Understanding the construction bidding process is key to winning more jobs. General contractors (GCs) and subcontractors need to understand all the steps in the bidding process to know what’s expected of them along the way.
The bidding process starts when a project owner or architect advertises that a project is ready for bid and makes the bid documents available to bidders. The bidding process may be facilitated by the owner, an owner’s representative or construction manager, or the project architect.
The owner sends out a request for proposal (RFP), request for quote or qualifications (RFQ), or an invitation to bid (ITB) package. This may be sent to only select general contractors or may be openly advertised for all available GCs to bid. The package includes the project drawings, specifications, reports, and possibly a draft contract. Information such as bid date and time, whether the bid opening will be public or private, and how bids will be scored are also included.
The package specifies what documents must be included with each bid, like a particular bid form or questionnaire. Additional documents may also be requested, including a company resume, project experience, a preliminary project schedule, or financial statements. Although these requirements usually apply only to the GC, subcontractors may be required to provide some added information for their company to supplement what the GC is submitting.
Once a GC has decided they’re going to bid on the project, they’ll go through the project documents to determine the types of work needed to complete the project. They then develop their own invitation to bid to send out to prospective subcontractors. The invitation to bid includes detailed information on the project and the scope of work.
The GC then distributes the invitation and the project documents, often called a bid package, through various channels. They may send it directly to subcontractors they’ve worked with before and advertise it with bid exchanges, contractor’s associations, and bid sites, like PlanHub.
Subcontractors who choose to bid on the project will access the project documents and begin their bid process. If they have questions regarding the documents, like there’s missing information or unclear details, they submit these questions to one of the general contractors bidding the project. The GC will review the questions and forward them to the design team as required.
During this part of the process, it’s common for additional documents to be shared after a project has been sent out to bid. These additional documents, called addenda, usually provide clarification or missing information. Any work shown or described on the addenda documents must be included in each bid as part of the original bid documents.
It’s also common for bid dates to change due to missing information or delays in getting design documents. It’s the GC’s responsibility to communicate these changes to the subcontractors bidding on the project.
On or near the bid date, subcontractors send their bids to the general contractors bidding on the project. Each GC reviews each sub bid, compares it to those of similar scope, and asks clarifying questions as needed. The goal is to compare subcontractors in the same trade, apples to apples, though this is often difficult because everyone bids projects differently. GCs may ask subs to revise their pricing, provide more details, or submit revised proposals based on requests from the GC.
The GC selects the winning subcontractors for each trade based on the criteria given for the project. This may include having a particular skill set, experience with similar projects, a working relationship with the GC, or a low price. While it’s true that the lowest bid usually gets chosen, it isn’t always the case. Having experience with similar projects and establishing a working relationship with GCs are good ways to win bids.
Next, the GC puts together their final bid price for the project and completes the bid form, along with any supporting documents the owner has requested. The GC submits their bid packet to the owner or architect as per the instructions given in the request for proposal. Bids are then opened either publicly or privately.
