Information on Construction Bidding on Residential Homes
With many residential construction projects, contracts are awarded through a process known as bidding. During the bid process, contractors submit their price to complete the specified work, and the lowest bidder is generally awarded the job. Contractors may bid on single or multi-family residences, and work may range from renovations to new construction.
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What Is a Bid?
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A construction bid is a document that lists a contractor's total price to perform a specific range of tasks. The bid is generally derived from a number of components. First, it includes the cost of labor and materials needed to complete the job. Next, the contractor will include costs for equipment rental, wear and tear on tools and vehicles, and any other related costs. Finally, the contractor should include applicable taxes, overhead and profit.
Understanding Scope
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It is critical that both the homeowner and the bidder understand the exact scope of work covered by the bid. The term "scope" refers to the specific tasks or costs that are included or excluded in the bid price. For example, when hiring a contractor to build a new home, the bid will almost always cover the actual construction of the house, but may not include a multitude of other items. Before signing a contract, homeowners will want to clarify in writing whether items such as permits, utility lines, inspections and taxes are included. By confirming the scope of front, you can avoid disagreements and escalating costs as the project progresses.
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How Bids Are Prepared
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Contractors may rely on a number of different techniques when preparing bids. When submitting pricing to home builders, the contractor will generally be able to price the job using architectural drawings. Some individual homeowners may also have drawings that can assist the contractor with pricing. When it comes to most residential remodeling or renovation, the contractor must typically base pricing on information gathered during a home visit. During this visit, the contractor will walk the job and take note of existing conditions that may affect his price. He will also talk with the homeowner to discuss the desired scope of work.
Finding Bid Leads
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There are a number of ways for residential contractors to find bid opportunities. Toll Brothers, the largest homebuilder in the U.S., has a program known as Toll Bid. Toll Bid can be found on the company's websites and lists upcoming bids, as well as links to drawings and other project information. Many national and regional builders have similar programs. Contractors can also find leads through Bid Notification Programs, such as those offered by Construction Journal or McGraw Hill's Dodge Program. Many contractors can even inquire with local general contractors about residential bidding opportunities.
Successful Bidding
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To successfully land residential construction work, bidders must keep a number of important concepts in mind. First, it's critical to understand that residential and commercial projects have very different price levels and building techniques. Those transitioning from commercial construction should be careful not to price the job too high. Next, the contractor should learn to choose bids carefully. Instead of submitting large quantities of bids, the contractor should take the time to evaluate each opportunity and focus efforts on the most relevant opportunities.
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