Contents
What is construction bidding?
Construction bidding refers to the process of a contractor or subcontractor submitting a tender for one of three areas:
- To build the project
- To provide services for the project
- To be a key supplier of materials to the project
How does the bidding process work?
- Bid Solicitation / Project Announcement: The client announces the upcoming construction project and invites bids
from interested contractors. This may be done through public notices, advertisements, or invitations to
prequalified contractors.- Pre-Bid Conference (Optional): The client may hold a pre-bid conference to provide interested contractors
with more information about the project, clarify any ambiguities in the bid documents, and answer questions
from potential bidders.
- Pre-Bid Conference (Optional): The client may hold a pre-bid conference to provide interested contractors
- Bid Preparation: Contractors review the bid documents provided by the client, including the project
specifications, drawings, contract terms, and any other relevant information. They assess the scope of work,
required materials, labour, and equipment, and prepare their bids accordingly.- Site Visit (Optional): Contractors may conduct a site visit to the location of the construction project
to familiarize themselves with the site conditions, access points, existing infrastructure, and any
potential challenges that may impact their bid.
- Site Visit (Optional): Contractors may conduct a site visit to the location of the construction project
- Bid Submission: Contractors submit their bids to the client by the specified deadline. Bids typically include a
completed bid form, pricing breakdown, proposed schedule, qualifications, references, and any other required
documentation. Also incorporated within the submission is the Project Delivery Method which is typically one of
these four areas:- Design-Bid-Build
- Design-Build
- Construction Manager at Risk (CMAR)
- Integrated Project Delivery (IPD)
- Bid Opening: The client opens and reviews the bids received from contractors in the presence of relevant
stakeholders. The bid opening process ensures transparency and fairness in the evaluation of bids. - Bid Evaluation: The client evaluates the bids based on predetermined criteria such as price, qualifications,
experience, proposed schedule, compliance with specifications, and any additional evaluation factors specified
in the bid documents.- Negotiation (Optional): Depending on the project and the client’s preferences, there may be a negotiation
phase where the client engages in discussions with selected contractors to refine the terms of the contract,
clarify scope details, or negotiate pricing.
- Negotiation (Optional): Depending on the project and the client’s preferences, there may be a negotiation
- Bid Selection / Contract Award: The client selects the winning bid based on the evaluation criteria and notifies
the successful contractor of the contract award. This typically involves issuing a formal letter of intent or
contract award notification.
What is typically included in a bid?
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Break down each area
- Client and project details
- Your credentials
- Scope of work
- Existing conditions
- Cost estimate
- Payment schedule
- Work schedule
- Warranty information
- Signatures
What are the different types or methods of bidding?
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Open tendering:
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Negotiated tendering:
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Selective tendering:
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Serial tendering:
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What are the different types or methods of bidding?
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Step 2
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Step 3
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Step 4
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What happens after a bid is selected?
Contract Execution:
The client and the selected contractor execute the construction contract, finalising the terms and conditions of the agreement. This may involve signing a formal contract document and providing any required XXXXX
Project Mobilisation:
Once the contract is awarded and executed, the contractor brings in resources, procures materials, arranges for subcontractors (if necessary), and prepares to commence work on the construction project.
Construction Commencement:
The construction work begins according to the agreed-upon schedule and project timeline, with the contractor overseeing the implementation of the project plans and managing day-to-day operations on the construction site.
What are the potential risks or pitfalls to be aware of in construction bidding?
- Incomplete or Inaccurate Information: Bidding based on incomplete or inaccurate project information can lead to underestimating costs, missing critical requirements, or failing to meet client expectations.
- Unclear Scope of Work: Ambiguities or misunderstandings regarding the scope of work can result in disputes, change orders, and additional costs during the construction phase.
- Market Competition: Facing stiff competition from other contractors can drive bid prices down, potentially reducing profit margins or leading to underbidding to secure the project.
- Price Fluctuations: Volatility in material prices, labour costs, or subcontractor rates can impact the accuracy of bid pricing and affect project profitability if not properly accounted for.
- Project Delays: Delays in obtaining permits, approvals, or access to the site, as well as unforeseen delays during construction, can prolong project timelines and increase costs.
- Regulatory Compliance: Failure to comply with local building codes, zoning regulations, environmental requirements, or safety standards can result in penalties, delays, or legal liabilities.
- Subcontractor Performance: Reliance on subcontractors for specialised tasks or trades carries the risk of subcontractor default, poor workmanship, or delays in delivering services, which can impact overall project quality and timeline.
- Financial Risks: Financial constraints, cash flow issues, or insufficient bonding capacity may hinder a contractor’s ability to fulfil contractual obligations or secure necessary performance bonds.
- Change Orders and Variations: Clients may request changes to the original project scope or specifications after the bid has been submitted, leading to additional costs, disputes over pricing, and potential impacts on project profitability.
- Litigation and Disputes: Disputes with clients, subcontractors, or other stakeholders over contractual terms, payment disputes, or project performance issues can result in costly litigation, damage to reputation, and project delays.
- Unforeseen Site Conditions: Discovering unforeseen site conditions such as soil instability, environmental hazards, or underground utilities during construction can necessitate costly adjustments to the project plan and timeline.
- Client Solvency and Payment Risks: Contractors should assess the financial stability of the client to mitigate the risk of non-payment, insolvency, or project termination due to client financial difficulties.
