Bid Format For Construction: A Complete Review

Construction project owners often prefer the most competent, affordable, and experienced general contractor to help them with their projects. These clients create and submit bid packages to solicit construction bids from interested contractors. A construction bid package contains several construction documents to help contractors understand project requirements. It’s where contractors analyze construction designs, plans, drawings, and other relevant materials involved in the entire project.

However, have you ever considered the type of documents included in a bid package? Also, do you know what is included in each section of the construction bid template and why they’re important? That’s what we will cover in this guide. We will start by dissecting the format to understand the particular in each section. We will also look at where each section fits in the entire bidding process. But first, let’s start by understating the construction bid landscape. 

The Three Common Construction Project Bid Formats

Every construction bid is different and unique to the project. Each bid is tailored to match the project specifications and complexities. Almost all contractors have come across one or all of the three common construction bid formats. Let’s explain them. 

Unit Price Bid

Contractors quote this project per unit of work instead of a lump sum proposal for the project. Contractors include material costs, labor expense calculations, and overheads in their construction bids. They also include built-in profit margins in each unit. They then multiply the units of work completed by the respective unit prices to get the project’s total cost. 

Let’s take a road construction project as an example. A contractor could divide the project into smaller units, like excavation, embankment, paving, shoulders, drainage structures, curbs and gutters, and signage and markings. The contractor would then price each unit differently depending on the complexity, labor hours, and labor cost. For instance, they could price the excavation unit by using historical and industry standard information on the same project. 

They could then do the same for other units to get the total project cost. 

Lump Sum Bids

In this construction proposal template, contractors quote a single price for the entire project. Contractors often know the final labor and material costs upfront for the entire construction process. They also estimate the potential unforeseen challenges in the project and account for it. 

Lump sum bidding is ideal for well-defined projects, like constructing an office building. In such a case, contractors work with detailed plans and specifications to come up with total cost and labor estimates. They also include a general markup that includes profit margins in their bid proposal. 

Design-Build Bids

In this bid format, the contractor takes on two responsibilities - designing and building the project. The design-build contract is beneficial to both owners and contractors. Owners save on their construction budget since they’ll not need two separate contracts for designers and contractors. On the other hand, contractors get the independence of working on a project as they see fit. 

The design-build bid process or proposal requires technical expertise and experience to execute. 

Now that we know the three major construction bid formats, let’s break down a format and examine the details included in each section. 

The Anatomy of a Winning Construction Bid Proposal

To many, especially those new to the construction industry, a construction proposal template might sound like a mere document. Although the details are simple and straightforward, they are very crucial when selecting a winning construction bid. 

For instance, your bid might be disqualified if you don’t include the correct contact details and address. Overestimating the project cost to increase your profit margin would also result in disqualification. 

Why would you waste time filling out documents and probably hiring someone to handle office work and not do it the right way?

The easiest step to increase your chances of winning a construction bid is understanding what every section in the bid package entails. It’s also crucial to know where in the bidding process each section is vital. 

If you need help creating an offer, try our free bid package template.

Let’s dissect a winning construction bid. 

Executive Summary

Think of this as your elevator pitch. It’s where you impress the project owner by including your qualifications, like financial stability, track record and experience, and licensing and insurance. Ensure you include verifiable information before submitting the documents.

First, start by reading the construction documents to understand the client’s requirements. Which qualifications are they looking for? Do you meet these qualifications? Can you prove it? These questions help to guide you as you fill out the right information.

It’s a section where you show the client you understand the project by highlighting objectives, challenges, and context. 

If you have worked on a similar project before, make sure you mention this as well. Doing so helps build trust between you and the potential client. Also, mention details like completing the project on schedule, staying within budget, and minimizing disruptions.

Explain to the client your unique value proposition on why you stand out from others and why they should choose you. 

The executive summary section is very crucial in the bidding process. First, it helps your bid stand out in the pre-qualification stage if the project owners offer this. The pre-qualification stage, although optional, helps construction owners shortlist qualified bidders by collecting and comparing this information. 

It also comes in handy during the bid preparation phase. Here, contractors rely on the bid documents and research to come up with desirable bid proposals. 

Once they receive the bids, construction owners evaluate all proposals based on the information provided in all documents, including the executive summary. Then, they make their final decisions on whom to award the contract. 

Project Approach

Consider this part as the ‘how’ section of the project. In this section, you elaborate on how you’ll execute the project by highlighting your construction methodology. 

Let’s take road construction as an example project. Here, you could include clearing and grubbing, excavation and compacting the subgrade, subbase and base course, building drainage, and constructing pavement, curbs, and gutters as your construction methodology.

The project approach also provides you an opportunity to showcase your risk management and quality control to deliver the project per requirements. Don’t forget to mention your communication channels throughout the project. 

This section is crucial during the bid submission. Construction owners pay attention to this section when evaluating and awarding contracts. That’s why you need to be thorough and very detailed when handling it. 

