What Is A Bid In Construction?
One question we always get sent to us at Mo Engineers is, “What is a bid in construction?” Well, it’s pretty straightforward. Bids are structured offers presented by building firms to coordinators of a specific project they want to take on for their company to carry out.
To simplify it, let’s give you an example of a construction bid. Think of a building company with some resources free to construct a high-rise building in the center of Miami, Florida. They would usually be sent an invitation to bid (ITB) by a project manager and can send a bid with data about prices and delivery timeframe.
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The Steps Involved In The Bidding Process For Construction Projects
The construction bid process is straightforward and similar to if you were to make an offer on something in a different field.
See below for how to bid for a job in construction.
Step 1 – The project owners must determine the project’s magnitude and put together a plan with architectural drawings, scope of work, and job completion dates.
Step 2 – The project owner puts forward a Request For Proposal (RFP) with the help of a bid manager containing the project information so the bidding for contractors can begin.
Step 3 – The construction companies determine whether they want to bid for the job or not, taking into account their company’s situation.
Step 4 – Firms that are enthusiastic about putting a bid in for the construction job will arrange them with price projections, credentials, strategies, etc.
Step 5 – As the date for the contractor job bidding approaches, all interested parties must make an offer before the deadline.
Step 6 – After the project owner gets the bids from the contractors, they’ll read over each and compare them to each other based on costs, experience, and practices.
Step 7 – The project owner chooses the successful contractor, and the terms are negotiated before signing the official contract.
What’s Taken Into Account When Bidding In Construction?
We must look at three fundamental elements before bidding on a job, as they’re a huge part of the bid selection.
They include:
- The Project Delivery Method
- The Procurement Method
- The Contract Model
The Project Delivery Method
The Project Delivery Method outlines the responsibilities shared by the project’s stakeholders. Whatever approach the project owner adopts will carry different risks for each party involved.
Here are some of the methods:
- Design Bid Build (DBB)
- Design Build
- CMR or CMAR
The Procurement Method
The procurement method relates to how the construction services required for the project will be acquired. It’s broken up into the following sections.
- Best Value Source Method
- Low Bid Method
- Direct Selection or Sole Source Method
- Negotiated Method
Contract Model
Finally, the Contract Model, also known as the form of the contract, has to be established. The project owner can choose to go down a number of routes based on their preferences. Whatever the chosen option, it must outline the costs and potential profits before signing.
Let’s look at the Contract Model options.
- Cost plus contracts
- Unit price contracts
- Guaranteed maximum price contracts
- Time and materials contracts
- Lump-sum contracts
Final Thoughts
That concludes our breakdown of what a bid is in construction. Winning bids is a huge part of the building industry, and if your firm’s team knows their ins and outs, it can be hugely beneficial when it comes to the bidding date.
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