Information on Construction Bidding

Construction bidding is the process by which contracts are awarded to building contractors. This process is used for the majority of commercial projects, such as schools, offices and shopping centers. A small percentage of owners and developers may award contracts through negotiations, rather than bidding, though this is fairly rare. During bidding, contractors submit their total price, or bid, they plan to charge to perform a scope of work. Bids are evaluated based on price and other qualifications. A contract for the project is then awarded to the selected contractor.

Bidding Begins

Bidding starts when a developer or owner approves the building plans for a project. Using these plans, the owner puts the project up for bid. He may issue a Request for Proposal (RFP) to local general contractors or construction managers. The owner may also post the bid request online for open bidding. The RFP or bid request will include basic project information, bid due dates and instructions for submitting final bids or questions.

Bid Documents

When a contractor or construction manager agrees to bid the project, he will use bid documents to calculate his price. Depending on the complexity of the project, these documents may include building plans, specifications, a project manual, schedules and other bidding instructions compiled by the owner. If contractors have questions during bidding, they may issue a Request for Clarification (RFC) or Request for Information (RFI). Answers to these requests, as well as any additional information, are then sent to all project bidders in the form of an Addendum or Change Bulletin. These changes then become an official part of the bid documents.

Subcontractors

Because of the complexity and scope of many construction projects, general contractors rely on subcontractors for help with bidding. The general contractor will issue bid invitations to area subcontractors, such as plumbers, electricians and other relevant trades. He will typically issue bid documents to these companies, which begin bidding the work on the project that applies to their specific trade. By obtaining multiple bids per trade, the general contractor can get an idea of the true cost of the work.

Compiling the Bid

Once prices have been received from subcontractors, the general contractor goes to work compiling the bid. She must review bids from each trade to look for items that have been omitted, then price these items to include in her bid to the owner. The general contractor must also include general project conditions, such as insurance, general labor, job site trailers, equipment and management salaries. Once all of these numbers have been compiled, she will add overhead, profit,and applicable taxes to this price before submitting the bid.

Awarding the Contract

In many instances, the low bidder will be awarded the job. This is not always the case, however, particularly on nongovernment projects. The owner will start by evaluating the bids he receives from general contractors. He must compare price and scope of work, as well as the general contractor's ability to perform the job. When evaluating this ability, he may look at the schedule, manpower, company history and previous experiences with each contractor. The owner may also call each contractor in for a bid-review meeting in an effort to select an appropriate contractor for the job. Once he has made his selection, he will award a contract for the job based on the bid price.

References

• Construction Bid Procedures
• Contractors Group
• Low Bids in Construction