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How do you evaluate project proposals and bids?

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Evaluating project proposals and bids is a crucial skill for construction managers, as it can affect the quality, cost, and timeline of the project. However, choosing the best proposal or bid is not always easy, as there are many factors to consider and compare. In this article, we will discuss some of the steps and criteria that can help you make informed and effective decisions when evaluating project proposals and bids.

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Richard Brackstone

Head of Commercial and Risk | Ensuring Commercial Success and Reducing Risk
SRINIVAS ANAND R

Program and Project Management, Capital Infrastructure and Organizational Capability Development, Strategic…
Terry Tracy

Assistant Vice President at Trilogy Health Services, LLC

1 Understand the scope and requirements

The first step is to understand the scope and requirements of the project, and make sure that they are clearly defined and communicated to the potential contractors or subcontractors. You should also review the contract documents, drawings, specifications, and any other relevant information that can affect the project delivery. This will help you avoid any misunderstandings, ambiguities, or discrepancies that can lead to disputes or claims later on.

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Terry Tracy

Assistant Vice President at Trilogy Health Services, LLC
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The old adage, apples to apples, is the most convenient way for all contractors to bid the same scope. That would be plan & spec. No substitutions would be considered at that time, minimal exclusions if necessary, and a detailed proposal broken down into AIA building divisions. A bid narrative, also included as part of the proposal documents is much desired. If you have the above data, it's easy to compose spreadsheets with costs across the divisions. Building software will identify the high, the low, and the average automatically. This speeds up efficiency from your team in their bid analysis, by leveling the building field. At the time of awarding, work with the contractor on substitutions, value engineering, etc.

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2 Review the qualifications and experience

The next step is to review the qualifications and experience of the bidders, and check their references and past performance. You should look for evidence of their technical expertise, financial stability, safety record, reputation, and customer satisfaction. You should also consider their availability, capacity, and flexibility to handle the project scope and schedule. You can use tools such as prequalification questionnaires, interviews, site visits, or online platforms to verify and compare the bidders' credentials and capabilities.

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3 Compare the cost and value

The third step is to compare the cost and value of the proposals and bids, and analyze how they fit your budget and expectations. You should look beyond the bottom line, and consider the quality, reliability, and efficiency of the proposed solutions and services. You should also look for any hidden costs, risks, or contingencies that can affect the project outcome. You can use tools such as cost breakdowns, value engineering, life cycle analysis, or risk assessment to evaluate and compare the cost and value of the proposals and bids.

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Richard Brackstone

Head of Commercial and Risk | Ensuring Commercial Success and Reducing Risk
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The cost and value of proposed bids are often different things. It is always essential to ensure that you evaluate bids fully and that you are comparing apples with apples. Limitations, exclusions, substitutions and qualifications can render two initially comparable bids to ultimately being very different. Methodology can also fundamentally change the comparison of two bids. Has one identified an innovative method of tackling the job at hand, or do they simply not understand and underestimate the requirements? Price alone should never be the determining factor.

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4 Assess the innovation and sustainability

The fourth step is to assess the innovation and sustainability of the proposals and bids, and see how they align with your project goals and vision. You should look for evidence of their creativity, originality, and differentiation from the competition. You should also look for evidence of their environmental, social, and economic impact, and how they comply with the relevant standards and regulations. You can use tools such as innovation scoring, sustainability indicators, or certification schemes to evaluate and compare the innovation and sustainability of the proposals and bids.

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5 Negotiate the terms and conditions

The fifth step is to negotiate the terms and conditions of the contract with the selected bidder, and finalize the agreement. You should aim for a fair and balanced deal that reflects the scope, requirements, cost, value, innovation, and sustainability of the project. You should also address any issues or concerns that may arise during the negotiation process, and seek legal advice if needed. You should use tools such as contract templates, clauses, or checklists to ensure that the contract is clear, comprehensive, and enforceable.

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SRINIVAS ANAND R

Program and Project Management, Capital Infrastructure and Organizational Capability Development, Strategic Procurement, Budgeting and Cost Optimization, Leadership and Team Development || Ex-Delhivery || Ex-TCE
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Unfair risk allocation may protect the primary party in terms of schedule or cost escalation, but not 100% from two perspectives. First, When damages or penalty related disputes faces legal trails, it may not be fully favorable to the primary party if the contract is biased. Second, project objectives might fail completely. For example, a new production facility project stalls because of such a dispute. This severely impacts revenue. Worse, if your competitor gets ahead of you. Therefore, Allocated risks should be manageable and appropriate. Also, Rewards should go hand-in-hand with risks.

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Richard Brackstone

Head of Commercial and Risk | Ensuring Commercial Success and Reducing Risk
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Sadly, the goal recommended here of achieving a fair and balanced deal is far too often ignored for an approach of screwing over the other side as much as possible. Unfair contract terms, unreasonable requirements and inappropriate allocation of risk are all too often the norm. From Client to Main Contract, Main Contractor to Subcontractor, and even Subcontractor to Sub-subcontractor. The culture of top-down risk push is, unfortunately, endemic within the UK construction industry.

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6 Monitor the performance and feedback

The sixth step is to monitor the performance and feedback of the contractor or subcontractor during the project execution, and evaluate their compliance with the contract terms and conditions. You should establish and maintain regular communication and reporting channels, and use tools such as key performance indicators, quality assurance, or change management to track and measure their progress and performance. You should also provide and receive constructive feedback, and address any issues or problems that may occur along the way.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do you evaluate project proposals and bids?

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2

3

4

5

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1 Understand the scope and requirements

2 Review the qualifications and experience

3 Compare the cost and value

4 Assess the innovation and sustainability

5 Negotiate the terms and conditions

6 Monitor the performance and feedback

7 Here’s what else to consider

Construction Management

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