https://www.governmentbids.com/
What is Included in the Construction Bid Proposal?
For any construction bid form, you should make sure the following items are included in your proposal.
- The scope of work
- Specific and general exclusions
- The plans, specs, and addendums used for the bid
- Your price to complete the work
If you need to modify the template provided in this article, make sure these four items remain.
In the following section, I’ll cover how to create your contractor bid. I will cover the topics that should be included in the bid in greater detail as well.
How to Create a Construction Bid Proposal
For any project, the best practices of a construction bid process typically consists of 6 steps.
- Obtain the invitation to bid or request for proposal (RFP)
- Conduct a site visit to view the existing conditions
- Submit the necessary RFIs
- Develop the estimate for the construction bid
- Finalize the proposal
- Submit your bid to the project owner or GC
What to do After Obtaining the Invitation to Bid or RFP
With any construction bid, the first thing you need to do is review the bid documents. This will provide you with the details of the project and can be found in the request for proposal.
The RFP or bid documents should consist of the following items:
- Design drawings
- Project specifications
- General conditions and notes to bidders
- Permitting
- Bonds
- Prevailing wages
- Etc…
These documents will tell you how you will need to bid for the project. It gives you key information on what you need to include in your price.
If you miss anything in the bid documents, then you’ll end up having to pay for this out of pocket.
Once you have reviewed the bid documents, it’s time to schedule a site visit.
Conduct a Site Visit and View the Existing Conditions
For government projects, they will notify all the bidders of a specific date and time for a site walk. This is primarily for looking at the existing conditions and generating any RFIs.
Here are some photos that I took on a job site walk.
I captured this image to document the loose wiring that is hanging off the side of the buildings. This was not shown in the plans but required that we tidy this up.
You need to document any equipment that may interfere with the work. This will become a coordination effort when construction starts. Your time needs to be included in the bid.
Compare the plans against what you see onsite. If you find any discrepancies, note this for your RFI questions later.
Site visits also give you a better understanding of what equipment you may require to complete the job.
Submit the Necessary RFIs
When you return to the office, you can submit your questions using an RFI form. The design engineer will respond to the questions to provide additional information.
Depending on the number and type of questions, this can result in an addendum being issued.
An addendum is a change in the original scope of work provided in the initial bid documents.
If they issue an addendum, you can expect that they will give you some additional time to submit your bid.
How to Develop the Estimate for Your Construction Bid
By this point, you should have all your questions answered and all the bid documents reviewed. Now, it’s time to determine your price.
This is the most important part of the bidding process. If you miss anything in the estimate and your price is selected, the owner will not pay for things missed.
Anything included in the bid documents must be completed regardless of if you price it or not.
This is the danger of submitting a price without covering the entirety of the scope of work.
So, when working on your estimate consider the following steps.
- Review the general requirements and project specifications: This will let you know if you need to include money for building permits, bonds, hazmat testing, etc… Take your time reviewing these documents so nothing is missed.
- Look at the design drawings: Use the design drawings as your reference to determine the material, equipment, and labor hours. Perform takeoffs, which will give you a quantity of the amount of material needed for a portion of work. You can calculate equipment and labor costs based on the quantities.
- Include enough time for the office staff: Some companies use a percentage of the labor hours to calculate the office hours. I find this doesn’t work that well and the hours are typically short. Work with the project managers to determine the correct number of hours needed for the job.
- Cover all your indirect costs: Indirect costs are items that do not directly apply to construction. This is your cost for a trailer, hot spot, portable toilet, etc… on the construction site. These things are required in the construction process and need to be covered in your price.
- Overhead & Profit: Lastly, you need to consider the percentage to use for overhead & profit (OH & P). Most construction companies will use 10% for each.
After you’ve followed these steps, you should have your price finalized to complete the work.
You can transfer this over to the proposal page to provide to your potential customer.
How to Complete the Bid Proposal Page
The first thing you want to include in the bid proposal page is your price. Next, reference the bid documents used to develop the best price.
Reference the Bid Documents Used in Developing your Price
Doing this will hold you accountable for the documents used during bid time. That way a general contractor can’t hold you to work that you never priced.
You should only be required to complete whatever was listed on your proposal. Also, make sure that if they issue a contract, these documents are referenced there as well.
How to Write in the Scope of Work
This is more geared toward the subcontractor. If you’re bidding as a general contractor, they will expect that your proposal includes everything in the bid documents.
You’ll want to provide a very general description of the work that is covered here. If you’re doing a plan and specs job, then you can use the following example.
“Your company name” agrees to provide the labor and material to complete the work as shown in the contract plans and specs dated _____. We agree to complete the work laid out in the following specifications as well:
26 – Electrical
27 – Communications
As you can see, this is a broad description of the scope of the project. This provides enough information to tell someone what portion of the job you will cover.
If you’re not bidding on a plan and specs project, you will need to write a specific scope of work.
Let’s say a customer wants you to replace an exhaust fan. Your scope of work section should read:
“Your company name” agrees to replace the 10 HP exhaust fan on the rooftop along with the ductwork at the points of connection. Work shall include all electrical associated with replacing the fan. Start-up testing included for the new exhaust fan along with a trouble-free period of 7 days.
Consider something like this when you have to write your next bid proposal.
Include the General & Specific Exclusions in your Bid Proposal
In the bid proposal, you should write down your list of exclusions. These can be general items that you include in every project or more specific ones.
As a subcontractor, you do this to protect yourself when it comes to what’s included in your scope. If you’re not clear about the exclusions, the general contractor will assume that you have everything covered.
It will be hard to prove that you did not include the work if it is not specifically excluded in the proposal.
Now, as the general contractor, the owner assumes you’re covering everything in the bid documents. So, you can’t put down many exclusions if you want the job.
This doesn’t mean you can’t put down any exclusions in the proposal. You just need to be careful about what is written.
For example, if the bid document shows hazmat abatement you can’t exclude this. You need to find a subcontractor to give you a price to complete the work. If awarded, you hire that subcontractor.
Sending Your Bid Proposal to the Owner or General Contractor
At this point, you should have your proposal page completed and ready to send. You will send this with your bid package for the owner’s review.
After some time they will issue an award letter. Hopefully, you get the winning bid!
What is an Owner Looking for When Selecting a Construction Firm?
It’s important to understand the criteria that the owner has before you even bid. This will give you the upper hand when you submit a price.
According to the University of Missouri, they consider the following items when reviewing construction contractor’s bids.
- The firm’s qualifications: The owners want to know if your team can complete the project.
- The number of projects completed: This will display your experience in the construction business to the owner.
- The firm’s past performance: The owner wants to know your reputation within the construction industry and that you are a reliable contractor.
- First present workload: Having too much work will indicate that you might not be able to meet the deadline. You may have to prove to the owner that you have the capacity to take on more work.
- The firm’s experience with the project type: Having experience with the project type will reduce the risk of issues after turnover. No owner wants to deal with constant problems with their new equipment.
I believe that these are typical standards that any owner or construction manager will follow when selecting a contractor.
Key Takeaway
By following the steps laid out you should be on your way to developing a construction bid on your own. If you have a mentor or experienced estimator you work with, consult them on your first few bids.
Before you go, consider checking out my article on requests for proposals! This will give you a better idea of what is included with the bid documents for your next project.
Thank you for reading.
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