The Construction Bidding Process for Dummies

Pre-Bid Planning, Preparation, Evaluating Bids, and More

Although most people may not realize it, the construction industry wouldn’t be able to operate without the construction bidding process.

What do you need to know about the bidding process? Well, it plays a pivotal role in selecting a contractor to execute the work outlined in a construction project.

In addition to selecting the right contractor for the job—the bidding process is designed to ensure that a project is completed on time, within budget, and to the desired level of quality.

In this lesson, we’re going to provide an overview of the construction bidding process—including its purpose, key components, as well as the various parties involved.

Purpose of the Construction Bidding Process

The primary purpose of the construction bidding process is for the project owner or representative to solicit—a fancy word for “ask” or “request”—proposals from contractors interested in the job, and to select the most qualified contractor to complete the work.

The bidding process can take multiple forms—including competitive bidding, where contractors submit sealed bids—or negotiations, where the owner and contractor negotiate a contract price. The choice of bidding process is often determined by the size and complexity of the project—as well as the project owner’s preference. But, more on this in a different lesson.

Pre-Bid Planning and Preparation

At this point, the project owner and design team gather information and prepare for the bidding process, which entails:

  • Defining the scope of the project: The project owner and design team determine the scope of the work to be performed, as well as the desired results.
  • Establishing the budget: The project owner sets a budget for the project and the design team develops cost estimates to ensure the budget is possible.
  • Selecting potential contractors: The project owner and design team develop a list of potential contractors to invite to bid on the project.
  • Preparing bidding documents: The design team prepares the bidding documents—including the request for proposal, plans, specifications, and any other necessary documents—to be distributed to the considered contractors.
  • Scheduling the bidding process: The project owner and design team determine the timeline for the bidding process—including the date for receiving bids, as well as the date for awarding the contract.

On a quick side note—in case you’re wondering who exactly the “design team” is—the design team on a construction project usually consists of architects, engineers, and other specialists who are responsible for creating the design of the project. The plans created by the design team will be necessary for the contractor to construct the project according to the project owner’s specifications.

The Bid Invitation Process: Selecting Eligible Contractors

During the bid invitation phase, the project owner and design team identify and select contractors who are qualified and capable of performing the work required for the project.

This bid invitation process typically involves the following steps:

  1. Developing a list of potential contractors: The project owner and design team create a list of contractors who have the necessary experience, skills, and resources to perform the work required for the project.
  2. Issuing the bid invitation: The project owner and design team distribute the bidding documents to the potential contractors—typically through mail, email, or an online platform like Procore or BidClerk.
  3. Evaluating contractor qualifications: The project owner and design team review the different contractors’ qualifications—including their experience, resources, as well as performance on previous projects.
  4. Selecting eligible contractors: Based on the evaluation of the different contractors’ qualifications, the project owner and design team select a limited number of eligible contractors to submit bids for the project.
  5. Notifying eligible contractors: The project owner and design team notify the selected contractors of their eligibility to bid on the project. At this point, any additional information that is necessary is provided to the eligible contractors.

Overall, the bid invitation process is designed to ensure that only qualified and capable contractors are invited to bid on the project.

Evaluating Bids: A Critical Step in the Process

The typical process for evaluating bids includes:

  1. Receiving bids: The bids from contractors are collected and reviewed in detail to ensure that all information required is present and that the bids are complete.
  2. Bid tabulation: A bid tabulation is created that summarizes the most important information from each bid—including the cost of work, the proposed schedule, as well as the contractor’s experience and references.
  3. Bid evaluation: The bids are evaluated based on specific criteria—such as price, experience, and references—to determine which bid offers the best value for the budget.
  4. Comparison of bids: The bids are compared against each other and evaluated based on the criteria determined in the bid documents.
  5. Award of contract: The winning bid is selected, and the contract is awarded to the (hopefully) most-qualified contractor.

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