Winning construction bids and locking in profitable projects is both an art and a science. With the right bidding strategies, processes, and technologies in place, construction professionals can consistently land the jobs they want at healthy margins. This guide covers proven techniques to master the art of bidding on construction projects.
From accurate cost estimations to leveraging solutions like ExakTime for streamlined time tracking, contractors can gain a competitive advantage in the bid process. By understanding bidding basics, implementing smart strategies, using modern technologies, and avoiding pitfalls, your company — whether it’s a small business or large firm — can win more profitable projects. Read on to learn insider tips that will transform your approach to the construction bidding process.
Understanding the Basics of Construction Job Bidding
The competitive bidding process is how the vast majority of commercial and public construction projects are awarded. It’s a competition where contractors submit sealed bids to complete a specific project based on the provided plans, specifications, and contract terms. The owner then reviews all bids received and typically selects the lowest responsible and qualified bidder to be awarded the job.
It’s essential construction professionals have a solid grasp of some key concepts when making construction bids:
The Importance of Accurate Estimations
Creating extremely detailed and precise estimations is the foundation of any winning bid. As a general contractor, you must thoroughly nail down the true costs or your pricing will be wildly inaccurate. The process starts with comprehensive takeoffs of plans to quantify all materials, equipment rentals, and labor hours needed.
Understanding current and localized labor rates and material costs is critical. Account for site conditions, expected production rates, overheads, profit margin, and contingencies. Time-tracking software like ExakTime provides validated data on labor costs and productivity rates to inform precise estimates. Having an experienced estimator on staff or as a consultant is hugely beneficial. The right inputs and taking the time for meticulous construction cost estimating can lead to bid submissions you can confidently stand behind.
Understanding Construction Specs and Contracts
Review the project specifications closely to understand the contracted scope of work as well as any unique requirements that drive costs up. Note specifications for materials, finishes, performance criteria, testing, deliverables, and more that will impact pricing.
Also, carefully analyze the construction contract terms as they define the commercial aspects like payment schedules, change order management, insurance requirements, penalties, and other financial implications. Conducting thorough due diligence on the plans and contract is essential before bidding out any project. Never bid out a project where the plans and contract aren’t crystal clear.
Key Strategies in Bidding Construction Jobs
Submitting the lowest bid pricing does not always guarantee winning projects. There are several savvy strategies general contractors should thoughtfully incorporate when bidding to land the most profitable work:
Finding the Balance Between Competitive Pricing and Quality
Finding the ideal balance between competitive pricing and delivering high-quality work is an art honed over years of experience. Bid too high and you won’t win enough work. But underprice jobs and you’ll suffer financially down the road when extra costs erode margins.
The key is thoroughly knowing your expected costs and crafting bids that allow reasonable profitability. Be willing to walk away from unsuitable projects that don’t meet your criteria, even if it means short-term schedule gaps. With discipline, contractors can strike the right balance between price and quality that maximizes profits across their body of work over time.
Building Core Competencies and Specializations
Savvy construction professionals strive to identify and build deep expertise in certain project types, delivery methods, technical capabilities, and more. Avoid the temptation to stray from your wheelhouse just to fill short-term schedule gaps.
Instead, invest in specializations that align with your strengths and passions. Become known as an expert in specific sectors like healthcare, education, hospitality, or multifamily through consistent pursuit of projects in that niche. Highlight past successful projects as proof of your qualifications. Over time, you’ll win more work by being seen as a specialist rather than a generalist trying to be all things to all clients. Lean into your specialty.
Forging Strong Relationships Across the Industry
Like most industries, success in construction is built on strong relationships. Nurture win-win partnerships with owners, architects, engineers, subcontractors, vendors, and other players. Get to know them long before the bid submission deadline. Earn trust by being responsive, delivering quality projects, and helping solve problems.
Consider relationship development as part of your continuous marketing. This fosters goodwill that leads to more bid opportunities, valuable insights, and better projects over time. The construction industry is a small community, so your reputation amongst clients and partners matters.
Leveraging Technology for Improved Efficiency
Embracing construction-specific software, mobile apps, and advanced digital platforms can give contractors a competitive edge in accuracy, speed, and professionalism during the bidding process. But avoid overinvesting in technology just for flashy bells and whistles.
Carefully evaluate solutions against current pain points and true needs. Prioritize tools that integrate with existing systems to create a streamlined tech stack. Implement new solutions incrementally and ensure teams are properly trained. With the right technologies tailored to their workflows, contractors can achieve greater productivity and precision when bidding for bigger profits.
Leveraging Technologies in Construction Job Bidding
Advancements in software and technology are also impacting construction bidding. Those who embrace technology gain advantages over old-school bidders.
Use of Software and Apps for Construction Bidding
Specialized estimating software offers many advantages compared to relying solely on spreadsheets. Robust programs improve accuracy through standardized cost databases, automated formulas, and digital takeoff integration. They allow seamless collaboration across a distributed estimation team. Intuitive construction bidding apps provide additional benefits like remote access to plans, digital bid submissions, and on-the-go mobility for contractors.
The right mix of desktop and mobile solutions can significantly boost productivity and precision in developing competitive bids. Construction companies that strategically invest in the best bidding technology for their needs will gain an edge over firms still using outdated processes.
