What’s the best strategy for construction bidding?

This post will show you how to win more jobs and how to make the most out of your bids.

Don’t have time to read? Feel free to watch the video below:

Watch video training now

 

Quick Guide to Construction Bidding

Before we get into how to bid construction jobs effectively, we need to first understand the fundamentals. Here’s a basic breakdown of the purpose and process of bidding in construction:

What is Construction Bidding?

To put it simply, “bidding” in construction refers to the process of calculating the costs of a project and using this information to submit a proposal.

The people who receive these proposals are usually developers, architects, or realtors, and there a few reasons why they would invite contractors to bid a project of theirs:

  1. They want to entrust a project to a general contractor and are looking for the best price.
  2. They are still designing a project and want to look at its preliminary costs.
  3. They are curious about the renovation costs of an existing building.

No matter what the reason may be, from the eyes of the contractor, all bidding situations follow this simple pattern:

Someone needs a price, you need a job

It’s that simple. With this in mind, it is clear to see why this step in the construction process is so important to be done correctly. It’s what decides if you work or not.

The Bidding Process

Most owners (the person who owns the land and is paying for the job) do not completely oversee the job themselves. Instead, they rely on the project’s architects to act as the contract administration and oversee the construction on behalf of the owners.

Once they are selected and the job is ready to get started, the architect will act as a gatekeeper will send out an invitation to bid for local contractors to submit their proposals

Pro Tip:

Because architects are gatekeepers, contractors should reach out to them as soon as possible and get a foot in the door

Architects will typically send bid invitations through lead generating sites. Once they hear back from general contractors, they will move forward with selecting a bid and use the budget proposal to figure out how to pay or finance the job.

Although this is not a good estimating strategy, most general contractors will prepare a bid proposal by reaching out to their subcontractors to make their own bids and adding up the numbers.

This whole process of sending out bid invites and selecting one is called the sales cycle and it takes around 3-6 months to complete. To recap, here’s the process in order:

  1. Contract administration (architect) is selected
  2. Architects send out bid invites to GC’s
  3. GC’s send out bid invites to subs
  4. GC’s calculate full bid and submit
  5. Architects select winning bid and apply proposed budget

Strategy #1: Estimating speed is key

You can only bid as fast as you can estimate.

The thing is, contractors usually only win 10-20% of the construction bids they make, so what this means is that, for you to increase your sales, you need to bid more. In order to bid more, you need to estimate faster.

Nowadays, this isn’t as difficult as it sounds. There’s plenty of digital takeoff softwares and cost databases out there for you to estimate entire jobs in half the time.

For smaller contractors though, the best estimating strategy is actually outsourcing your estimating, as we have covered in previous posts.


By using an on-demand estimating service like I Am Builders, you can essentially have the support of an entire estimating department for a fraction of the cost, and most importantly, avoid missing out on bids.

No matter what method you choose, remember: the more you bid, the more you hit.

Strategy #2: Negotiate as a high-value contractor

A lot of contractors forget that the first bid proposal you submit is never the final budget.

You can think of your first proposal more so as “Preliminary Bid”.

The most important fact to understand about the preliminary bid is that architects will always ask for a discount. With this in mind, the best strategy is to bid high and negotiate down.

You might be thinking, won’t bidding high make winning the job harder? Actually, increasing your perceived value is more important than being the low bidder.

The concept of perceived value is something that many contractors miss. If I were to offer you a Toyota Corolla for $50,000, you would laugh in my face, but if I were to offer you a Ferrari for the same price… You would do everything in your power to get the money together.


The principle is the same for general contractors. Your perceived value means more than the price itself and there are two ways you can increase your perceived value:

  1. Bid higher preliminary bids
  2. Build client relationships

The second way is the most important and highly neglected among most contractors.

If, on top of sending a bid, you follow up with the architect through visits, calls, text, etc., you position yourself as the most preferred option simply because the contract administrator is familiar with you.

Pro Tip:

There are four “touch points” to interact with project owners and get in their good graces. These four are:

  1. Email
  2. Text
  3. Phone
  4. Face-to-face visits

The benefits of having a higher perceived value are priceless: Architects will be more willing to negotiate your price even if you’re the highest bidder. Plus, changing market conditions won’t be as detrimental to your negotiation process.

All in all, when it comes to biddy, expect to negotiate your price down and make sure to increase your perceived value.

Strategy #3: Follow up, follow up, follow up!

We mentioned earlier how following up with your clients increases your perceived value. As a contractor, you can’t underestimate the power of building relationships.

It might sound like this doesn’t relate to bidding, but building relationships is one of the most important things you can do to win more construction jobs.

When you consider the construction sales process, getting leads and estimating is only half the battle. Remember that the process itself takes 3-6 months and in that time, you can greatly increase your chances of winning the job if the architect knows you.

Plus, having a strong relationship with the contract administrator can bring you even more leads when you become a trusted contractor. Following up benefits you in the short-term and the long-term.

The Secret to 10X your Construction Business

If you are interested in growing your construction business, I’ve prepared a short training video for you that you can watch for FREE:

In this training, I will show you how you can put your estimating on autopilot and boost your sales to 10X your business in 90 days; step-by-step with a simple copy and paste formula!

Watch video training now

 

In this training, I will show you how you can put your estimating on autopilot and boost your sales to 10X your business in 90 days; step-by-step with a simple copy and paste formula!

Published On: December 5th, 2022 / Categories: Other, Quick Tips /

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What’s the best strategy for construction bidding?

