How to Bid a Construction Job

Should you bid this job at all?

The go/no-go call is the cheapest part of bidding to get right — it costs hours of reading, not a week of takeoff. Every bid consumes estimating hours you cannot spend on a different bid, so bidding indiscriminately spreads limited estimating capacity across work you are less likely to win.

How you got on the bid list. An invitation from a GC you have worked for is a different proposition than an open plan-room listing. If the list is long and you have no relationship with the buyer, you are competing on price alone against bidders whose costs you do not know. Ask how many are bidding. If nobody will say, that is an answer.

The contract terms, not just the drawings. Liquidated damages, retainage amount and release timing, pay-if-paid clauses, no-damage-for-delay language, broad indemnity, and long payment windows all carry cost. Some of it you can price; some you should decline. Read the agreement and supplementary conditions before you spend a day on takeoff, because a term you cannot live with ends the conversation regardless of the numbers.

Capacity you actually have. Backlog, bonding capacity, and — most often overlooked — which superintendent would run the job. A win you cannot staff is worse than a loss. Check schedule overlap against your committed work, not an empty calendar.

Whether the bid is real. Some invitations exist to produce a required number of bidders, or to price-check a contractor already chosen. Signs include a specification written around one manufacturer with no approved equals, a bid period too short for the package size, and an owner who will not answer questions. You cannot always tell. You can at least notice.

What should you read before the drawings?

Start with Division 00 and Division 01. Division 00 holds the instructions to bidders, the bid form, the agreement, and the general and supplementary conditions. It tells you when and how the bid must be delivered, what bid security is required, whether alternates and unit prices are mandatory, and what makes a bid non-responsive. A correctly priced bid can still be thrown out for missing one of those rules.

Division 01 is where unpriced cost hides. Temporary facilities and utilities, site security, dumpsters and cleanup, safety program requirements, mockups, submittal and coordination effort, BIM/VDC coordination, commissioning support, record drawings, O&M manuals, training, and extended warranties are specified here and frequently fall outside what trade subcontractors quote — verify package by package rather than assuming coverage. Read the testing and inspection requirements separately: on IBC Chapter 17 work the owner often contracts special inspections directly, so a testing allowance can be a duplicate cost — but the contractor still pays for retests of failed work and for the access, hoisting and standby time that inspections consume. On a general contract, whatever Division 01 requires and nobody else prices lands on you.

Find the order-of-precedence clause. Drawings and specifications frequently conflict, and contract document sets normally include a clause stating which governs. Do not assume the rule from your last job applies — locate the clause and read it. Then turn the conflicts you find into RFIs while the question period is still open. Ambiguity you do not resolve before bid is risk you priced by accident.

Where do scope gaps actually appear?

A recurring cause of bid losses that become job losses is scope that fell between two trades. Nobody excluded it dishonestly; everybody assumed someone else had it.

Between trades. Blocking and backing for wall-mounted items, firestopping at penetrations, flashing at dissimilar materials, sealants, patching after demolition, roof curbs and their supports, equipment pads, and access panels. Each belongs to a different trade depending on how the specification is worded, and each is small enough to be left out of every quote you receive.

Between site and building. Excavation and backfill at building footings, utility connections at whatever line the specification actually draws — five feet outside the building is a common convention, not a rule, so read the Division 22, 26 and 33 scope language to see where the split falls — building pad preparation, and stoops or slabs that touch both packages. Utility company charges are the classic omission on this boundary: tap and connection fees, meter and service charges, backflow devices and vaults, and any work the utility performs itself are routinely carried by no one. Draw that line yourself and put it in writing to both bidders rather than letting them each draw it.

Your own self-performed work. Take off self-performed scope yourself, in detail, using your own production rates. Quantities from an outside source can be checked against the drawings. Production rates for your crews exist nowhere but your job cost history, and they are what turn quantities into a number you can stand behind.

How do you solicit subcontractor bids you can use?

