About 70% of constructors use bid strategy techniques to get projects. The approval rate of a bid wholly depends on how much you’ve placed your bid. Or you can say that bidding is the game of getting a project. If you’re new to the construction industry and want to learn the art of successful construction bids, this guide is for you. In this blog we’ve written an ultimate guide on how construction bidding helps to win successful projects.
What Is Construction Bidding And What Does It Contains?
Construction bids are a proposal that you send to your clients. The client sees the proposal and they have a choice, either to accept or reject the proposal of the constructor. The bid consists of different items that includes pricing, ETA and other important information that we’ll mention later. It’s a one simple file or document that mentioned the proposal and the proposed amount to the client.
Here’s what included in the construction bid:
|Project information||The name of the project, the location, the owner’s contact information, and the contractor’s contact information.|
|Bid Design||A detailed description of the work that will be performed, including the materials and labor that will be used.|
|Schedule||An estimate of the time it will take to complete the project.|
|Budget||The estimated cost of the project.|
|Terms and conditions||A list of the terms and conditions that will govern the project, such as payment terms, change order procedures, and dispute resolution.|
|Additional information||Any other information that the contractor believes is relevant to the project, such as references, certifications, or insurance information.|
Construction Bidding Strategies That Help To Win Successful Projects
Here are the most industry recognized strategies that guarantee maximum chances of winning a construction bidding proposal:
Decisions in Construction Bidding Process
In the construction industry, there are various bidding processes. Usually there are 3 types of processes that we’ve mentioned below in the bulleted points. These three are the standardized methods in almost all kinds of construction projects.
|Construction Delivery Method||Procurement Method||Contract Model|
|Design-Bid-Build||Competitive Bidding||Lump Sum or Fixed Price Contract|
|Construction Management||Negotiated||Cost-Plus Fee or Guaranteed Maximum Price (GMP)|
|Design-Build||Selective Tender||Design-Build or Design-Build-Operate-Maintain|
- Construction Delivery Method: In this method, the project owner contracts with an architect or engineer to design the project. Once the design is complete, the client solicits bids from contractors. After evaluating the bids, the owner selects a contractor to construct the project based on the lowest bid or other evaluation criteria.
- Procurement Method: Competitive Bidding is typically used in Design-Bid-Build. Contractors compete by submitting sealed bids, and the owner selects the contractor with the most favorable bid.
- Construction Delivery Method: In this method, the owner hires a construction manager (CM) during the early stages of the project. The CM works closely with the owner and the design team to provide input on constructability, cost estimates, and scheduling. The CM then manages the bidding and contracting of trade contractors for the construction phase.
- Procurement Method: Construction Management typically involves a Negotiated procurement method. The owner negotiates separate contracts with trade contractors based on their qualifications, experience, and proposed pricing.
- Construction Delivery Method: In Design-Build, the owner contracts with a single entity, the design-builder, to provide both design and construction services. The design-builder is responsible for managing the entire project from concept to completion, reducing coordination efforts between multiple parties.
- Procurement Method: Design-Build typically involves a Selective Tender procurement method. The owner prequalifies a shortlist of design-build teams based on their qualifications and experience, and then requests proposals from those selected teams.
Don’t Chase Every Job
Just because there’s a project available on the list, doesn’t mean that you should send for it. Taking time and only applying on a selected job on which you are sure that you can do that is always a better idea than applying on every random job. Sending a bid on a random job will never increase your acceptance rate. In fact, to send a proposal to every project, you will most probably use a fabricated and pre-written proposal.
Clients are not that fool, they know who’s sending them a custom written proposal after reading the project and who’s sending them a prefabricated proposal. Additionally, a fabricated email is considered spam and will never earn you a conversion.
Therefore, always take your time, review the job carefully that you can do and then send a customized bid. Here are some things that you should include in your bid:
- Executive Summary
- Project Understanding
- Scope of Work
- Project Schedule
- Pricing and Cost Breakdown
- Value Engineering
The client is posting a job bid because they want a solution right? That’s what 70% of constructors don’t understand while bidding. When you understand the client’s problems, only then you can bid effectively on the job and may get the project.
Majority of the contractors only talk about their past experiences, what they have done, their education and skills, that’s not how you bid on the job. Your client doesn’t want your “about us” and they are not interested in your biography. They want a solution to their problems.
