The full guide to construction bidding: Definition, tips & more

As the construction market continues to ebb and flow, contractors need to have a well-thought-out approach to growing their business and expanding their project portfolio.

A key way of accomplishing this is through construction project bidding. While the process may seem straightforward, it’s often complicated by evolving project scope and client expectations. In a highly competitive market where it’s especially hard to stand out against your competitors, an effective and efficient construction bid can make all the difference in a contract won or lost.

In this article, we’re sharing insight into bidding on construction projects, giving you the tools you need to win construction bids and grow your business.

What is a bid in construction?

A construction bid is a formal proposal submitted by a contractor or construction company to compete for a construction project. It outlines a contractor’s proposed cost, timeline and scope of work. Clients use bids to help them select which contractor or company they contract with on a project.

In residential construction, a contractor can submit a project bid directly to a homeowner. The homeowner then compares bids based on factors such as cost, builder reputation and experience. Once a bid is accepted by the homeowner, a formal construction contract is usually prepared and agreed on before the project begins.

Types of construction bidding

The bidding process can vary based on project requirements – and to support a fair and efficient selection process. Different types of bids may make more sense for projects of varying size and complexity.

Open bid or competitive bid

An open bid, also known as a competitive bid, allows an interested contractor to submit a bid for a construction project. The bids are openly evaluated, meaning their cost, qualifications, schedule and proposed approach are reviewed transparently. Then, the contract is awarded to the contractor with the most favorable terms.

Closed bid or invitation-only bid

In a closed bid, only a select group of prequalified contractors are invited to submit bids for a construction project. The project owner then chooses the contractor. The main difference between this process and an open bid is a smaller pool of participants. 

Design-build bid

In a design-build bid, the project owner seeks bids from contractors who can handle both the design and the construction aspects of the project. In many cases, a client or homeowner contracts separately with a designer and a contractor. The design-build bid streamlines the process by only considering contractors who can combine design and construction responsibilities into a single contract.

Request for Proposal (RFP)

A Request for Proposal is a formal document outlining the project’s requirements and soliciting proposals from interested contractors. Contractors are then expected to submit a comprehensive bid proposal outlining plans, timelines and budgets.

In residential projects, open bids are common, and homeowners often seek multiple bids from various contractors before selecting the best option for their project. The same is true for smaller commercial projects, although business owners or project managers may also invite contractors to submit bids for their selection process. RFPs are more commonly requested for larger construction projects.

How the construction bidding process works

The construction bidding process may vary depending on project scope, bid type and the stakeholders involved. Generally, though, the process can be broken down into seven steps.

1. Project announcement

The project owner announces the construction project, providing basic information such as scope of work, location and timeline. For commercial projects, this is intended as a way to generate bids from interested contractors, but this step still exists with residential builds – it just looks a little different. For example, after recognizing the need for a project, a homeowner may complete this step by submitting requests for bids through a contractor’s website.

2. Bid documents

Detailed bid documents – including plans, specifications and contract terms – are made available to interested contractors. In residential projects, these details are included alongside the project announcement or as a reply to contractors requesting more information before preparing a bid.

3. Pre-bid meetings/site visits

Many contractors may request a pre-bid meeting to gather additional information, ask questions and get a firmer grasp of the project budget. These meetings might include visiting the property or potential construction site in person to take measurements and review existing infrastructure to help ensure accurate bid details.

4. Bid preparation

Contractors review the bid documents, evaluate project requirements, estimate project costs and plan their approach. This also helps them understand the resources needed to complete the project, including labor, materials and equipment. In residential construction, a bid and a construction estimate are often used interchangeably, although an estimate typically focuses more on factors like cost and quantity.

5. Bid submission

Contractors submit bids, which typically include the proposed price, project schedule and – in some cases – qualifications and client testimonials.

6. Bid evaluation

At this point, the project owner evaluates all bids based on factors including cost, reputation, schedule and ability to meet scope.

7. Contract award

The project owner selects the winning bid and awards the project to a chosen contractor. Still, work does not typically begin until a formal contract agreement is signed.

How to find construction bidding opportunities

You may face more difficulty in finding construction bidding opportunities depending on what kind of construction your business specializes in. Commercial builders may face high competition and rigorous prequalification processes, for example. Residential contractors may experience more one-to-one bidding requests by homeowners. In either case, contractors can use these methods to find bidding opportunities.

