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Learn How to Get the Best Construction Bid

Written by Jeff

February 25, 2024

How to Get the Best Construction Bid

Introduction to Construction Bids

Selecting the right Construction Bid for your building or infrastructure project is one of the most important decisions you will make. The bid evaluation and contractor selection process aims to identify the bidder that offers the best combination of quality, experience, value, and reliability. This involves carefully reviewing bid proposals, verifying qualifications, and negotiating contract terms.

There are several key steps to evaluating bids and choosing the best contractor for your needs:

  1.  Define your project goals, requirements, and selection criteria upfront. Develop a request for proposals (RFP) that clearly communicates your specifications.
  2. Research potential bidders and pre-qualify those with relevant experience who can deliver within budget.
  3. Distribute the RFP and hold a pre-bid meeting to ensure all bidders understand your project.
  4. Receive and open bid proposals, then thoroughly evaluate and compare them based on your predefined criteria.
  5. Conduct reference checks and interviews to verify the capabilities of shortlisted bidders.
  6. Negotiate pricing, timeline, terms and conditions with your top choice.
  7. Make a final decision and award the construction contract to the bidder that best meets your needs.
    This article will walk through each of these steps in detail, providing guidance on crafting bid documents, evaluating proposals, and ultimately selecting the right contractor for your project.

Define Your Construction Bid Goals and Requirements

The first step in evaluating construction bids is to clearly define your project goals and requirements. This will provide the foundation for the entire bidding process and allow you to select the bid that best fits your needs.

  • Scope: Provide a full description of the project and specifications. Include the type of building or structure, size, number of floors, materials to be used, any demolition required, and other details about the expected final product.

  • Budget: Set a clear maximum budget for the total project cost. Outline any wiggle room if bids come in over budget.

  • Timeline: Indicate your ideal timeline and any deadlines, such as the need to complete different phases by certain dates. Include the expected start date and required completion date.

  • Quality standards: Specify the quality of materials and level of workmanship required, including any special certifications or skills needed by the contractor. Reference industry standards if applicable.

  • Sustainability goals: Note any sustainability or energy efficiency aims, like LEED certification, net zero energy use, renewable energy, etc.

  • Permits/regulations: Outline permits and government regulations that must be followed.

  • Site considerations: Provide details about the site such as access, soil conditions, environmental factors, easements, etc.

  • Insurance requirements: Specify what insurance coverage you require the contractor to carry.

In addition, decide what level of ongoing involvement you want with the builder. Will they hand over a turnkey project or do you want progress updates and change order approvals?

Knowing your goals upfront allows you to communicate exactly what you want to potential bidders. It also gives you a benchmark to evaluate if bids meet your needs and reject any that don’t align. Taking the time to define requirements will pay dividends later when selecting the right construction partner.

Research Potential Contractors

When putting together a list of contractors to bid on your project, it’s important to do thorough research to ensure you only consider qualified, reputable companies. Here are some tips for researching and vetting potential contractors:

  • Ask for referrals from family, friends, neighbors, realtors, architects, etc. who have had construction done recently. Get a list of companies they were pleased with.

  • Search online directories like the Better Business Bureau, Angie’s List, and your state’s contractor licensing board. Look for contractors in good standing without complaints.

  • Look for contractors who specialize in your type of project and have years of experience doing similar work. Verify they are licensed for your state/city.

  • Review contractors’ online portfolios and visit job sites they worked on. Get a sense of their quality of work and construction practices.

  • Ask contractors for client references and follow up with those previous clients about their experiences.

  • Look up contractors’ ratings on review sites like Yelp and Google. Be wary of very low ratings or a lack of reviews.

  • Research contractors’ financial stability—a poor financial state can affect the project. Search public records for liens or bankruptcy.

  • Conduct interviews with contractors on your shortlist. Ask about their bandwidth for your project timeline, how they handle communication, bills/change orders, subcontractors, etc. Go with those you feel most confident in.

Thoroughly vetting potential contractors takes time upfront, but saves headaches later. Checking their reputation, work quality, financials, and client references gives you the information needed to make the best hiring decision for your project. Take a Look at our article on “10 Questions to ask when Hiring a Construction Contractor” for more ideas.