Empowering Estimations with Digital Takeoff Tools
Embracing digital takeoff tools can be a total game-changer for creating accurate quantity takeoffs rapidly. By uploading PDF plans or BIM models into estimating software, contractors can swiftly extract materials by type or assemble cost-driven estimates by spec section. This eliminates the need for manual counting, scaling, and calculations which are tedious and prone to human error.
Digital takeoffs also allow easy modification if plans change. The right takeoff tool, combined with a contractor’s material knowledge, can empower precise material quantities for bids in a fraction of the time.
Streamlining Time Tracking with Solutions Like ExakTime
Accurately tracking time and labor costs is crucial to developing competitive and profitable bids. Traditional manual timecard methods are prone to errors and inefficiencies. Modern time-tracking software like ExakTime can help.
ExakTime offers simple, intuitive online tools optimized for construction crews to log hours worked, tasks performed, equipment used, and more. Features like GPS timestamps, geofencing, and photo capture verify staff location and validate time entries. This provides the validated labor data needed for precise bidding. ExakTime seamlessly integrates with payroll and accounting systems to sidestep manual processes.
Managers gain insights into labor utilization and productivity.
Implementing automated time-tracking solutions can save construction firms significant time and money. The benefits compound when integrated with bid estimation and project delivery workflows. Advanced technologies like ExakTime empower contractors to win more bids and boost profits.
Avoiding Common Pitfalls in Construction Job Bidding
While the construction bidding process provides huge opportunities, some common mistakes can quickly derail success if contractors aren’t careful:
Overcoming the Problem of Underbidding
The temptation to underbid just to win work is real, especially when things are slow. But submitting lowball bids often leads to losing money on projects and eroding the long-term health of your business. The key is to intimately know your true costs and stand firm on the number where you can profit, even if it means losing out on jobs. Underbidding trains owners to expect unrealistically cheap prices too.
Managing Potential Risks and Unforeseen Costs
No matter how buttoned up your estimate, surprises and unknowns always crop up on construction projects. It’s crucial to build in reasonable contingency allowances based on past experience. Understand specified allowances and owner contingencies in the project documents — don’t rely on them fully. Proactively manage change orders and be ready with documentation to justify legitimate added costs. Thinking through project risks upfront and having plans to address them will prevent profit fade.
Avoiding Formulaic Bidding Without Thorough Review
In the rush to submit competitive bids, some contractors simply use historical percentages or rules-of-thumb to adjust pricing up or down from their database. This formulaic approach can lead to mistakes without a thorough review. Savvy bid management means customizing each bid based on the unique requirements, site considerations, and specifications of that project.
Frequently Asked Questions About Bidding Construction Jobs
Bidding for construction work often raises many questions for contractors. Here are answers to some of the most common FAQs around the bidding process:
How Do You Determine What to Bid on a Construction Job?
Conduct a detailed quantity takeoff of materials, equipment, and labor required based on the plans, specs, and site conditions. Develop unit pricing based on current subcontractor bids and material costs. Build in appropriate markups and contingencies. Compare your total estimate to the project budget.
What Percentage Should Be Allowed for Contingencies?
Industry standards recommend 5-10% of total costs as an acceptable contingency allowance. Higher contingency amounts may be warranted for complex projects with greater unknowns or risks.
What Is the Most Common Way to Bid on Construction Jobs?
Sealed competitive construction bidding is the most common. All contractors receive the same documents and submit sealed bids by a specified deadline. Bids are then compared and awarded.
How Do You Stand Out When Bidding for Construction Jobs?
Highlight relevant experience and expertise for that project type. Provide examples of similar successful projects. Emphasize relationships with design team members. Outline qualifications of key personnel. Demonstrate financial strength.
How Long Are Construction Bids Good For?
Most bid bonds specify a 30-60 day timeframe that bids must be held open. Contractors can withdraw a bid after that expires. Timeframes may vary, so review bid documents closely.
How Can Time Tracking Software Help With Bidding?
Robust time tracking software provides accurate data on labor costs and productivity rates, which are essential for creating competitive bids. Features like:
- GPS verification of employee location
- Timestamped clock-in/clock-out
- Matching hours worked to projects and cost codes
- Tracking paid time off and sick time
- Overtime wage calculations
All provide validated labor data to precisely estimate the work hours and costs to complete projects. This level of labor cost intelligence can be a major advantage for contractors when bidding against others still relying on manual methods. Advanced time tracking tightly integrated with estimating software takes this to the next level.
About ExakTime’s Solutions for the Construction Industry
ExakTime offers automated time-tracking software designed specifically for construction professionals to empower accurate bidding and simplify payroll.
Features like photo ID capture, GPS location stamps, and geofencing provide the validated data needed for precise labor estimates. Robust reporting and analytics help optimize staffing and productivity.
Integrations with leading accounting and project management systems mean no more manual entry or duplicate data. ExakTime simplifies compliance with certified payroll and prevailing wage reporting.
ExakTime also offers mobile apps, over 100 integrations, and bi-monthly online training. Their US-based customer support provides onboarding assistance.
Large construction firms, small businesses, and general contractors leveraging solutions like ExakTime gain technology advantages that lead to more competitive bids, operational efficiencies, and greater profitability on projects. Learn more and view a demo at ExakTime.com.