Online platforms and public procurement websites

Many organizations and government entities post bidding opportunities on dedicated construction procurement websites. This requires proactive search and active monitoring to stay updated on projects that may be the right fit for your company.

The flip side of this effort is to ensure that your website is optimized to accept requests from potential clients, too. This might include an investment in SEO to ensure your website is findable online, having a clear contact method visible from your homepage and using construction CRM software to engage with leads after you’ve captured their information. 

Networking with industry professionals

Building a strong network within the construction industry – and your local community – can lead to valuable bidding opportunities. Attending industry events, joining professional associations and nurturing strong relationships with subcontractors and suppliers can all play a part in expanding your brand recognition and referral business, which can increase invitations to submit bids for projects.

Trade associations and organizations

Organizations like the Association of Professional Builders often share project leads and industry news and provide resources for finding potential projects. Remember, this can include publications circulated nationally and locally, depending on where your company is licensed to complete projects.

Subcontractor opportunities

Subcontracting with larger contractors or construction companies can provide access to bidding opportunities as they often seek subcontractors to collaborate on projects. In residential construction, custom home builders often share requests for bids with subcontractors if they can’t take on another build.

Maintain a database for future reference

Keeping a well-organized database of past projects and clients helps contractors reference potential leads for future bidding opportunities and maintain strong relationships.

How to bid remodeling jobs

When bidding for remodeling jobs, there are specific considerations to keep in mind compared to bidding for new construction projects. Existing site conditions, the need to integrate with existing designs and unexpected scope changes can all affect how you bid on a project compared to how the results pans out. Here are some tips to improve your chances of success.

1. Take the time to visit the site and understand the client’s requirements

Conduct a thorough site visit to assess existing conditions and gain a clear understanding of client expectations and project constraints.

2. Have detailed discussions with the client to understand their vision

Engage in open and frequent communication with the client to fully understand remodeling goals, preferences and specific design requests.

3. Prepare a detailed and accurate cost estimate

Take into account all necessary construction overhead – such as labor, materials, equipment and subcontractor costs –to provide a comprehensive and accurate estimate for the remodel.

4. Clearly outline the scope of work in your bid

Define the specific tasks, timelines and deliverables in the bid to ensure everyone is on the same page.

5. Showcase your experience and expertise in similar remodeling projects

Highlight relevant past projects and remodel work that was of similar scope to what your client is requesting.

6. Offer value-added services such as design assistance

If possible, provide additional services, such as design assistance, that might differentiate your bids from competitors.

7. Provide a competitive bid while avoiding underpricing your services

Strive for a competitive bid that’s reasonable with market rates and your level of expertise. Clients are remodeling for a reason – they won’t always go for the lowest bid if it means sacrificing quality or design preferences.

8. Maintain communication throughout the bidding process

Ensure you have open lines of communication with the client, including offering a customer portal after a bid is won so homeowners can access project information on their own.

9. Ensure bids are well-organized, appealing and easy to understand

Present your bid in a professional and organized manner. Remember, most homeowners aren’t fluent in construction – you may need to itemize and offer more explanations for individual clients. The clearer you are, the fewer construction speed bumps you’ll experience.

10. After submitting your bid, follow up with the client

Be proactive. Follow up with each client after submitting your bid and continue to express interest in the project.

Win more construction bids with Buildertrend

Buildertrend’s comprehensive construction management solution can strengthen a business’s ability to secure more projects through bidding.

1. Bidding and estimate features: Our platform provides templates and customizable options to generate detailed cost estimates quickly. Combined with industry-leading takeoff measuring tools, this helps our customers present compelling bids to their clients that stand out from the competition.
2. CRM software: Our CRM tools efficiently manage and organize client information and project history. By centralizing data, businesses can access crucial details during the bidding process, allowing for personalized and informed conversations. This helps support strong relationships between contractors and clients, while enhancing the overall bidding process.
3. Customer management and communication features: Effective communication is key to successful bidding. Buildertrend offers seamless communication for construction teams, clients and subcontractors through features like real-time messaging, document sharing and progress updates.

By leveraging these expert tools, you can enhance your competitiveness, improve bid quality and win more construction projects.

Construction bidding FAQs

Get answers to the most common questions about construction bidding.