Create a Construction Bid Request Package or a Detailed RFP

The Bid Request also known as a RFP (Request for Proposal) is one of the most important documents in the bid process. It provides potential bidders with all the information they need to accurately estimate costs and submit a compelling proposal. The more detailed the RFP, the better the bids you will receive.

Key elements to include in an RFP:

Project Overview and Scope

  • General description of the project and location
  • Overall project scope and key elements to be included
  • Any required approvals or permits
  • Project objectives and goals

Plans and Specifications

  • Blueprints, drawings, plans showing project layout and design
  • Material specifications and quality standards
  • Preferred brands, products, or vendors if any
  • Warranty requirements

Project Timeline

  • Start and completion dates
  • Key milestones and deadlines
  • Schedule requirements or constraints

Contractor Requirements

  • Licensing, insurance, bonding requirements
  • Safety and site compliance procedures
  • Past project examples and qualifications

Bid Instructions

  • Deadline for bid submission
  • Required formats and bid bond
  • Instructions for questions and site visits
  • Criteria for bid evaluation and selection

Terms and Conditions

  • Payment schedules and retention percentage
  • Change order and claims policy
  • Performance bond and warranty requirements

The bid request package provides all the details contractors will need to provide accurate pricing and vet their own ability to complete the project successfully. Taking time to create a thorough bid request will result in higher quality bids to choose from.

Distribute the RFP and Hold a Pre-Bid Meeting

It’s important to walk potential bidders through the RFP in detail so that everyone is on the same page regarding your project’s requirements, specifications, and timeline. Consider holding a pre-bid meeting 1-2 weeks after distributing the RFP. This gives bidders time to review the documents and come prepared with questions.

At the pre-bid meeting, provide a project overview presentation highlighting:

  • Scope of work
  • Technical specifications
  • Materials required
  • Project schedule and deadlines
  • Special requirements or conditions

Walk through the RFP section by section, explaining bid requirements and answering any questions. Be sure to document all questions asked and your responses and share meeting minutes with all bidders afterwards.

Allow bidders to visit the job site if possible so they can visualize the project and account for any access or logistical issues in their bid.

The goal is to eliminate confusion and put all contractors on equal footing when preparing their proposals. Being transparent upfront prevents misunderstandings down the line that could lead to disputes or delays during the project.

Receive and Open Construction Bid Proposals

When the bid submission deadline passes, it’s time to receive and open all the proposals that were submitted. There are proper bid opening procedures that should be followed to ensure fairness and transparency in the selection process:

  • The bid opening should be conducted publicly at the time and place specified in the RFP documents. All bidders who submitted a bid by the deadline should be invited to attend the bid opening in person.

  • Open each bid proposal one at a time at the bid opening. Announce the name of the bidder and the total bid price for the record.

  • The attendees should be provided with bid tabulation worksheets to record the important details of each bid as it’s opened. This creates transparency into the bids received.

  • No decisions or evaluations should be made at the bid opening itself – it’s simply meant to reveal the bid prices publicly.

  • After opening, each bid should be considered a public document that can be reviewed by any interested party with appropriate notice.

  • All bids that were received by the deadline should be opened, even if they are non-compliant or incomplete. Late bids should remain unopened and be disqualified.

  • After the bid opening concludes, evaluate and compare the compliant bids in more detail to make a selection. Communicate the next steps in the process to all bidders.

    Following proper procedures at the bid opening stage ensures all parties can have confidence in an ethical, fair and transparent bid selection process. It provides a level playing field for bidders and oversight into how bids are received and handled.

Evaluate and Compare Construction Bid Proposals

Once you’ve received all the bids, it’s time to evaluate and compare them. There are several key factors to consider when reviewing construction bids:
Price
The bid price will likely be a major factor in your decision. Make sure you’re comparing apples to apples by having all bidders quote on the same scope of work. Keep in mind that the lowest bid doesn’t necessarily mean the best value, as an unrealistically low bid could indicate a contractor has misunderstood the project scope or is cutting corners.
Scope
Carefully review what’s included in each bid. Make sure they interpreted the project scope and deliverables the same way. Watch for bids that seem to omit necessary tasks or materials – a very low bid could mean important items are missing.
Qualifications
Look closely at each bidder’s experience, reputation, staff expertise, safety record, past performance on similar projects, and financial stability. An established contractor with proven success on comparable projects is less risky than one with little relevant experience.
Project Schedule
Review the proposed timeline and construction schedule from each bidder. Look for realistic timeframes, reasonable project phasing, and insight into how they’ll deliver the project on time. Watch for bidders who propose overly aggressive schedules that could compromise quality.
References
Speaking with past clients will provide valuable insight into how each contractor operates. Ask for and check multiple references to verify quality work, timeliness, good communication, and ability to resolve unexpected issues.
Value Added
Some bidders may highlight additional value they can provide, such as advanced technologies, innovative materials, sustainability initiatives, extended warranties, etc. Consider these plusses but balance them against the overall bid price.

