The bid is a company’s opportunity to sell its services to a client. While the construction industry continues to recover from the economic downturn, it’s essential to craft an effective submission that allows your company to succeed over your competition. A winning bid is more than a document that breaks down costs and labor; winning a bid for a large or competitive project can add to a company’s portfolio and improve its status within the construction industry. “Beyond the price, it’s differentiating your services from all the other bidders that are offering essentially the same type of service,” says Daryn Reif, Chief Executive Officer of Field Automated Communication System, LLC.
KEY CONSIDERATIONS
The bidding process really begins before the official bid notification is sent. In construction, as in business in general, relationships forged outside of business, through networking or previous work, can give a company an advantage when learning about projects that will come up for bidding. Joining associations and building professional relationships with important players in the construction industry can give contractors and other bidders a glimpse into projects that are coming down the pipeline.
“If you’re not including value-added services as an option that you bring to the table, your competition is,” says Reif. “You need to present in your technical proposal or in your bid proper a reason why you’re going to be able to deliver a service that’s world class and one step above everybody else’s.”
It’s important for companies to determine the nature and extent of the project. With this information, companies can realistically ascertain whether the project is a wise investment for their portfolio and whether they can realistically compete with other companies for the bid. Though the construction industry is still in recovery, companies should remain selective about the projects on which they choose to bid. Though the company is bound to win some contracts, submitting bids to numerous projects for the sake of submitting a bid is not the wisest use of time or energy. Instead, focus on the strengths of the company and the resources available for the project.
ESTIMATING COSTS
An experienced estimator is essential to a winning bid. Using meticulous attention to detail, an estimator relies on guides and field experience to approximate the costs for the project based on drawings and other details. While some companies rely on consultants to estimate costs, others use software to approximate costs. Each has advantages and companies should choose whichever method has produced the best results in the past.
Regardless of whether a company devises estimates based on software or professionals, the results can have serious repercussions. Estimate the cost of man hours and materials too high and it can cost the bidding company the contract; similarly, estimate too low and it can cost the company money if material prices increase or an unforeseeable incident sparks a setback in the project.
Some companies may be tempted to set their costs low in order to win the bid, under the premise that if costs change, they can submit a change order. While change orders allow some wiggle room for fluctuations in costs, companies should not rely on them. Not only to they establish a bad precedent for the project, the company may have to pay some of the costs incurred or have to cut back on aspects of the project, e.g., use cheaper materials, cut back on manpower, etc., which may be a breach of contract.
CONSTRUCTION BID SOFTWARE
Technology has fostered the growth of software solutions directed towards the pivotal, yet tricky, estimating process. Software programs such as Bid4Build and Turtle Creek—two of the most popular estimation software programs—organize bid materials, generate bids and create cost estimates for construction projects of all sizes and types.
