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How to Bid on a Construction Job

Thursday, February 05, 2009
Related Tags: construction | job | cost | subcontract | labor
 

Instructions

  • Step 1:
    Meet with your potential client. Arrange to visit the job site and review the plans and specifications.
  • Step 2:
    Compile a list of materials and contact your vendors for pricing and availability. Calculate your cost for materials including delivery charges and an allowance for lost and damaged materials. Mark up your materials cost enough to provide your business some profit, but not so much that you are not competitive.
  • Step 3:
    Estimate your labor time and cost. Include wages, social security, and Medicare, as well as your overhead costs for workers compensation and employee benefits. Add your markup on labor to this figure. This will also be part of your gross profit from the construction job.
  • Step 4:
    Get bids on any portions of the job you'll need to subcontract out. Mark up your cost on subcontract labor slightly to cover your administrative costs. Make sure your subcontractors are properly insured and that they have sufficient working capital to undertake the job.
  • Step 5:
    Prepare a time line for the construction project. Consider availability of labor, materials and subcontract labor. Allow cushion time for inclement weather, back orders, last minute subcontractor scheduling problems, and delays due to the client.
  • Step 6:
    Write your bid for the construction project. Provide enough detail so that the client has a clear picture of what he is getting for his money. Make sure that your proposal looks professional. If the client has specified how the proposal should be broken out, be sure that you comply.
  • Step 7:
    Present your bid to the client. Provide references from satisfied customers. Also provide photos of high quality work you've completed in the past. Show evidence that you, your employees and your subcontractors are properly insured.
  • Step 8:
    Include in your bid an estimated completion date. Also spell out how you will deal with changes to the original scope of the job. Specify that change orders will be in writing, and that the cost of the change will be detailed and signed by the client before you proceed. This protects both you and the client.
  • Step 9:
    Ask the client when you may follow up to discuss who will be awarded the job. When you follow up, if the client wants to give the construction project to another contractor, ask if you may compare bids. Explain to the client that the low bidder is not always the most cost effective option. Offer to work with the client on cost if your clients budget is limited. Suggest alternative materials or design options that will cut cost while maintaining quality.

Tips & Warnings

  • If complicated drafting, engineering or architectural design are required in order for you to bid on the job, arrange to bill the client separately for these services. You should be paid for design services, whether you're awarded the construction project or not. Provide the design to the client and collect payment before proceeding with a detailed bid on the construction project.If you are awarded the construction project, have the client sign the contract. Always verify the clients financing before beginning work. If the construction project is large, consider collecting a deposit and requiring progress payments as portions of the job are completed. Include these conditions in the contract.
  • Do not agree to work jointly with another contractor who is unfamiliar to you or not properly insured, even if the contractor is hired independently by the client. This exposes to serious potential liability. Also, uninsured contractors may not be safe on the job site, so your employees could be at risk too.

Resources


How to Bid on a Construction Job Provided by eHow.com
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