The bidding process is an essential part of every construction project. It enables firms and companies to hire contractors. However, this process can be time-consuming and costly. To move past this, you must expand your network of owners, general contractors, and construction managers. The easiest way to achieve this is by implementing construction bid management software. In this article, we will list the top five benefits of such software. But first, we’ll discuss the contracts that make up the construction bidding processes. Read on and build a pipeline for your future business success.
What is Construction Bid Management?
The core purpose of construction bidding is submitting a tender by the contractor to the client. This tender serves as a proposal to conduct or manage a particular construction project. In addition to a general contractor, large projects require many professionals. For instance, they include architects, engineers, consultants, designers, landscape architects, etc.
The five steps of the construction bidding process are:
- The client sends bid invitations to the contractors or the subcontractors.
- They receive the invitation that includes the scope of work, time of completion, penalty, and pre-qualification details.
- Contractors download the tender document and review the project based on their respective cost codes.
- Contractors submit their bids to the client.
- The client awards the bid to the subcontractors with a most competitive offer. Then he converts it into a commitment.
The general contractor grants the bid to one subcontractor based on the best value. In many cases, it is the lowest price, but it can include other variables, too. For example, it can be bid capacity, past performance, and experience in the construction project type. Meaning, the lowest bid price does not confirm that you’ll win the project. Often, the contractors will disqualify the contractor with the lowest price. They go with a middle number to reduce their risk.
No two construction projects are the same. There are three most common types to choose from. They are based on the project’s size and the owners’ tolerance for risk. They include the firm fixed-price contract, cost-plus contract, and time and material contract.
Firm Fixed-Price Contract
Firm fixed-price contracts are true to their name. In them, the contractor grants to deliver a specific scope of work for a fixed price. It provides a barrier of risk for the project owner, but the contractor usually gets compensation for taking on the risk. Some construction contracts provide extra incentives if you finish the project ahead of the deadline or under budget.
Under a cost-plus contract, the project owner agrees to pay for all contractor’s expenses, as well as a percentage of profit. This contract model can appear under several names. Some of them are cost plus a fixed rate, cost plus fixed fee, and cost-plus with a guaranteed maximum price contract.
Time and Material Contract
A time and material contract involves an hourly rate and the actual unit price of materials. You usually use this for projects with a vague or small scope of work. The contractor provides bills using material costs and labor cost codes. Therefore, it poses less risk for the contractor and more for the project owner. In order to offset this, numerous contracts are written with a “not to exceed” clause. The contractor sets a number they cannot go above without requesting permission from the owner.
Why Use Bid Management Software?
Navigating construction bidding can appear complex at first. But contractors get to streamline the process by implementing suitable construction estimating software. In this section, we will list the top five advantages of using construction bid management software.
Expanded Contractor Network
When you need more market pricing for your bid packages, you can reach out to a growing construction community of pre-qualified contractors. Implementing software will supplement your business with a network of many self-registered construction professionals. This includes architectural and engineering firms, general contractors, and specialty subcontractors and suppliers.
Utilizing Kohezion’s tools, you get to select the construction requirements that relate to your bid package. Our low-code system enables you to create the application you need, at the speed you want, without relying on outside vendors.
Efficient Bidding Process
Kohezion offers an online dashboard that allows your bid team to manage your private subcontractor database efficiently. That way, you get to organize subs by trade, location, minority status, and more. By streamlining all the tasks involved, your preparation of bid packages will be as efficient as possible. It will allow you to remove the barriers and blockages that slow down estimating. This ensures that your team is working collaboratively and constructively.
Centralized Bidding Management
In Kohezion, you can keep track of all your bid invites in one place. It makes staying on the same page with others easy at every stage of the bidding process. You also have all the data you need to put together a proposal as soon as you open a bid. That covers dates, contact information, documents, and project data, such as size and location.
Additionally, construction bid management software can help you:
- Schedule follow-up reminders with customers
- Save time by grouping similar tasks
- View analytics and reports to help you make better decisions about where to spend your time bidding.
You can set customized access for subcontractors to review project documents and submit proposals. The software allows you to monitor what plan files they view, download, and collaborate on. Start by adding the required project documents, set the scope of work, and invite your contractors.
Your team can then quickly post details of their projects and bid packages for the rest to view and share. Kohezion will give you and your team a clear overview of all packages, contractors, and progress, along with detailed reporting options.
Kohezion’s automated interface will record every contractor’s actions, and reminder notifications will help keep everyone on track. This gives you the certainty that everyone is always working from the same page. Furthermore, cloud-based software stores your data in a central location. That way, you get to compare past bids. Instead of losing time collecting data from old spreadsheets, you’ll have a record of successful projects to use as a reference for future evaluations.
By incorporating a low-code online database platform, you’ll get to collaborate with your team and deliver applications at the speed you need. Simply register your email and complete business info to access your free account.
You can also invite your colleagues to join your account and get notified of bid opportunities. It’s easy to quickly gain the effectiveness of managing your projects in one place. Start your 14-day free trial and see how our construction bid management software can lead to more accurate and successful bids.