“10” THE KEY NUMBER
The Evolution of a bidding in a construction project is a sequence of 10 activities that proposes a proposal to build a structure for a potential customer.
The idea is to find an advantage over the competition to make the customer enter the portfolio. Crafting a winning proposal or bid is a skill that requires dexterity and knowledge. It’s more complicated than putting numbers together. Here are some of the steps required to win biddings.
1. ASSESS THE SIZE OF THE PROJECT
First, you need to do an initial assessment of the project and determine if you can tackle it with the resources you have. Is it a residential, industrial or commercial project? Have you worked on a similar project before? Learn to say no to projects that exceed your resource scale. As a contractor, you have to distinguish profitable jobs from those that will drain your funds.
2. CHOOSE AN ACQUISITION METHOD
After evaluating the type of project, you must decide how to hire construction services. There are several factors that affect the contracting methods of a project:
- Government projects, some laws affect hiring methods.
- The experience of the owner, the complexity of the project, the scope of experience and the size.
- Low Bid Procurement Methods: The Low Bid method only takes cost into account and selects the lowest bid.
- Best value: takes into account other factors in addition to the single provider cost, negotiated and based on qualification.
- The negotiated method allows the contractor to negotiate the terms of the contract after selection.
- The qualification method has two levels to ensure that the contractor has the best technical expertise.
3. ASK IF YOU NEED
A contractor may have questions about it. If a contractor has concerns, such as missing documents or unclear details, they should ask the customer representative questions. The design team reviews these questions, and the answers are submitted in an additional document known as an addendum. This other document provides clarifications and information missing from the offer. The dates of the offer can also change in the missing documents, and the customer communicates it before the presentation. All information described in the suspects must also be included in the offer documents.
4. UNDERSTAND THE BIDDING INSTRUCTIONS
“Most contractors confuse bid proposals with work requests”, but it’s more complex than that. A reasonable offer demonstrates a deep knowledge of the sector. The bid instructions help you assess the customer’s requirements and estimate costs. This will show you if the project is profitable for you in the long run. Check the bid documents, such as project drawings, reports, specifications, the date of the bid, and the criteria used to calculate the bid score. This will help you adjust your offer accordingly.
5. CALCULATE WHAT YOU ARE GOING TO SUBCONTRACT
When you consider the scope of your work, hiring a subcontractor costs less than hiring an unskilled team to help you complete your project. Subcontractors are specialists in their line of work. Most contractors outsource mechanical, sheet metal fabrication or application, electrical and plumbing (MEP), structural steel glazing, and underground utilities.
6. CHOOSE A TYPE OF CONTRACT
Evaluate the best type of contract that provides you with the best returns. The different types of contracts available are maximum guaranteed price, cost plus fees, lump sum, target price or unit price. In guaranteed maximum price contracts, the price is fixed and, as a contractor, “you cannot charge more if there are budget excesses”. Lump sum contracts have a fixed price from the beginning. A cost plus contract has an agreed contract amount and a payment to add the contractor’s profit margins to the total costs.
7. MAKE A CONSTRUCTION ESTIMATE
The next step is a detailed cost estimate to check the feasibility, profitability and capacity of the project. Here it would help determine direct and indirect costs, overhead, buffers for subcontractors whose bids are below budget, and labor. It would be best to account for all costs directly related to the project. It is better to have consistently accurate bids than to have low bids every time. Consistent propositions improve your profit margins in the long run.
8. MAKE SURE YOU COVER ALL EXPENSES
During cost estimation, it is easy to overlook some expenses. However, if these expenses are not taken into account, the project can be difficult to carry out. Some of these expenses are utilities, rent, marketing, and monthly vehicle expenses. There are many expenses to consider, and they are necessary to keep your business running.
9. MAKE SURE IT IS PROFITABLE
Profitable projects help the contractor deal with cost overruns on future projects. Don’t fall into the trap many contractors fall into by not bidding on projects. Profit margins are usually very low and not worth it. A decent profit margin would be 15-25% of the construction costs.
10. INCLUDE TESTIMONIALS, AWARDS AND CERTIFICATIONS
The most credible ambassador for your business is a satisfied customer. Even if you are good at your job, the customer will feel more comfortable when they see satisfied customers. The importance of these references cannot be overstated. Awards and certifications also build trust and credibility by showing that your art was recognized enough to win awards. The customers want to work with these types of contractors, and this is an area you can take advantage of. This humanizes your business by putting it on a level where the customer can relate to it. From there it is part of the Small Details.