Understanding the construction bidding process is key to winning a construction bid. For subcontractors, the competitive bidding process may begin when a project is first released for construction bid, or after the general contractor has been chosen. The process is similar either way.
You might be confused about how to bid construction jobs or how the process looks on subcontractor bidding sites. This article provides a look at the construction bidding process for subcontractors, from bid release to the beginning of work. For a GC’s perspective, see our article on the bidding process for general contractors.
1. Project Released for Bid
The construction bidding process begins when the project owner, architect, or general contractor releases the project for bid selection. The project construction documents then become available for subcontractors to bid on. The project documents include drawings detailing the work to be performed on the private projects, specifications noting how the work is to be performed, and what materials are to be provided.
General contractors send invitations to bid (ITBs) to subcontractors and/or advertise the need for subcontractor bids. An invitation to bid includes information about the construction project, the scope of work, and the bid proposal due date. It includes a bid package with the construction job plans, specifications, and other documents needed to bid on the private projects. It also details what information the GC needs to turn in with their bid proposal. Subs may be required to provide additional information if it’s requested by the owner.
2. Subs Assess the Project
Once a subcontractor receives an invitation to bid on complex projects, they’ll begin the process of assessing whether to bid on the project or not. These decisions are based on many aspects of the construction project, including the scope of work, timeline, and availability. They may also assess the location of the project and whether there are other conditions present, like the need for night work or specialty products. Based on these project characteristics and their existing workload, the sub will decide whether to place a competitive bid or not.
3. Subs Bid the Project
Once a subcontractor has decided to a competitive bid on the project, they begin to review the construction job plans, specifications, and other bid documents. If they have any questions or something is unclear, they submit their question in the form of a request for information (RFI). These questions are submitted by the GCs to the owner and design team for consideration. Once a response has been decided, additional documents may be sent out in the form of a bid addendum. These addenda must be recognized on any proposal to ensure that all documents have been considered in creating a bid.
Subs start by doing a material and equipment takeoff, which details all the materials and equipment needed for the project, along with the quantities of each. Based on these counts and measurements, the estimator figures out how much labor will be needed to complete the work. Then, depending on whether the project is using regular pay rates, prevailing wage, or Davis-Bacon wage rates, the estimator multiplies the number of hours by the going wage rate for each type of worker. This cost estimate gives them the total labor costs for the project. Material costs are added to these labor costs, along with overhead and profit percentage, to come up with the final bid amount.
4. Bid Day
On or before the day that bids are due, subcontractors submit their proposals to the general contractors who are bidding on the project. Each general contractor takes the bids they’ve received and tries to compare scopes and prices, which can be difficult because each sub bids the job differently. To compare apples to apples, the general contractor may ask individual subs clarifying questions or reprice the work based on certain considerations.
After comparing the subcontractor quotes for each trade, the GC selects a winning bid sub based on their skill set, experience, relationship with the GC, or best price. While low price is usually given the most weight, GCs may select higher bids based on skills and experience. The GC adds their own labor and general conditions costs to the proposal and submits their bid to the owner or architect. The bid opening is either done publicly or privately, depending on private or public projects.
5. GC and Sub Selection
After the bids are opened and the apparent winning bid has been contacted, there may be additional questions and negotiations between the GC and the owner. Some of these negotiations may include subcontractors, who may be asked to reprice work or reconfigure their proposals. Once a general contractor has been selected, they are notified by the owner, and contract negotiations begin.
6. Owner Contract
Next, the owner enters into negotiations with the selected general contractor and their team of subcontractors. More revisions to proposals may be required at this stage, as well. If the owner and the winning GC can’t come to terms on a contract, the owner may choose another GC to perform the project. Negotiation then starts over with the new contractor. Once a contract is signed, the project moves into buyout.
At this stage, the GC makes their final subcontractor selections and sends contracts out to each sub. There may be further negotiations on price, scope, and schedule after the subcontract has been sent out. Once everyone is satisfied with the terms, the construction contract is signed, and the sub begins work on the project.
Looking for a simplified bid process?
The hardest part of the bid process for subcontractors is finding bid opportunities. Construction bidding websites, like PlanHub, allow general contractors to reach out to you with less work. You can even use the app as a tool to find and bid on construction projects. We have quality leads from across the US – from California to Texas to Maine, and every state in between. If you’d like a free demo of how PlanHub can help you find more work or learn more about the types of construction contracts, schedule today.