Bidding on Commercial Construction Projects

Construction crew looking over blue prints
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Construction bidding is the process through which a general contractor (and, sometimes, an architect) is selected to work on a construction project. In some cases, the only thing that matters in the construction bidding process is presenting the lowest price to the owner; in other cases, the contractor's qualifications are just as important—if not more important—than having the lowest dollar amount. Knowing how to bid construction jobs can make the difference between success and bankruptcy for a construction contractor. If a contractor does not know how to bid on construction jobs, they will have no chance of turning a profit.

Construction Bid Template or Bid Sheet

A construction bid template, or bid sheet, is the required document on which construction companies present their formal bid in their effort to win a project. In the traditional method of selecting a contractor, an architectural firm is hired by the property owner to develop a design for the building or project. Once that design is completed and approved by the client, the architect then puts the design out for bids. While the architect may want to know more information about a contractor than just their price, the price is the primary reason for the selection of most primary contractors. In some cases, the bid is the only thing that is presented, and the lowest bid gets the project.

Types of Bid Proposals

Two common proposal methods for bidding on commercial construction jobs are the design-build proposal and the construction manager at-risk (CM at-risk) proposal. The design-build method combines the architect and contractor as a unified team that presents not only a price to build the project but also the cost of the architectural design. In other words, the bid contains an all-inclusive price for the cost of design and construction. Design-build supporters believe this method is more efficient and leads to lower costs than with a traditional bid structure.

Under the construction manager at-risk method, the contractor and architect operate separately, but the contractor is involved in the process from the beginning and serves as liaison for the client in dealing with the architect. CM at-risk bids are not blind, meaning the client can select whichever contractor they believe is best-suited to handle the project. The contractor's bid comes in the form of a guaranteed maximum price, which states the cost of pre-construction services and the construction process itself will not go over a certain total.

Online Construction Bid Systems

The Internet has significantly changed many aspects of the construction industry, including the bidding process. Traditionally, companies bidding on a project had to send large amounts of paperwork to a potential client for consideration. Today, construction bids can be created and submitted online, finishing the bid process with the click of a mouse.

There are online databases that allow you to view, download, and print construction drawings in order to complete a bid proposal. To gain access to a database, construction companies must register and complete all application requirements. For any given project, all of the information relevant to bidding is shared among all participating contractors, and notifications regarding due dates and changes are sent via email. 

Online bidding database systems provide support for:

  • Selection of appropriate procurement and contracting strategies as well as the nomination of an appropriate principal in the contracts
  • Preparation of tender documents and contracts based on standard forms
  • Selection of contractors and consultants with proven performance records
  • Effective management of contracts, including clause commentaries, sample letters, and checklists
  • Maintenance of an effective performance management system through monitoring and reporting
  • Resolution of contractual claims and disputes

Using Construction Bid Estimation Software

Construction bid software is commonly used by general contractors for cost estimation and budgeting when developing a bid for a new project. This software was introduced over two decades ago and has had a major impact on the industry by making once difficult aspects of the process much faster and more efficient. But perhaps the biggest benefit of estimating software is the way it automates job costing. The software typically comes with a database of construction costs that are updated monthly by subscription. Builders can also keep their own database for job costing so that the software more accurately reflects local costs and price fluctuations in the market.

Simply having material and labor costs at hand makes the estimator’s job easier. Estimators can also use the software to define a job’s materials and labor hours. The software takes this definition and calculates the job cost from a database of labor and material costs. The estimator needs only to choose a job he or she has defined in the database, and the software does the rest. This minimizes the risk that a procedure or material is accidentally left out of the equation.

Another benefit of estimating software is that it allows the builder to look at the final job costs and compare them with the initial bid. Bids can then be reviewed to see how they can be made more accurate. The estimator may decide to alter the definition of a particular job within the software database, calling for less of a material or fewer labor hours.

Construction bid software is not overly expensive, with most programs falling into a price range between $60 and $250, depending on the capabilities of the software. Most construction bid software is designed to work within Microsoft's Excel program, while others are stand-alone applications.