Lost your Construction Bid? – 7 reasons why it happened

Introduction

In the construction industry, we consider a 5:1 bid-to-hit ratio pretty impressive. If you’re within that range, trust us, you’re doing great. While the statistics are clear, no matter what, it is still frustrating to lose a construction bid. To help you avoid this, we’ve listed 8 major reasons why you could have lost your construction bid. We’ve also given some practical advice to stop that from happening. 

We also touch up on some basic jargons of the construction industry in this blog. You can read more of these from 50 Construction estimating jargons to keep in mind. Let’s begin!

What is a Construction Bid? 

When a construction project is announced, different contractors bid to win the job. They submit a construction bid—a proposal to their clients—highlighting the cost and other details for completing the project. These bids include estimates for materials, labor, other expenses, and the timeline for the work. The client then reviews bids from different contractors and selects the one that best meets their needs. As a general or subcontractor, if you have a strong bidding game, you win more bids and naturally build a strong reputation in the construction industry. 

8 Reasons You Really Lost Your Construction Bid.

1. You submitted incomplete or inaccurate Bid Documents

As funny as this sounds, one of the most common reasons a construction company might have lost a construction bid – submitting an incomplete or inaccurate construction bid document. What does this mean in practice? This means that you’ve either missed some very important project details in your bid. Or you’ve committed some serious calculation errors.

How do you avoid this from happening? Here are 3 tips to follow:

+ Double-check all documents before submission

Make sure you review your construction documents thoroughly before submitting your bid. This helps catch errors or omissions and prevents disqualification. You should also focus on the accuracy of cost estimates, material lists, timelines, and compliance with client requirements.

+ Use a bid checklist to ensure all required elements are included

Preparing a checklist is the easiest way to ensure you don’t miss any important project details. The construction document should cover details such as; project scope, pricing, timelines, legal and compliance documents, certifications, and any specific requirements outlined by your client. 

+ Have a colleague review your bid for accuracy

Before you press that send button, ask a colleague to review your bid document. As they can help you spot mistakes or oversights that you might have missed. They can also provide valuable feedback to improve your bid proposal.

2. Unrealistic Bid Pricing

Overbidding and Underbidding are 2 major pitfalls in pricing a bid. When you place a construction bid that is significantly higher than your competitors, it may be seen as being overpriced, While an extremely low construction bid might raise concerns about your ability to successfully complete the project. 

You can do these 3 things to avoid placing inaccurate bids: 

+ Research market rates and material costs thoroughly

Market rates for many construction materials fluctuate frequently, which is why it is crucial to factor in current market prices. When conducting your market research, look for vendors who supply quality materials at low prices. This way, you can increase your profits.

+ Factor in all project expenses, including labor and overhead

You can place a successful bid only when you include all project-related expenses, such as labor, equipment, administrative costs, and other indirect overhead costs.

+ Consider the project’s complexity and potential risks when pricing

Keep in mind that every construction project comes with its own unique risks and challenges. There are multiple issues that can cost you both time and money. Some such problems include 1) difficult site conditions 2) regulatory requirements 3) delays due to unforeseen circumstances etc. You should always consider these things in mind before placing a bid.

3. Lack of Experience or Qualifications

You don’t need to fret over bagging every project that comes your way. Some projects require specific experience or qualifications. If you and your construction company do not meet those criteria, it is better to pass on the opportunity and pursue one you are more likely to win.

Follow these steps to bid for relevant construction projects:

+ Carefully review project requirements before bidding

+ Only bid on projects that align with your expertise and qualifications

+ How to gain more experience and be more qualified for Construction bids?

If you are thinking of expanding into a new area of construction, consider a partnership. Partnering with a credible construction firm helps you in three ways. First, you gain access to specialized skills and experience. Since these skills complement your work, you can take on new projects and deliver quality results. Second, when you collaborate with a firm, you pool resources such as labor, equipment, and materials, making you better equipped to handle critical projects. Third, you save money by sharing administrative costs, reducing overhead expenses, and purchasing materials in bulk.

4. Missed Deadlines

Don’t expect your bid to fare well if you submit incomplete bids. To avoid this make sure you mark your deadlines in your calendar. Aim to submit your bids at least one day prior to the deadline to avoid last-minute mishaps.       

5. Failure to Address Project Specifics

You should craft a bid after thoroughly analyzing the project. Submitting a generic bid is a sure way to get rejected, As clients assess whether you’ve understood their specific needs and requirements.

In your bid, you should highlight your estimation approach and include project-specific work plans and methodology. This way, you prepare a project-specific bid.

6. Lack of Differentiation

If your bid does not stand out it might get rejected. Remember, the bidding process is very competitive. Clients receive hundreds of bids when they raise a query. In such a case, if your bid doesn’t communicate a unique value proposition, it may go unnoticed. 

To protect your bid from failing do these 3 things. First, create a unique brand image, include short case studies and testimonials along with your bid, and explain your approach to completing the client’s work. 

7. Insufficient Financial Stability

Your financial stability is your biggest asset, as it ensures you can complete the project without any unwanted difficulties.

Include financial references or a statement of your financial capacity in your construction bid. If not, prepare yourself to send out a proof of financial stability if demanded. 

Conclusion

We’re proud that you’re trying to understand why you lost your construction bid. Because you’ve now taken the first step toward improving and winning future construction bids. Make sure you address the 8 reasons you just read about. If you liked this blog, share it with your construction team. Trust us when we say that a well-informed team contributes to a successful project in any company – Construction company included.  

Are you an experienced bidder? We would be thrilled if you share your insights with us.

If you want us to write on any other Construction topic, comment below.