Scope of Work

Think of the project scope as the blueprint for the project. It’s where you convince the potential client of your understanding of the project by clearly defining deliverables. 

Let’s consider a residential construction project. Your tangible deliverables could be constructing the main house, paveway, drainage, roofing, windows and doors, and landscape. The installed systems’ deliverables could include lighting, plumbing, HVAC, communication, and security systems. 

These are just examples of deliverables to include in this section. However, it’s best to be realistic when mentioning these deliverables to avoid coming short of the expectations. Ensure they align with the project’s goals and specifications. 

Many experienced contractors break down the project into distinct phases and provide a milestone for each phase. Doing so makes you stand out from other contractors and shows the project owner you understand the project better. 

The project scope section is crucial when evaluating and awarding bids. Construction owners tend to work with contractors who demonstrate their understanding of the project. That’s why you must finetune your details here. If you don’t understand anything, ensure you ask the client before proceeding. 

Qualifications

The qualification section helps to establish and build trust between you and the potential client. It’s a section where you showcase the company’s experience handling the project you are bidding on. 

It’s crucial to highlight any relevant success you have had handling similar projects. Mention the projects you have completed and highlight the objectives that you achieved in these projects. If possible, include the former clients’ contact information as a reference. However, it’s best to talk to these clients about sharing their information before doing so. 

The qualification section is also a great place to introduce your experienced personnel. Do you have technicians, engineers, plumbers, electricians? Mention them and their experience. Be sure to include how these people and their experience will come in handy to the project. 

It’s also the perfect opportunity to provide financial evidence to prove your financial stability. It will save both the construction company and the client’s time when awarding bids, as project owners prefer working with contractors with a healthy financial status. 

The qualification stage is important in several bidding phases. It comes in handy in the pre-qualification phase if the construction owner decides to have one. Here, they decide to pre-qualify contractors before allowing them to bid. It also comes in handy during the bid evaluation and contract awarding phases. 

Technical Proposal

This section is one of the most relevant documentation construction projects require. It’s a chance for you to showcase your understanding of the project by highlighting the types of materials and equipment you’ll use in the construction. 

For instance, if you’re contracted to construct a pavement, you could list materials like aggregates, asphalt, geotextile, concrete, and additives as what you need to complete the project.

You could also list equipment like excavators, bulldozers, and other earth-moving equipment for the project. Trucks and loaders would also come in handy.

The goal of this section is to prove to the client that you have ideas of how to bring the project to life. It also proves that you’re not afraid to experiment and stamp your authority on the project. If you’re not confident about what to include here, you could start working on a free construction bid template. You can then have a professional look at it and offer suggestions and corrections. 

A bid construction template guides you through the process as it has all the sections marked and labeled. This way, you can write a construction proposal by filling in the template without needing much assistance. 

The technical proposal section comes in handy in the bid evaluation and contract awarding phases. Construction project managers focus on the most versed and experienced contractors based on the information they provide in this bid proposal template.

Cost Breakdown

Transparency is crucial in the construction industry. Cost breakdown helps the contractor and the stakeholders involved understand the total project’s cost. 

Divide your costs into three categories - labor, materials, and overheads. For labor costs, ensure you factor in the hourly wages and overtime. You should also account for time theft, as this has proven to be a huge challenge in any construction project. 

You should know that every construction firm loses at least 20 cents for every dollar due to time theft. Adjust your labor costs to account for this figure. Otherwise, you’ll see a significant reduction in your profit margin. 

Always include overheads in the cost of materials to secure your profit margins. Overheads like transporting the materials to the construction site are often overlooked. Additionally, account for material damage during transit or construction, as this is often common in any construction project. 

Overheads like office administration costs should also be included here. Don't forget to mention your payment schedule to avoid future conflicts with your client.

Cost breakdown helps the construction managers understand the project’s budget and award the contract to general contractors with the most affordable bid. 

Guarantee and Warranties

Contractors must win their client’s confidence. Providing project guarantees proves your capability to mitigate risks. 

For instance, you could indicate the potential timeline you expect to complete the project. Additionally, you could include penalties for delays and missing these deadlines. 

Another instance is offering a warranty for the quality of your work. You could let the client know that you offer a period-bound warranty for the project if it doesn’t satisfy their demands. Some contractors have offered a few years of free construction work on the same project if it doesn’t last a specified period. 

Also, share the manufacturer’s warranty on the materials with the client. Although it may sound highly unlikely for the project to get damaged, warranties and guarantees instill a sense of calm and confidence in the client. 

Final Thoughts

A construction proposal template has many crucial details that determine whether you’ll get the contract or not. Understanding a construction bid template ensures you fill in the right information, and your bid won’t get disqualified. Many contractors make the mistake of rushing through the construction proposal template as they try to win as many contracts as possible. It’s best to compare your firm’s capabilities in terms of finances and experience and ensure it reflects the requirements in the construction bid template. It’s always best to seek out professional help if you don’t have any idea what to fill in a construction proposal template.