Knowing What to Bid on a Construction Project
- Yvonne Root
- Apr 2
- 3 min read
Updated: Apr 9
So, a construction project has gone out for bid, and you’re interested in getting in on the action, but you’re unsure how to know your bid will make sense for everyone involved. Let’s start with how NOT to bid.
3 ways NOT to Bid on a Construction Project
Use the by-gosh-and-by-golly method. Just don’t do it! It won’t work out.
Ask your fellow contractors for information on an online source such as a construction-centric forum or social media community. Face it: George in Mississippi won’t have a clue how much Alex in California will have to pay for materials or wages, and neither will Pat in Connecticut.
Do a not-slow and not-fast (in other words – a half-assed) job of checking out what your suppliers will charge, how much each employee will cost, or what equipment you’ll need to add to your inventory.
Before You Bid on a Construction Project
There are standard practices to follow before putting the bid together.
Read and understand the entire bid package. Yes, even the appendices and other inclusions must be thoroughly reviewed.
Get out on the site and look for all possible difficulties or challenges the site might offer.
Develop a material take off. (MTO) Create a detailed list of all the materials you will need to complete the project, including their quantities and specific types.
Send a Request for Quotation (RFQ) to the suppliers you trust. Ask for detailed information about the product, quantity, desired delivery time, and payment terms.
Evaluate labor requirements. You will need to consider not only the number of employees and length of time required to complete the project but also the labor burden associated with each employee. (Don’t forget to include the cost associated with any sub-subcontractors you plan to contract with for the project.)
Determine the costs associated with insurance and bonding for the project.
Calculate your overhead and indirect costs for this project.
Clarify the proper amount needed for contingencies.
Account for profit! Do not leave profit to chance. Include enough in your bid to assure that you will make a profit.
Confidently Bid on a Construction Project
Savvy construction contractors use an accounting method known as Job Costing to track the specific costs associated with each project or job. By including direct costs like labor and materials and indirect costs like overhead, they can determine the total cost of an individual project. This method allows them to price their services accurately – you know, submit an accurate bid. Further, the Job Costing method will enable them to assess profitability on a per-project basis.
Bid on a Construction Project – Reduce the Risk
There is always risk involved when bidding on a construction project. Heck, many things can (and often do) go wrong on any given project. Yet, by taking the time and doing the hard work involved in knowing what to bid, you can lessen the threat and minimize the probability of various risks.
Bid on a Construction Project – More Information
In the upcoming three articles, we’ll dive deeper into this subject.
How to Price for Your Construction Projects – where analysis is the focus.
Get the Cash Register Ringing in Construction – the spotlight will shine on having a Spending Plan and a Billing System.
How to Make Construction Estimating Make Dollars and Sense – where what we bring to the forefront is software designed to make sense of the Job Costing method and make dollars for construction contractors.
Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:
Clients and customers
Employees and subcontractors
Vendors and service providers
Governmental entities
Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:
Remain informed
Avoid hassles
Reduce risks
Be future-ready
Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735
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