How do you guarantee accurate construction bids?

Great points..So many small contractors do not accurately include an overhead cost. For a very simple rule of thumb, take your overall business cost (net of suppliers) and divide it over your sales. By talking with other owners in your field you should also be able to find out the average profit margin. So if your quote is way outside this average it may give you pause to recheck your number.

Any bid process is usually based on a tight timeline to prepare the bid, ordinarily the ideal team or indeed the project director that you would choose for the project is usually already committed to an ongoing project, it is therefore always a challenge to complete a feasible and competitive bid, and be aware that if you are actually selected for interview who will actually attend and represent the project, this is brought about in many ways by the fact that projects are more complex and the staff and leadership with the level of experience required are few and far between.

Another frequently overlooked cost that deserves attention is site conditions. Beyond materials and labor, understanding how to navigate the site becomes crucial. Unforeseen obstacles to access a site, parking expenses, as well as the logistics of unloading and transporting materials can be hidden expenses that often go unnoticed. Consider the scenario of working in a bustling downtown area where parking rates apply, or in a hospital with strict delivery restrictions during daytime hours. Each of these factors adds an additional financial burden to the project. It is important to recognize and account for such hidden costs to ensure accurate budgeting of construction projects.

I'm a firm believer that every estimator needs to have field experience. It's even better if you ran crews yourself. You'll clearly understand all the details involved, including risk, logistics, etc. I also believe every estimator should go to the field monthly for at least a few hours and log their own productions and create their own "historical data". This keeps their experience fresh.

As a construction lender we only allow fixed price bids. The owner and the builder know exactly what the cost are going to be and there should be very little to no change orders on new construction. There should be a contingency line item for unexpected expenses, usually less then 5% of the total budget

One thing I learned while working for the estimator's association ASPE was that they need to be able to visualize the work to be done, which you can't see on a 2D blueprint. Only field work experience gives that sort of perspective.

Don’t make any assumptions! Get clarification on anything you question or isn’t clear. Make certain you have all the pertinent information, that the information is accurate, and that you have a complete understanding of this information.

I feel all estimators should have field experience. So many whom I worked with who don't have this experience have trouble spotting critical criteria in specs that cost a lot of money and were never put in the bid. Good estimators are hard to find, so consistent training with whom you have is imperative to a company's overall success. So many moving parts and details are involved on a project site, including logistics and means of egress.

Besides studying a design, a set of specifications, or the complete design documents package, the bidder must know very well how they will execute. Plan ahead construction methods, location restrictions, labor availability and any other special needs. A quote should always consider every external factor to properly execute.

If there is a specification, measurement, or omission that catches your eye, always raise it with the client/architect/MC or whomever. It may well be you that ends up paying for any errors if you do not call attention to them.

To use SBDs as mandated by all IFIs is accepted. Not to.mention that it going to be modified as per the Client requirements with the permission of IFI. But I truly and humbly do not THINK that bidding softwares are credible in bidding process. Errors are fatal in this case. No software can have the practical insightful experience that a senior procurement specialist would offer.

Contractors need takeoff software, estimating software, and bid tracking software. All bids submitted should be stored in one centralized spot. I hear so many stories of subs sending quotes to people who no longer work for the company or who are on vacation. Have all bids go to one place. Also estimating software usually has many tools that help you cross-check your numbers to build confidence.

If there are a few clients or contractors that you repeatedly bid for work with, it is worth finding out what bidding software they use, and go for the most popular - it can save time in formatting and layout.

In my experience, this helps a long way. As human, we are subject to making several mistakes which could be costly. The use of the right technology and software helps a great way to reduce these human errors and omissions. A tailor made software would have factored in all these inconsistencies and improve the process to present a formidable bill.

A standardized format definitely keeps things looking professional and easier to manage across jobs and time. It will also help keep things efficient for an estimator and make it less likely to overlook potential tasks or scope that needs to be included. Software can help in big ways when used properly but also poses some major bid risks when relied upon too heavily on the estimating side. Beyond that, one of the single best exercises for a successful job is the human effort in the estimating process. It forces you or someone on your team to have an intimate understanding of the project...and that often results in a better initial bid and ultimately a better managed project.

Always triple-check every calculation, and always get a second set of eyes to go over your figures. It is remarkable how often we fail to see the wood for the trees when working on bids.

No one is perfect ! Neither can a software think ! Don't rely on anyone !! Use your commonsense as the best thorough check for your bid with your personal experiences and the clients package requirements !! Don't keep any loopholes for regrets either ways!!

All bids need to be double-checked. Put your ego to the side because we are all human and we make mistakes. Estimating is very tedious and our eyes get tired which causes mistakes. I usually recommend large bids to be fully estimated one week before the bid so they can be reviewed by a chief or senior estimator.

