How to Bid for a Contract

Contract bidding is a highly competitive process.
Contract bidding is a highly competitive process. (Image: Jupiterimages/ Images)

A successful contract bid can make all the difference between gaining significant income and going home empty-handed. A company always wants to get the highest profit-margin possible while still bidding low enough to beat out competitors, so the bidding process is a sometimes difficult balance. Preparation is necessary before making the bid to ensure that you don't promise services you can't provide at a price you can't afford. Bidding for a contract also requires excellent public relations skills as you begin the relationship with a potential client.

Speak with the manager of the business you'll be placing the bid with so you fully understand the scope of work that needs to be performed and what the client's expectations and needs would be. The manager can also give you any required forms that need to be included in the bid and fill you in on his company's requirements regarding entering a bid.

Calculate how many people would be required to do the job and how many hours it should take them to complete it. If you are not familiar with the work yourself to make accurate time estimates, talk with multiple workers who are experienced in the field so you can acclimate to the logistics of the job.

Multiply the number of employees needed and hours of work required by the rate you will be paying them. This is the amount you need to make on the job to break even, so your pay for the contract should be higher to help ensure your company a profit for the services performed.

Add the cost of any equipment needed for the job that you would be providing and specify what that equipment is and what it is used for. Include any additional miscellaneous expenses as well.

Add between 3 percent and 5 percent on top of that amount to get a minimum ballpark figure you should use in the bid that would give your company a profit.

Review the figures used so you can locate places you could reduce the number of workers or the number of hours needed. The more efficient the work process is, the more room you'll have in the budget for profit.

Compare your estimates with any other contracts for similar work that you have access to so you can see if your figures will likely be high or low compared with other bidders.

Write an agreement stating the work that would be performed, how many people would be conducting it and how long the job should take. Specify the experience of your staff as well to show the advantages of using your company. Include very specific details about how work is billed and when payments would be need to be made. Include a spreadsheet with the figures that you used. If you are not experienced in writing a bid, have an attorney assist you to make sure there aren't any loopholes that could damage the company down the road.

Tips & Warnings

  • There are companies designed to help you with contract bidding if you prefer. Research the company ahead of time to avoid a potential scam.
  • Many government contract bids require you to provide financial statements and other information about your company as well, so all of that should be prepared as needed ahead of time.

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