Bidding Mistakes in Construction : Avoid them at all costs

A construction business is built on successful bids. And the strategy for a winning bid is crafted through 1) thorough market analysis, 2) detailed budget preparation, 3) understanding the competition, and 4) drafting a well-thought-out proposal. However, there are various challenges in the bid management process that can cost the construction company dearly. That is why you should stay informed about such common bidding mistakes and avoid them at all costs. We have listed 10 such pitfalls in this blog.

If you are new to the field of construction, this blog will be a good place to learn how to place competitive bids. And if you’re a seasoned contractor, check if you are following all the rules or not.

Mistake #1. Underestimating Project Costs

One of the most common mistakes in construction bidding is underestimating the true cost of a project. This error can lead to financial losses and damaged relationships with clients.

Some common causes of underestimation:

+ Overlooking hidden costs

+ Failing to account for potential delays

+ Inaccurate material quantity calculations

Creating cost-effective construction bids might be a difficult task. But it is not impossible.  

To draft accurate bids, always perform a detailed cost analysis, including labor, materials, equipment, and potential contingencies, set aside funds for possible delays, and use tech solutions to automate cost calculations. 

You can use free cost calculators available in the market to calculate the costs. But if you are placing numerous bids we advise you to use a reliable Construction bid management tool. Check Do I need a construction bidding tool? and read How to pick the best Construction bidding tool to pick one for your company.   

Mistake #2. Rushing the Bidding Process

In the fast-paced construction industry, it’s tempting to rush through bid preparation to meet tight deadlines. However, this haste can lead you to costly oversights and errors.

Consequences of rushed bids:

+ Missed important project details

+ Calculation errors

+ Failure to adhere to RFP protocols

+ Inadequate risk assessment

How do you avoid these? 

1. Take the time to carefully review all project documents
2. Double-check your calculations
3. Consider potential risks before submitting your bid. 
4. Follow a bid management process flowchart. As it lists down all the tasks from opportunity recognition to submitting the proposal and post-submission analysis. 

Mistake #3. Ignoring the Competition – Bid Bidding mistake

It is important to focus on your own bid. But never ignore your competitors. You should understand the competitive landscape. As this will help you position your bid more effectively.

Ways to stay competitive:

+ Keep an eye on your supplier competition

+ Research your competitors’ strengths and weaknesses

+ Identify unique value propositions for your company

+ Stay updated on industry trends and pricing

Remember, your goal is not to underbid at all costs, but to offer the best value for your clients.

Mistake #4. Failing to Visit the Job Site

You cannot draft a quality bid without visiting the actual job site.

If you base your bids on plans and specifications on paper, you are bound to have oversights and errors.

Benefits of site visits:

+ You get to identify potential challenges not evident in plans

When you go on a visit you can easily spot potential issues. Issues such as unexpected ground conditions, existing structures, or environmental factors that could impact your project.

+ Assess site accessibility and logistical considerations

After a site visit, you can easily assess factors like access roads, entry points, and any other obstacles that complicate logistics in the long run.

+ Gain insights for more accurate cost estimation

When you visit a site in person you understand the scope and scale of the project. This way you avoid overestimation or underestimation and place more accurate bids. 

So always make time for a thorough site visit before finalizing your bid. As it can save you from costly surprises down the line.

Mistake #5. Overlooking Contract Terms and Conditions

NEVER DO THIS!!

Never jump straight to the numbers (Profits $$$) before you review your contractual terms and conditions. Why? Because this is a recipe for disaster. 

Don’t trust us? This is what Jan Doe, a construction attorney has to say – “The devil is in the details. A seemingly profitable project can quickly turn into a nightmare if you overlook unfavorable contract terms.”

Now lets focus on the key contract elements to review:

+ Payment terms

+ Change order procedures

+ Liability clauses

+ Project timelines and milestones

If you’re unsure about any contract terms before submitting your bid you can also consult with a legal professional. 

Mistake #6. Neglecting to Factor in Overhead Costs

Not that you are unaware of overhead costs. But sometimes contractors miss some very important overhead expenses. So make sure you pay attention to such costs. 

Overhead costs in construction to consider:

+ Office expenses

+ Insurance and bonding

+ Marketing and business development

+ Administrative staff salaries

Ensure your bid includes a fair allocation of overhead costs to maintain profitability across all projects. When you use an automated bid management system you avoid missing any overhead cost calculations.

Mistake #7. Failing to Account for Material Price Fluctuations

Construction material prices are volatile. Plus the vendors that supply you the materials can also quote different prices. If you fail to calculate these potential price changes your company can lose a lot of money. This bidding mistake bleeds your profit away.

How to fight material price fluctuations?

+ Include price escalation clauses in your bid

+ Consider locking in prices with suppliers for large projects

+ Build a contingency into your bid for potential price increases

Mistake #8. Neglecting Post-Bid Follow-Up

Don’t forget, your responsibility doesn’t end when you submit the bid. You need follow up on your bids so that you don’t lose valuable opportunities.

Here are 3 effective post-bid strategies that you should follow:

+ Request feedback on unsuccessful bids

Always seek feedback on why your bid was not successful. Try to understand the reason why you lost your bid and improve on future projects. 

+ Stay in touch with potential clients

Maintain communication with clients even after submitting your bid. This way you build a relationship with your clients. You might win a future project if you demonstrate continued interest. 

+ Learn from each bidding experience to improve future proposals

Lost a bid? Don’t lose hope!

Treat each bid as a learning opportunity. Analyze what worked and what didn’t. Use these insights to enhance your future proposals. 

Remember, successful bidding is not just about offering the lowest price. It’s about providing the best value while ensuring your company’s profitability and reputation. So make sure that you take your time to prepare thorough, well-thought-out bids. Avoid these 8 bidding mistakes in your next construction project and you’re all set!