Here’s our tips to help you secure the projects you want to win by creating quality, accurate and professional bids.
There are several important pieces to creating an effective bid, which we will be describing in the following steps. We have based these procedures on best practices from the field as well as tried-and-true methods that virtually all contractors use to enhance their position in the bidding process.
Sometimes people use the terms “bid” and “estimate” interchangeably. This is incorrect. Generally speaking, an estimate represents a contractor’s anticipated internal costs for completing a project. “Bid” on the other hand, refers to your best estimate of the final price to be charged to the customer.
Once a project is identified, appropriate staff is assigned to begin the tedious, but important, work of creating a bid. There are several steps in this procedure, each as important as the other.
The steps to creating a bid are:
The process of providing a preliminary estimate can be of as much assistance to the contractor as it is to the end customer. By researching the project and thinking through the potentially unique challenges that may be faced it is possible that potential hurdles that might stifle your interest can be identified. This is important in that by identifying challenges before delving into the project you can save both you and the end customer time and money.
It may have something to do with the potential size of the project – some contractors and subs are just not prepared to undertake projects that are beyond their scope of ability. Some projects may involve risks that you are on willing to accept. It is important to identify all of this in the preliminary stage so that neither you nor the customer begin investing dollars in a relationship that is destined to fail.
Assuming you have advanced passed the preliminary stage with your interest intact, the second step in ascertaining the potential cost of the project to the customer is a simple square-footage estimate. This is really ballpark as well in that any unique characteristics that may add to the cost are not yet considered. This is simply based on the size of the building. That needs to be clear to both the contractor and to the customer.
If your relationship proceeds to the “assembly estimate”, the parties involved gather more specific information about the project components. Your estimators calculate costs for all of the anticipated components of the projects including things like flooring, roofing, foundation and windows. Each of these components have unique costs associated and your estimators take that into consideration as part of the “assembly” estimate.
The final bid represents your best estimate of the final costs of your contract (subject to change orders along the way). The final bid forms the basis for the actual contract that will be signed by you and the customer. Final details are generally very detailed and are, by necessity, expected to be the most accurate.
Your final bid gives your customer a basis of comparison by which to compare to other bids they may have received. It becomes your sales tool in the process. For this reason, it is vital that your bid include the components that your customer will find most important as they weigh that decision.
The most important components of the bid process that your customers will care about are:
Few things worry businesses more than having projects they have begun end up going over budget. For this reason, businesses of often wary of just taking the lowest bid. Reputation for accuracy and professionalism in the bid process can go a long way toward winning more bids. It does the customer no favor to bid low only to force them scramble to find funds later (or downsize the project) due to flaws in the bid procedure.
Businesses are good at what they do and you are good at what you do. But these two things are most often very different. While they may be experts at selling shoes or groceries, they likely have little or no knowledge of the components of expanding or remodeling their facilities. For that reason, it is vital that your bid be clear and easy for the non-construction novice to understand and embrace. Have several people review it at your company and make suggestions that will result in a document that is clearer and easier to understand.
Most business people are experienced and savvy enough to understand that the lowest bid doesn’t always represent the best value. It does them no good to just jump at the lowest price if they are going to end up paying more later down the road.
References can be especially valuable to provide some comfort to the business in this regard. People who have worked with you and successfully completed projects are often used to give the end customer peace of mind as they go forward with their project.
The main steps in the bid process that you need to be aware of:
Contractors and subcontractors need professional workers to identify and sort through the various bid opportunities. This is an art form that requires knowing not only the things to look for, but also having a firm handle on the potential of your company.
To be able to submit an accurate bid, it is vital that general contractors have a firm understanding of the costs of project components that will be handled by subcontractors. This understanding comes from experience.
Follow the rules. Don’t miss deadlines. Include all components required. For public project bid opportunities, the rules can be very specific and often burdensome. Do your best to meet and exceed the criteria established by those seeking to have the work done.
This is the date and time that the business makes their selection. Sometimes it is in a public setting that you are welcome and encouraged to attend. Other times, it is done behind closed doors with the bidders being notified by mail or phone call afterwards.
If you are the winning bidder, this next step is extremely important. This will define your relationship going forward. Accuracy and clarity in the contract are as important (or even more-so) than in the bid itself. Communication between the contractor and the customer throughout this process is vital to ending up with a contract that meets the needs of both.
The project is done. The customer is ready to take occupancy. A ribbon cutting is scheduled. Assuming all went well throughout the process, this is a celebratory time.
Preparing construction bids is an art form that the most successful contractors and subcontractors use as an effective marketing tool to build their business. There are a variety of software options available to assist in this process. You need the most skilled, experienced people preparing your bids. People you trust and people who impress both you and the end customer with the accuracy, clarity and professionalism, of their product.
Your bid must be reasonable in price and date. It must be submitted by the deadline in a format that is welcoming and easy to decipher.
Successful contractors and subcontractors hire the best estimators and bid professionals. Alongside the skilled tradespeople who actually construct the project, these people are the face of your business. It behooves you to find the best and use them effectively. Your bottom line will be all the better for it.