Define the packages before you send anything out. A scope sheet per trade, listing what you expect included and what you expect excluded, turns a pile of incomparable quotes into something you can set side by side. It also tells the subcontractor what you intend to hold them to, which is the point of writing it.

Send invitations early with the full document set and the location where addenda will be posted, and set a quote deadline ahead of bid day. Quotes will still arrive in the last hour. The deadline is not there to stop that — it is so the trades that respect it can be leveled while you still have time to think.

One quote per trade is not a market price. On major trades you want enough comparable quotes to tell whether an outlier is a bargain or a scope miss, which in practice means more than two. If two cluster and one sits well below them, treat the low number as a possible scope miss until you have confirmed otherwise. Call and ask what they assumed, and write the answer down. If you carry that number anyway, you have accepted the risk knowingly, which is the only acceptable way to carry it.

How do you level subcontractor bids?

Leveling means normalizing every quote to the same scope before comparing totals. Build a matrix with your scope items down the side and bidders across the top, marked included, excluded, or unclear, then add each exclusion back to the bidder who made it and compare adjusted numbers. Quotes are silent on most of the items below unless you ask.

How do you keep addenda from wrecking the bid?

Addenda change the documents you are pricing, usually late and sometimes in the final hours. One person owns them from invitation to submission.

• Assign a single person to monitor the plan room, portal, or email thread addenda are issued through — including the morning of bid day.
• Log each addendum: number, date received, what changed, which trades it affects.
• Re-issue each affected addendum to the subcontractors in those trades and get written confirmation they priced it.
• Track which quote acknowledges which addendum number. A quote that predates the last addendum is not a current quote.
• Acknowledge every addendum on the bid form. On public work, an unacknowledged addendum can make an otherwise low bid non-responsive.
• If an addendum lands too late to price properly, say so and ask for a bid date extension. Other bidders are asking the same question.

How should you set markup on a bid?

Markup is not one number. Build it in layers, in an order that keeps each layer visible, so that when you decide to cut you are cutting something specific.

Job-specific general conditions. Supervision, project management time, trailer, temporary power and water, fencing, sanitary facilities, safety, small tools, cleanup. Most of these are driven by duration, so they move when the schedule moves — but not all. Final clean, dumpsters, temporary protection and winter conditions scale with the area and volume of work, and supervision scales with the number of concurrent work fronts and shifts, not just with months. Price them as line items built off the schedule and the work itself, not as a percentage.

Contingency, kept visible. Contingency covers gaps you know exist in your own estimate: incomplete design, unverified existing conditions, scope carried on a single quote. Keep it on its own line. Contingency buried inside inflated production rates cannot be removed deliberately, and it gets spent without anyone choosing to spend it.

Escalation. Material and labor on a long-duration job will not cost what they cost today, and if subcontractor quotes expire before buyout, that exposure is yours. Price escalation against the specific commodities and packages at risk, with their quoted price-hold dates, rather than as a blanket percentage, and say in writing who carries it. Long-lead equipment — switchgear, transformers, generators, large rooftop units, elevators — is a schedule question before it is a price question: get lead times quoted in writing, test them against the milestone and completion dates, and carry the cost of any early release, deposit, storage or resequencing those lead times force.

Overhead recovery and profit are different things. Overhead is what the company costs to exist and must be recovered across the work you win. Profit is the return for carrying risk. A single flat percentage on every job over-recovers on the easy ones and undercharges the hard ones. Rate the risk instead: unfamiliar scope, compressed or phased schedule, liquidated damages, a buyer you have not worked for, remote sites, and heavy delegated design all justify more.

Bonds, insurance and tax come last. Bond premium is rated on the contract amount on a sliding scale that steps down as the amount rises, so get the rate from your surety rather than using a flat percentage, and compute it after markup — the premium is part of the price it is rated on. Insurance is a different calculation: general liability is normally rated on payroll or receipts and builder's risk on total insurable value. Check the supplementary conditions before you carry either — builder's risk is often owner-provided, and on an owner- or contractor-controlled insurance program (OCIP/CCIP) you deduct your normal insurance cost instead of adding one.

