For all its positives, properly bidding a project requires a major investment of time on the part of commercial real estate owners and their teams. Even simple bid processes require hours of preparation on the part of the project manager, and then typically require several days for the vendors to prepare their bids, followed by leveling, negotiation, and, finally, award.
When speed of completion is critical to a job, spending too much time on the bidding process can bog down managers’ schedules, reducing the attractiveness of the financial returns for the project. That’s why it’s important to set timing guidelines with your team and your vendors.
So, how long should the bid process take for commercial real estate projects? Our data, based on the last 1,500 RFPs that have been run through the Honest Buildings system, provides some key insights.
Evaluating timing in stages
In order to analyze how long owners typically give vendors throughout the bidding process, we looked at our procurement data at three different stages:
Invite to first bid: This number represents the length of time owners are giving their vendors to submit a first round of bids. It measures the amount of time it takes from when the first bidder gets invited into Honest Buildings for an RFP response to the time the first bid is received back through the platform.
First bid to last bid: This is typically the period where bids are revised to reflect any clarifying questions, or the length of time from initial bid submission to the conclusion of the best and final offer. It is the length of time between the owner’s receipt of the first bid to the receipt of the last bid, including revisions.
Last bid to award: This is the time frame between final bid submissions and bid award. Based on our experience with our partners and clients, this likely reflects the time for any final negotiations and clarifications, including the internal approval and sign off process to award bids.
Best practices to apply with your teams
According to our data:
• Invite to first bid: The median number of days it takes from inviting bidders to answer an RFP to receiving the first bid is 7.8 days.
• First bid to last bid: The median number of days from first bid to last bid received by an owner is 4 days.
• Last bid to award: Owners takes an average of 8 days to award the bid.
It’s important to keep in mind that these numbers can vary widely by project size and complexity. In fact, as the chart below shows, it varies quite a bit.
For smaller, less complex projects valued at under $100k, the median timing is only about five days from bid invite to first bid, three days for all bids to be received and 6.7 days between last bid received and award. But for larger jobs, including those over $1M, the median days out to bid is 16 days, or just over two weeks.
Based on this information, best practices show that it takes about two and a half weeks for a bidding process from the day you send the RFP to awarding a bid.
Most popular bid due date
We often joke in customer training that Friday at 5pm is the most common bid due date. After all, what project manager wouldn’t want to kick up their feet at the end of a long week and relax by leveling bids?
We may get a good laugh at this, but what do the numbers say? Based on our data, it turns out our intuition was right. Friday is the most popular day bids are requested to be returned from vendors, with almost twice as many bids due on Friday than any other day of the week. Whether the project managers are actually leveling the bids over the weekend is questionable. Another idea is that managers expect vendors to be late in submitting their information, and proactively give them the extra days over the weekend to submit.
A properly run bid process is key to the relationships between the owner’s team and vendors. A clear understanding of timing expectations starts that relationship off on the right foot.