To guarantee accurate construction bids, it's essential to thoroughly review and cross-check your bid calculations. This involves checking and rechecking all cost components, ensuring nothing is overlooked. Additionally, seeking input from experts or colleagues for a fresh perspective can help catch potential errors or omissions. A meticulous, multi-stage review process is key to producing precise and competitive construction bids.

I totally agree and would advice that at least 3 levels of check is done before submission is made so that any discrepancies can be resolved before submission. Three different personnel or level of checking is not likely to miss anything important out.

Knowing how a sales process works will drastically improve your overall bid-win success. So many bids are sent out that cost thousands to be put together but nobody follows up. Makes no sense.

Negotiation is good, but be very careful about dropping your price - you should be bidding at a price you can afford to complete the project and make a margin - if you drop your price, that comes out of your margin, and that can be disastrous. If the price has to go down, it should only be on the basis of reduced spec, or similar.

Of course, value engineering would come in handy here. You can offer some ideas and ways of reducing the construction cost by using some methodology that won’t cost as much as designed if possible. Instead of lowering your bottom line you could advice on other method or materials to achieve the project in a more efficient way.

This negotiation step can be important depending on your pipeline of work. Ideally you have a strong pipeline of potential projects so you don't feel desperate to win a job and have multiple options when you don't. This makes for a very strong negotiating position but requires more effort to put out bids and estimates on jobs. That said, there value is staying active and keeping work and cash flow going when you dont have many options...as long as you aren't paying out of pocket to do the job! In all scenarios, having a high level of understanding of your budget numbers makes it easier to know how lean you can go and when to tap out.

Agreed. Specially regarding asking feedback. In my experience -as part of the owner's team- very, very few Bidders try to reach the clients and asking for feedback. It is worth mentioning that I've noticed in clients lately -as part of the bidding process- the inclusion of a "post-bid" session with the "non-winners" bidders to let them know why their bids were not selected. I do believe that those "post-bid" session would become wide adopted and with that help contractor's to improve their bids and their odds

I would say that’s when DATA (collecting and analyzing) becomes a gold mine. Projects are never the same, but they have similarities. Utilizing past bids data can definitely create patterns and predict a lot of aspects, risks included (because risks affect the cost, so the bid!) The customization of the bids added to an efficient data interpretation would tremendously increase bids accuracy… Of course that requires a good system, great tools and technologies and a good will…

It is hard to stress the value of your doing your own internal productivity and overall job tracking. The more data collection and analysis you can do the better for future estimates. By tracking and understanding those numbers you get the added benefit of being able to offer internal incentives for employees/subs for meeting production goals, which can strengthen the team and minimize cost over-run risks.

Agreed. Analysis of your tendering process, highlight the sectors, and size of project "￡" where you achieve success. Use the outturn profitability for the Contracts undertaken, creating a feedback loop for supply chain performance and general cost intelligence for tendering purposes moving forward. Look at what Client's you enjoy a good degree of success with, and which Client's you do not achieve success with, and ask yourself where should you put your resources to tender. Consider the type of tender information provided for tendering purposes i.e. BQ or drawings and specifications, because of the cost of tendering. BQ = less time, cost and risk. Drawings and specifications = take offs for quants, more risk, time & cost to tender.

One thing that is indeed helpful in formulating a bid is learning from experience, also known as return on experience (REX). This helps in estimating the average bid for all bidders. From this estimate, you optimise inputs to arrive at the most profitable bid that is most likely to win, bearing in mind other factors like design, the complexity of the project, and your own capacity to carry out the undertaking.

Make sure you can finance the job even in worse case scenarios. There are some very unethical people out there who prey on small under capitalized companies. Along those lines make sure your progress payments line up with your costs and stand your ground.

Accurate construction bids are the cornerstone of project success, requiring knowledge of the scope, detailed review, and collaboration. 1. Deep Project Insight: Understanding the complete project scope is key. Thorough exploration and constant communication with subcontractors address discrepancies quickly and ensures accuracy. 2. Ethical Evaluation: Upholding ethical standards is paramount. Scrutinizing subcontractors' quotes rigorously identifies gaps to fill and guarantees completeness. Team reviews before bid day assure quality outcomes. In essence, securing accurate construction bids integrates profound understanding, attention to detail, and ethical practices. This strategic approach ensures successful project outcomes.

Always do a site visit/s to assess temporary facilities and logistics. The proximity to the worksite can have a significant impact on material handling labor and labor productivity. Some sites can have limitations that will come back to bite you if not taken into account in your bid.

If you are not able to conduct a site visit, at the very least try to find a satellite view of the site from one of the many available map apps. Look for parking and lodging options for your crews. If it's a downtown site, you may need to consider the cost of on-time deliveries if on-site material/ equipment storage is not an option. If parking is only off-site for your crews, you may need to pay for a shuttle. These costs need to be considered when preparing your bid.

If you are just starting off, getting an experienced hand (read as paid consultancy) to prepare a bid on your behalf can be very helpful. Someone who has years of practice will most likely have a lot of lived experiences that you can benefit from.