What is a Bid in Construction?

March 10, 2024

Creating accurate bids is one of the most important tasks for any construction company. But, it can also be one of the most challenging. Bidding requires a significant amount of planning, calculation, and attention to detail. A well-written and professional-looking bid will increase your chances of winning more jobs.

Generally, the construction 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. Often, bids are structured as either a Cost Plus or a Guaranteed Maximum Price (GMP) contract. A Cost Plus arrangement typically includes a transparent construction cost, based on the scope of work, including all direct costs and a specific percentage or lump sum amount for the General Contractor’s overhead and fee. The GMP is based on a pre-determined scope of work that may include any or all construction, renovation, or improvement projects for the facility.

In many jurisdictions, the project owner analyzes and compares all bids received to select a contractor for the project. The selected contractor performs the work per a negotiated contract. However, there are several alternative methods of procurement, such as the direct selection or sole source method and Integrated Project Delivery.

To improve your chances of a successful bidding process, read the project requirements thoroughly and carefully and make sure you have all required documentation, ticketed staff and materials. Also, make sure your submission is submitted by the deadline. If you do not submit a bid on time, or if your submission is deemed to be deficient, you will miss out on the job. Lastly, consider using an estimating software that will help you prepare the most accurate and professional bid proposal.

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