This post will show you how to win more jobs and how to make the most out of your bids.

Don’t have time to read? Feel free to watch the video below:

Watch video training now

 

Quick Guide to Construction Bidding

Before we get into how to bid construction jobs effectively, we need to first understand the fundamentals. Here’s a basic breakdown of the purpose and process of bidding in construction:

What is Construction Bidding?

To put it simply, “bidding” in construction refers to the process of calculating the costs of a project and using this information to submit a proposal.

The people who receive these proposals are usually developers, architects, or realtors, and there a few reasons why they would invite contractors to bid a project of theirs:

  1. They want to entrust a project to a general contractor and are looking for the best price.
  2. They are still designing a project and want to look at its preliminary costs.
  3. They are curious about the renovation costs of an existing building.

No matter what the reason may be, from the eyes of the contractor, all bidding situations follow this simple pattern:

Someone needs a price, you need a job

It’s that simple. With this in mind, it is clear to see why this step in the construction process is so important to be done correctly. It’s what decides if you work or not.

The Bidding Process

Most owners (the person who owns the land and is paying for the job) do not completely oversee the job themselves. Instead, they rely on the project’s architects to act as the contract administration and oversee the construction on behalf of the owners.

Once they are selected and the job is ready to get started, the architect will act as a gatekeeper will send out an invitation to bid for local contractors to submit their proposals

Pro Tip:

Because architects are gatekeepers, contractors should reach out to them as soon as possible and get a foot in the door

Architects will typically send bid invitations through lead generating sites. Once they hear back from general contractors, they will move forward with selecting a bid and use the budget proposal to figure out how to pay or finance the job.

Although this is not a good estimating strategy, most general contractors will prepare a bid proposal by reaching out to their subcontractors to make their own bids and adding up the numbers.

This whole process of sending out bid invites and selecting one is called the sales cycle and it takes around 3-6 months to complete. To recap, here’s the process in order:

  1. Contract administration (architect) is selected
  2. Architects send out bid invites to GC’s
  3. GC’s send out bid invites to subs
  4. GC’s calculate full bid and submit
  5. Architects select winning bid and apply proposed budget

Strategy #1: Estimating speed is key

You can only bid as fast as you can estimate.

The thing is, contractors usually only win 10-20% of the construction bids they make, so what this means is that, for you to increase your sales, you need to bid more. In order to bid more, you need to estimate faster.

Nowadays, this isn’t as difficult as it sounds. There’s plenty of digital takeoff softwares and cost databases out there for you to estimate entire jobs in half the time.

For smaller contractors though, the best estimating strategy is actually outsourcing your estimating, as we have covered in previous posts.


By using an on-demand estimating service like I Am Builders, you can essentially have the support of an entire estimating department for a fraction of the cost, and most importantly, avoid missing out on bids.

No matter what method you choose, remember: the more you bid, the more you hit.

Strategy #2: Negotiate as a high-value contractor

A lot of contractors forget that the first bid proposal you submit is never the final budget.

You can think of your first proposal more so as “Preliminary Bid”.

The most important fact to understand about the preliminary bid is that architects will always ask for a discount. With this in mind, the best strategy is to bid high and negotiate down.

You might be thinking, won’t bidding high make winning the job harder? Actually, increasing your perceived value is more important than being the low bidder.

The concept of perceived value is something that many contractors miss. If I were to offer you a Toyota Corolla for $50,000, you would laugh in my face, but if I were to offer you a Ferrari for the same price… You would do everything in your power to get the money together.


The principle is the same for general contractors. Your perceived value means more than the price itself and there are two ways you can increase your perceived value:

  1. Bid higher preliminary bids
  2. Build client relationships

The second way is the most important and highly neglected among most contractors.

If, on top of sending a bid, you follow up with the architect through visits, calls, text, etc., you position yourself as the most preferred option simply because the contract administrator is familiar with you.

Pro Tip:

There are four “touch points” to interact with project owners and get in their good graces. These four are:

  1. Email
  2. Text
  3. Phone
  4. Face-to-face visits

The benefits of having a higher perceived value are priceless: Architects will be more willing to negotiate your price even if you’re the highest bidder. Plus, changing market conditions won’t be as detrimental to your negotiation process.

All in all, when it comes to biddy, expect to negotiate your price down and make sure to increase your perceived value.

Strategy #3: Follow up, follow up, follow up!

We mentioned earlier how following up with your clients increases your perceived value. As a contractor, you can’t underestimate the power of building relationships.

It might sound like this doesn’t relate to bidding, but building relationships is one of the most important things you can do to win more construction jobs.

When you consider the construction sales process, getting leads and estimating is only half the battle. Remember that the process itself takes 3-6 months and in that time, you can greatly increase your chances of winning the job if the architect knows you.

Plus, having a strong relationship with the contract administrator can bring you even more leads when you become a trusted contractor. Following up benefits you in the short-term and the long-term.

The Secret to 10X your Construction Business

If you are interested in growing your construction business, I’ve prepared a short training video for you that you can watch for FREE:

In this training, I will show you how you can put your estimating on autopilot and boost your sales to 10X your business in 90 days; step-by-step with a simple copy and paste formula!

Watch video training now

 

In this training, I will show you how you can put your estimating on autopilot and boost your sales to 10X your business in 90 days; step-by-step with a simple copy and paste formula!

Published On: December 5th, 2022 / Categories: Other, Quick Tips /