Buying work is a decision, not an accident. Bidding thin to hold a crew together or enter a market is legitimate. Discovering after award that you did it is not. Know the number you cut to and why you cut it.

What gets a bid rejected on bid day?

Bids are rejected for reasons unrelated to price, and nearly all of those reasons are avoidable if you are not still doing arithmetic in the last hour. Before you submit, walk the bid sheet trade by trade and confirm every scope line carries either a quote or a plug you sized deliberately and know you are carrying, then have a second person check the sheet itself — a formula that did not copy down, a transposed digit, and a sub's number entered in the wrong row cost bids.

• Use the bid form provided, unaltered, with the legal entity name and license number exactly as registered.
• Where the amount appears in both words and figures, make them match. Many bid forms state that the written amount governs if they disagree — check what this one says rather than assuming.
• Price every alternate and unit price as real work, in the direction asked (add or deduct). A blank line can be treated as non-responsive. Alternates are not throwaway numbers: award is commonly determined on base bid plus alternates accepted in the order listed, so a careless alternate can win or lose the job on its own. Price a deduct alternate net of the credit your subs will actually give and of any general conditions time it removes, and price unit prices at a rate you would accept for either added or deleted quantity, because the owner chooses which direction to use them.
• Include bid security in the required form and amount the instructions to bidders state — executed, dated, notarized if required, and with the surety's current power of attorney attached. Confirm the surety is on the required approved list (Treasury Circular 570 on federal work, or the state's list), and check whether a cashier's or certified check is an accepted alternative.
• Acknowledge all addenda by number.
• Complete any required subcontractor listing or participation forms. Where they are required, an incomplete or missing form can make the bid non-responsive.
• Sign it.
• Where the bid closes through an electronic portal, register and complete any vendor pre-qualification days ahead, not on bid day; confirm file formats, file size limits and how many documents the portal expects; and upload a complete submission early, revising it if needed, because the portal closes on its own clock to the second and a partially uploaded bid is no bid. Where delivery is still physical, deliver early to the exact location named — the clock that matters is the receiving party's, and a bid delivered to the wrong desk in the right building is late.
• Know your market: on negotiated private work, written clarifications and exclusions protect you. On a public hard bid, attaching qualifications can make the bid non-responsive. Read the instructions to bidders before you attach anything.

Do you need to outsource the takeoff?

Outsourced takeoff and estimating services solve one part of this process, not the process. A third party can produce quantities and a priced estimate from your documents faster than an overloaded project manager doing it after hours, which is genuinely useful when bid volume exceeds your estimating capacity, when a package sits outside the work you normally do, or when you need quantities quickly enough for a go/no-go call to still be worth making.

What outsourcing does not replace is the judgment. Go/no-go, subcontractor relationships, leveling, risk-rated markup, and the decision to buy work stay with you. Outsourced pricing also needs a sanity check against your own job cost history, because someone else's unit costs reflect someone else's crews and someone else's market.

If you bid the same building type every week and you have an estimator working from your historical production rates, that estimator is usually better positioned than an outside firm on your work, because the production rates are yours. Outsourcing earns its cost when the alternative is not bidding at all, or bidding badly at midnight.

What should you do after the bid goes in?

Record the result whether you win or lose. Public bid results are generally obtainable — many agencies publish tabulations, others release them on request; on private work, ask — many GCs will tell you where you landed. The spread between your number and the next one is the cheapest market data you will ever get, and it says more about your markup than any internal review.

Then close the loop on the jobs you win. At closeout, put actual costs against the estimate line by line and correct the production rates that were wrong. Estimating history and job cost history often live in separate systems and never meet; connecting them is one of the lowest-cost ways to improve estimate accuracy.