Just tell them how you’re going to solve their problem, that’s what the client wants to hear. When you start mentioning your about us, the client thinks, ok so, how’s this related to my problem? That’s why, you should only mention their problem and give them a solution. This strategy will surely increase your bid’s acceptance to 40%.
Us to the Point and Summary of the Job
Your client isn’t a technical person (in most of the cases), so it’ll not make any sense to get into technical language in your proposal. Most of the contractors do make these mistakes and think that it’ll leave a positive impression in their client’s mind, it’ll not.
You shouldn’t add any technical stuff that your client can’t understand. What’s the purpose of sending a proposal if your client can’t understand the stuff mentioned in the proposal?
Always mention those things that are easy to understand and explain well to a non-technical person. This will let your client know how you’re going to do the work and can consider your proposal on the top priority.
Here’s a detailed table on things to mention in your construction bid proposal:
|Project details||Project name, location, and scope of work|
|Site conditions||Soil type, groundwater level, and existing utilities|
|Permits and approvals||Required permits and approvals from local authorities|
|Schedule||Project start and completion dates, as well as any key milestones|
|Budget||Estimated project cost, including contingency funds|
|Materials and equipment||List of materials and equipment needed, as well as their estimated costs|
|Labor||Number of workers needed, as well as their estimated wages|
|Safety precautions||Safety procedures and protocols to be followed during construction|
|Quality control measures||Quality control procedures and protocols to be followed during construction|
|Communication plan||How project progress will be communicated to stakeholders|
|Change management plan||How changes to the project scope or schedule will be managed|
Sell Value, Not Just Price
Some contractors might just slash the price and offer much cheaper rates than others in the market. They think that the client is considering the best deal. That’s not the case. Some clients might look at the pricing, but the majority of the clients look up for the value and quality.
Therefore, sell them the quality and not the discounted pricing. Explain to them why the pricing you’ve mentioned is worth spending for them and how your service can give them value and solve their issues.
If you just get into the lowest pricing competition with others, it’s not going to earn any profit for your business. Offering dirt cheap pricing is never a profitable idea. Therefore, sell your client’s quality, money is the by-product in that value service.
We don’t mean to hike up your prices because your services are great, keep them competitive in a market competitive. Your client wants quality, but doesn’t want to invest more than the market’s average pricing (in most of the cases).
Offer Short ETA
No one wants to wait for the delivery for too long. Everyone wants a fast delivery service for their project. Therefore, always try to deliver on the time and as soon as possible. About 60% of clients reject the proposal just because of the long delivery timelines. You must know that long ETA’s are always a turn off for the clients and can earn you a rejection from the client.
We don’t mean to offer instant ETA’s that make your bid suspicious, it’ll put a question mark on your quality issues. You can offer the market’s average ETA a few or hours faster. Don’t make it too long unless you want your bid to be rejected by the client.
What is a construction bidding strategy and why is it important?
Construction bidding strategy refers to the process of developing a comprehensive plan for submitting competitive and successful bids on construction projects. A strong bidding strategy can help contractors win more projects, increase profitability, and build a positive reputation in the industry.
How do you develop a successful construction bidding strategy?
Developing a successful construction bidding strategy involves a number of key steps, including identifying target projects, researching competitors and market trends, analyzing project requirements and specifications, developing a detailed cost estimate, and creating a compelling proposal that highlights your strengths and unique value proposition.
What are some common mistakes to avoid when developing a construction bidding strategy?
Common mistakes to avoid when developing a construction bidding strategy include failing to thoroughly research the project and market, underestimating costs, failing to account for potential risks and contingencies, submitting a generic or poorly written proposal, and failing to follow up with the client after submitting the bid.
How can technology and data analytics be used to improve construction bidding strategies?
Technology and data analytics can be used to improve construction bidding strategies in a number of ways, such as by providing real-time market intelligence, automating the bidding process, optimizing cost estimates, and identifying potential risks and opportunities.
How can a construction bidding strategy help you win more successful projects?
A well-developed construction bidding strategy can help you win more successful projects by enabling you to submit more competitive and compelling bids, demonstrating your expertise and value to potential clients, and building a positive reputation in the industry.