December 19, 2023
I have spent most of my days over the past 12 months staring at construction bids. The RhinoDox team and I have been deeply embedded with our clients discussing construction bidding best practices.
Part I dove into Why Bid History Matters and how there are Fortunes in Followup (if you did more of it). You can read Part 1 here. Today we are sharing Part 2…
Part 2: Your Bid Needs and Overhaul.
I keep asking a simple question, “What makes up a good construction bid?” I ask this question to anyone who has an opinion. I’ve sought out thought leaders in construction, talked to estimating and operations at our clients, leadership, estimator’s and PMs at GCs, random people at social gatherings, and a nice man at the local diner last week. I ask this question every day and below is what I have learned so far. So let’s dig into it!
What GCs Want….
GCs want the lowest price. But you already knew that. What they really want are bids that are easy to understand and organized so they don’t have to ‘hunt and peck’ to find information to level their bid. They want to know exactly what they are getting and for what price
Very simply, put the price at the top. It’s the first thing everybody reads. If you think putting the price at the bottom will get them to read your entire bid, I have some oceanfront property to sell you in Montana.
If your price is good, your prospect will continue reading. When a GC is leveling bids, the meat of your proposal should be listed in the scope of work. Here are a few tips on this section.
Some of our clients break it out by Spec Section. Add the word ‘Partial’ to the title if you aren’t covering the entire section.
Others break it out by grouping it as the type of work: EIFS, Frame/Hang/Tape, ACT, Glazing, Louvers, ETC. Breaking it out this way makes it easier to digest and read through.
Tip 1 Test: If you find Payment and Performance Bond sandwiched in a big list between some important Plan/Spec items, you are doing it wrong.
If you are wondering if an item in your proposal goes here, ask yourself, “Can this line item can be tied to that specific scope?” For example, Payment and Performance Bonds CANNOT be tied to a specific scope. It can only be tied to the overall project (more on that below)
Rule of thumb on this: The more important it is, the higher it should go on the proposal.
This is one of the more interesting and varied areas of proposals I see. It’s somewhere between non-existent and very informative.
When necessary, this area is used to help inform about things your client should know about the work you are proposing. I see this mostly used to fill in the information that is technical in nature, but isn’t covered in the plans. Sometimes this is technical specifications about the material OR conditions in which it is installed.
This might SHOCK YOU, and I’m only relaying what I have been told, BUT….some architects are lazy. Not all. But some. This area is the chance to show your expertise and that you have read through all documents and drawings.
This is also a useful area to address certain items upstream so they don’t bite you in the butt downstream.
This is NOT the area you use to communicate “What they need to know about doing business with you.” (more on that later).
In RhinoDox we think about this area as ‘Everything Else’. We laid out details in the scope of work. We clarified that in the ‘Clarifications and Assumptions’ section. Project Qualifications is meant to communicate everything else that is included or excluded.
These items directly affect the base bid price but CANNOT be tied directly to a scope item.
We traditionally categorize these into five areas as follows:
A) Job Site Items and Conditions – Things we need onsite or site conditions like dumpsters, temporary Enclosures, temporary utilities, cranes, etc.
B) Job Site Labor – Things we need to do onsite like demo, overtime, cleanup, safety personnel, etc.
C) Engineering/Plans/Testing – As-Built drawings, mockups, BIM Modeling, field testing, etc
D) Administrative/MISC – Ex: Permits & fees, sales tax, MBE/WBE/VBE, Section 3 hiring
E) Insurance – Ex: Payment and performance bonds, errors and ommisions, OCIP/CCIP
F) CYA Scope Items – One other area that we stick down here are all the Plans and Specs exclusions that happen rarely or infrequently but need to be included.
In addition to readability, organizing in this matter allows an estimator to ‘mind shift’ when putting the proposal together. They tackle Scopes/Plans & Specs –> Clarifications & Assumptions –> Project Specific Quals and everything else.
Dividing into groups allows compartmentalizing the components of the job one area at a time. This is another way to help estimators avoid unintentional errors and omissions.
The name ‘CONDITIONS’ is up for debate. But these are items are written to the proposal 100% of the time. Some clients list these items in the proposal and others choose not to. For those that choose not to, it’s because they have decided that this language doesn’t matter. Only language in the contract matter….which is mostly true.
However, if your bid is accepted and these terms are in the proposal, you at least have a jumping off point when negotiating your contract. Below is a list of examples of what we are referring to from our demo company ‘Highpoint Construction’:
There are many factors in what makes a good bid (besides low cost). Constructing a bid in this matter and consistently across all estimators is essential to successful bidding. If you enjoyed Part 2 of this series, tune in next time for Part 3 where I discuss the 4 Decisions Necessary for Profitable Jobs.
You can watch the video below or schedule some time to see how we are helping clients with their bidding process.