By thoroughly evaluating and comparing the key factors in each bid proposal, you can determine which contractor offers the best combination of value, quality, and dependability for your project’s budget and requirements.

Conduct Reference Checks

Checking references is a crucial step when evaluating construction bids. Once you’ve narrowed down the bids to your top few choices, take the time to thoroughly check references before making a final decision.

Speaking with previous clients will provide valuable insights into the quality of each bidder’s work and their reliability in meeting project timelines and budgets. Prepare a list of questions to ask references such as:

  • How did the bidder perform on previous projects in terms of meeting deadlines and staying within budget? Were there any major delays or cost overruns?
  • What was the quality of the completed work? Did they properly follow plans and specifications?
  • How responsive was the bidder in addressing problems or issues that came up during the project? Were they easy to communicate and work with?
  • Would you hire this company again for future projects? Why or why not?
  • Did the bidder have adequate staffing levels and resources to properly execute the project?
  • Were there any safety issues or concerns during the course of construction?
  • Were you satisfied overall with the end results of the project?

Take notes during your calls with references so you can compare between bidders. Look for red flags like consistent project delays, poor communication, or quality issues. This inside information will help safeguard against choosing a bidder that looks good on paper but has trouble delivering on their promises. Vetting bidders thoroughly now will pay off with a smooth construction process down the road.

Negotiate the Contract – Construction Bid

After evaluating all the bids and selecting your preferred bidder, it’s time to negotiate the final contract. This is your opportunity to refine details and clarify any remaining issues before finalizing the agreement.

  • Schedule negotiations with the selected bidder to discuss the project scope, timeline, pricing, and other contract terms in greater detail. Be prepared to explain your priorities and negotiate to optimize the contract to meet your needs.

     

  • Ask questions and clarify any vague or confusing areas of their bid proposal. Get written confirmation on expected deliverables, work schedules, quality control processes, etc.
  • Seek to negotiate better pricing if their bid came in over budget. Ask if they can shave costs in certain areas or reduce profit margins while still delivering quality work. Offer incentives for early completion or under budget performance.
  • Request adjustments to the payment schedule if desired. For example, smaller incremental payments tied to progress milestones rather than a few large lump sums.

    – Define clear performance requirements and project milestones. Outline expectations for communication protocols, change order process, and other logistics.

  • Specify precise completion criteria and testing/inspection procedures to ensure work adheres to standards and satisfies acceptance conditions before final payment.
  • Protect yourself with contingency plans, performance bonds, warranties, and penalty clauses in case of cost overruns, delays, or unsatisfactory work.
  • Clarify liability, insurance, intellectual property, confidentiality, dispute resolution procedures, and other legal protections.
  • Get any negotiated changes approved by lawyers on both sides before signing the final contract.

    Thorough negotiations will help optimize the project plan, contract terms, risk allocation, and working relationship before execution. Take time at this stage to ensure excellent clarity and alignment.

Make a Final Decision and Award the Contract

After you’ve completed all the previous steps, it’s time to make your final decision on which bidder to select. Notify the winning bidder that their bid has been accepted and request that they sign the contract documents. Be prepared to notify the losing bidders as well – it’s good business practice to let them know you’ve gone with another firm.

Once the contract is signed by both parties, the work can officially begin. Be sure to keep a signed copy for your records. You’ll also want to send a letter of intent or similar document to the winning bidder to lock things in prior to having the final contract signed.

Moving forward, maintain open communication with the awarded bidder to ensure the project gets completed to your specifications, timeline and budget. Schedule regular check-ins to monitor progress and head off any potential issues. With careful bid evaluation and contractor selection, you’re now on your way to a successful construction project.

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