When you open up your latest construction project for bids, plenty of vendors will likely respond but the quality of their bids will vary dramatically. From finding missing information to reworking line items for easier leveling to untangling crossed lines of communication, you will be responsible for doing what it takes to turn imperfect bid proposals into great construction estimates.
Moreover, you’ll need to consider more than just costs. A low bid doesn’t always mean that you got lucky; it could mean that bidder doesn’t completely understand the scope, costs and deadlines of your project. An ostensibly low bid may actually lead to unexpected change orders and schedule mishaps that will consume the money you thought you were saving.
The best strategy is to proactively eliminate—or at least reduce—confusion, misunderstanding and inconsistency. Here are a few steps you can take to get the most complete and accurate construction bids from your vendors.
Get your RFP right. If your request for proposal (RFP) doesn’t clearly outline exactly what you need priced, how and when you need it delivered, and how you want the bids to be formatted and submitted, then you’re setting yourself up for problems.
Drill down into as much detail as possible. Get descriptive with what you want. A detailed RFP avoids shoulder shrugs and claims of “well, you didn’t make that clear!”
Name names. Include a roster of your project team with a way to contact your project manager, along with the architects, engineers, approved subcontractors and any consultants they may need to communicate with. These are the professionals who will provide details and act as a helpdesk for general and technical questions. They’ll be the links in the unbreakable chain of the job—and the last thing you want is a missing link.
Work only from the most current RFP. Construction projects are the result of an evolution of plans that may change over time. Be certain that all of your bidders are working on the very latest version of your project documents. The best way to do this is to post the RFP in a centralized, digital location where old versions can be removed altogether and only the most current version remains.
If you must pass around an actual document, be sure to use a specific name, date, version number and time stamp so everyone can quickly identify the most recent version. Assign a “traffic manager” or project manager to circulate the latest version and get signoff from each party that they’ve received the most recent document.
Split up your bids. When it comes to creating a bid form, there’s a delicate balance between being too general and making the contractor’s head spin from too much detail. Land somewhere in the middle—give the contractor separate RFPs for separate projects, in small, bite-sized doses. For instance, if you’re requesting bids that include both an office redesign as well as bathroom renovations, send a separate bid form for each project, rather than one detail-heavy, overbearing RFP. This way, the contractor can focus on each job separately and you can analyze each bid more accurately.
Get granular with your bid form. CSI codes, as developed by the Construction Specifications Institute, will help you get more consistent bids on individual line items across vendors’ proposals. Many architects swear by these codes because they help avoid confusion about the scope of each trade. For you, they’ll help avoid misunderstandings, as each particular task is precisely spelled out.
Act like this is your first time. When reviewing the bids, ask “why” a lot: “Why is this cost so high?” “Why is this delivery date so far away?” “Why is this material so cheap?” You most likely will need to go back to the bidder and clarify anything that feels wrong or too good to be true.
Pay special attention to bidders who communicate well. Vendors who ask good, thoughtful questions during the RFI (request for information) process are likely to submit more accurate bids. Additionally, waiting around for a response to a bid is frustrating for General Contractors (GCs). The GCs who follow up with you and politely, professionally keep in touch while waiting may have an edge in the competitive bidding process. These are bidders who want to stay on your radar and provide a little extra effort in establishing a relationship with you.
Centralize your communication. Things happen: employees leave, and so do general contractors and construction managers. Then what? If your project communication is centralized, you’re less likely to lose valuable data or experience project delays. It will also be easier to ensure that everyone on the project team is working from the same documents. File your plans, permits, specs, official docs, contracts and even random project notes in the same place for maximum efficiency and accessibility.
Use software built for real estate project management. Still depending on Excel to get you from soup to nuts? Because bid management is getting more and more collaborative, Excel is not going to cut it, especially not in real time. Look for real estate project management software that will automate some of the manual work, like leveling bids, while providing better insights into historical pricing trends and vendor performance.
At the very least, move your Excel work to Google Sheets. It’s built specifically for team collaboration and it’s streamlined, functional, and user friendly. It is still subject to human error and many of the other flaws inherent to Excel, but it’s a step forward.
Don’t forget to gather supporting information. These backup docs can include prequalification forms, work histories, certifications and license details. Some are required by law; others are just good sense. Check your local government’s rules and regulations. Overall, supporting information assures that your bidders are eligible to work with you (and work in your state) and meet the requirements needed to perform a job like yours.
Know your history with each bidder. Referencing a vendor’s past bids and performance notes can lead you more quickly to final pricing and a more confident decision. Make it a policy to track whether vendors submit their bids on time, whether the spread between their original bid and final price is acceptable and how easy they are to work with.
Another benefit to leveling bids the right way: it gives you a chance to get into the mindset of your potential contractor, learning what’s important to them and the time and skill they are going to need to deliver. You can also tell a lot from their organizational and presentation skills—don’t underestimate an attractive, easy-to-understand bid.