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Many new contractors who are interested in the construction industry ask
how to bid construction jobs. There is no set way to bid on
construction projects, but coming up with the most
accurate cost estimate and
developing the lowest bid is a tried-and-true method.
Construction bidding is the process in which a general
contractor (and, in some cases, the 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
as important—if not more important—than having the
lowest dollar amount.
Knowing how to bid construction jobs makes 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 at turning a profit.
Using Construction Bid Estimation Software
Construction bid software is used largely by general contractors
as part of the cost estimation and budgeting processes when
developing a bid for a new project. It was introduced the industry
two decades ago, and it has made a major impact in a short period
of time. What was once a major issue of concern for all
construction projects, can now be done quickly and efficiently.
The main benefit of estimating software is the way it automates
job costing.
The software typically comes with a database of
construction costs, updated monthly by subscription. Many builders
will prefer to keep their own database for job costing so that the
software will more accurately reflect 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. In this way, the estimator only needs to choose a job he has
defined in the database, and the software does the rest. This
minimizes the chance that some procedure or material will
accidentally be 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, though some
of them are stand-alone.
The benefits of construction bid software are substantial. Using
software programs, general contractors are able to keep track of
the financial status on a daily or hourly basis contrary to, far
less frequently when the work was being done by an employee.
All budgetary information is stored in one location and is easily
accessed, in contrast to it was manually placed in separate files.
The likelihood of errors is also far less than it would be if the
computations were done by hand.
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. Without the construction bid
template, the entire process in selecting a general contractor to
take on the construction process would be changed and its legality
questioned.
A construction bid template is required for any project,
regardless of the building method used. 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 their price, the bottom line 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.
Traditional Construction Bid Proposals
A construction bid proposal is the basis on which many
construction companies are hired to serve as the primary contractor
on a project. Without a construction bid proposal, there would be
no way to establish the overall cost of a project, which would
throw the project and the contractor-client relationship into
chaos.
Under 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 construction
contract bids. While the architect may want to know more
information about a contractor than their price, the bottom line
cost is the primary reason for the selection of most contractors.
In some cases, the bid is the only thing that is presented and the
lowest bid gets the project.
Design-Build Construction Bid Proposals
With the design-bid construction method, construction bid
proposals cover more than just the price to build. The design-build
method combines the architect and contractor as a unified team,
where they present not only their price to build the project, but
their architectural design as well. A design-build construction bid
proposal includes an all-inclusive price, including the cost of
design and construction. Design-build supporters believe this
method is not only more efficient, but leads to lower costs as
well.
Construction Manager At-Risk Bid Proposals
The construction manager
at-risk (CM at-risk) method is another way construction
project bids are submitted. Under the CM 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 dealing with the architect.
CM at-risk bids are not blind, and the client can select
whichever contractor he believes is best-suited to handle the
project. The contractor's bid comes in the form of the 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 development of the Internet over the past two decades has
significantly changed many aspects of the construction industry.
For more than a century, a company bidding on a project had to send
large amounts of paperwork to a potential client for consideration;
now, an online construction bid can be made, finishing
the bid process with the click of a mouse.
There are multiple sites that allow you to view, download and
print construction drawings in order to complete a bid
proposal. A company must register and complete all the requirements
to have access to this database. Then all information is shared
among all contractors, and the notification regarding due dates and
changes is sent through email systems.
At Charter
Estimating These systems provide support for:
- Selection of appropriate procurement and contracting
strategies, and 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.
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