Construction bidding involves submitting a proposal, or a tender, to build or manage a construction project.
Bidding occurs with every construction project and it’s a vital step that enables businesses to determine which contractors will be hired to complete the work. This procedure is also used by subcontractors to pitch their services to other contractors.
It sounds simple, but construction bidding is a complex and nuanced process. Contractors are in competition to win the project, so they must make sure their bids are spot on.
The Construction Bidding Process
Every bid follows the same general steps as listed below.
- Bid Solicitation (also known as Request for Tender) – General contractors submit bids to the company owner, including all of the proposed details of the construction project.
- Subcontracting – General contractors accept bids from potential subcontractors. This step can occur at different stages in the process depending on the specifics of the project.
- Bid Selection – The owner reviews each of the submitted bids and selects the most appropriate one.
- Signing of the Contracts – Once the winner has been selected, both parties will sign the contract.
- Completion of the Project – The construction project begins shortly after the contract has been signed.
Project Delivery Methods
There are four main project delivery methods in construction bidding, all of which aim to share details of the project (including timings and budget) with the owner and to enable quality checks to be performed.
Design-Bid-Build (DBB)
The most common project delivery method for non-residential sites is the DBB. The owner will hire an architect first. Once the architect has created designs, contractors will submit their bids to bring the completed designs to life.
DBB is easy to implement and the owner has full control over both the design and construction aspects of the project. However, because of this, the owner must have a good level of expertise in the work and they are solely responsible for the project.
Construction Management at Risk (CMAR)
The CMAR method deals with the designs and construction through different companies. The construction manager of the project is involved from the start and they may help to design the construction with the architect.
This option is usually reserved for more complex projects. When a contractor submits a bid, this represents the guaranteed maximum price of the project and it covers pre-construction service, actual construction, the construction manager fees, and any potential contingency costs. If costs go above the guaranteed maximum, the risk lies with the construction manager.
Design-Build (DB)
In the DB method, the owner provides the contract (and one price) that covers both the design and the construction. The contract is handled by a design-build contractor who is accountable to the owner throughout the project.
Integrated Project Delivery (IPD)
IPD is a newer method of project delivery. It involves employing the owner, architect, and contractors as a team. The costs and risks of the project are, therefore, shared by everybody involved.