Bidding for a construction project requires a lot of effort. You must carefully analyze the client’s requirements and prepare an estimated budget plan. But regardless of how careful contractors are while bidding, the company pays for their mistake and suffers a huge loss.
Even a bit of negligence in the bidding process can waste the chance to win a project. So, you must know how to bid on a construction job to avoid the common bidding mistakes contractors make.
Mistakes contractors make while bidding
While bidding for a construction project, you must focus on each detail to avoid making a mistake. However, you never know how experienced the client is and their criteria for qualifying the contractors.
So, let’s look at 10 construction bidding mistakes to make an impeccable bidding proposal:
1. Bidding on every project
Never bid on every project you see on the platform because your company doesn’t work on all kinds of construction projects. With expertise, every construction company has some limitations, including:
- Competency – Faculty of efficiently completing a task or a project
- Resources – Workforce and equipment required for the project
- Finance – Money to cover construction expenses
Therefore, if you realize that your company can’t complete a project, discard the deal before submitting the final bid. Then, you can look for projects from other clients that align with your company’s portfolio.
2. Submitting incomplete documents
You submit the required documents to the client during the bidding process, like resource and budget plans. You can easily prepare these documents with the construction and project manager. However, you must ensure that the documents you submit are complete.
You should follow the correct framework with exact calculations. For instance, submitting the documents without attaching an important file can cost you the whole project as it displays carelessness from the contractor and the construction manager.
3. Inaccurate initial assessment
The contractor reviews the client’s requirements before visiting the construction site. The initial assessment is necessary as it helps contractors to understand the project scope. If you miss the important details during the initial assessment, you will document incorrect information in the report. That will lead to future problems while finalizing the proposal.
4. Not visiting the construction site
You must visit the construction site before making the final offer to the project owner. Never believe every word the client says in the documents. Only giving a visit to the construction site can give you the right impression.
You don’t know the condition of the site and its surroundings. Besides, your company might face legal action for bidding on a project which is to be built on an unknown territory.
5. Not questioning the client for clarity
Asking questions to the client or the project owner gives more clarity before submitting the bid. However, many construction bidders focus on profit and never ask questions to clarify the project details.
Once the deal is done, the company realizes that the project scope doesn’t align with the services the company offers. But since it’s too late to cancel the bid, the company must put its reputation on the line to cancel the proposal.
6. Making errors in calculations
The client expects to see balanced numbers in the bidding proposal, including the following cost estimates:
- Machinery – Purchasing or renting cost of construction equipment
- Wages – Account payables for the hourly, daily, or monthly wages
- Overhead – Hidden costs like taxes, maintenance, and insurance
The client knows what’s going on in the construction market. For example, the hourly pay of a construction worker is $18 in the United States. So, the client might reject your bid if you mistakenly submit $28 instead of $18. That will disturb the overall project cost estimate.
7. Unknown resources needs
While preparing the bidding document for your client, you must know your company’s resource capacity. Sometimes, the company does have all the required equipment. But some machinery is occupied at other job sites.
In some instances, the equipment might need maintenance to become available to work again. So, you must get information about the company’s resources to prepare the bidding proposal. Remember that maintenance of construction equipment needs time which delays the project.
You might have to rent a substitute machinery if that equipment has stopped working. So that’s another delaying factor of the construction project.
8. Hiring an unqualified subcontractor
General contractors usually hire subcontractors to carry out construction activities like masonry, concreting, welding, and carpentry. However, they might not find the same team for every project they bid for. That makes contractors hire unqualified subcontractors.
Inexperienced construction workers can work on a project but lack efficiency and reliability. Without an unqualified team, you can never complete a project within the allocated budget and time. So, you must ensure the subcontractors you want to hire are qualified and available in the project’s estimated timeline.
9. Estimating wrong labor costs
Remember that the labor cost varies with time, affecting the initial budget you share with the client. The best way is to mention the current labor cost in the document and balance the figure. That will be the middle ground for you and also for the client.
The client might reject the offer without negotiating if you show the wrong labor cost in the document. That affects the company’s reputation, and finding new clients might become challenging.
10. Overlooking construction risks
While working on the construction bidding, you must consider the risks associated with the project. That includes:
- Equipment failure – A machine suddenly stopped working
- Workers’ health – Employee or laborer’s health is affected
- Weather – Construction can’t continue because of bad weather
You must consider these risks as they affect the project’s budget plan and schedule. An inexperienced project owner might accept your offer without asking you about the risk plan. That will impact both parties. But, your company will suffer a major loss because of the delayed project.
As the project stays behind schedule, the costs will increase beyond the allocated budget.
You must carefully analyze the client’s project requirements and discuss each detail with the contractor or the construction manager. While preparing the bidding document, ensure you avoid the above mistakes to submit a winning proposal for the client and the company.