Bid Package Construction Breakdown - Examining Every Element

Whether you're a project owner or a contractor, we have all come across different construction bid packages. Personally, I have always relied on the information in a bid package to decide whether to bid on a construction project or not.

However, have you ever wondered what is included in a bid package? That’s what we are going to discuss in this guide.

We'll examine the bid package, the elements included in the package, and how to put together a construction bidding package. But first, let’s define the bid package construction investors use to solicit bids. 

What is a Construction Bid Package?

A bid package contains project documents issued by a client to potential contractors during the bidding process. These bid documents outline all the project details, like project scope, deadline, and milestones, to help contractors understand the project requirements.

Contractors then use this information to structure their bids to match the client's requirements. They then use the specifications in the bid package as a guide to complete the project per the instructions. 

Clients often issue bid packages with various forms. The most common ones are an Invitation To Bid (ITB), a Request For Tender (RFT), and a Request For Proposal (RFP).

In the case of an ITB, the client is specific with the project’s scope, leaving potential bidders competing on pricing.

The client doesn’t go too much into specifications for RFT and RFP, allowing potential bidders to compete on approach and price.  

Now that we know a bid package, let’s look at what it contains.

The Anatomy of a Bid Package

Bid packages contain similar key elements, regardless of whether they're for private or public construction projects.

However, there are slight variations depending on project details or local laws. Here’s what you would expect to find in a bid package:

Cover Sheet

It’s usually the first page of the bid package and contains project details like name, location, bidding deadline, and the client’s contact details. It also includes relevant information like site visit dates. Think of it as a calling card introducing the project to a contractor. 

Instructions to Bidders

The project owner creates this section for potential bidders, highlighting important details related to the bidding process. It serves as a navigation system, helping contractors structure their bids to match the project’s requirements. Here are a few details you should expect in this section of a bid package:

Bid Preparation Guidelines

Potential bidders learn how they need to prepare their bids. The guidelines touch on specific bid formats acceptable to the client. For instance, a client might specify a unit price bid format for their project. 

Bid preparation guidelines are crucial in all bid packages as they ensure contractors submit bids aligning with the client's demands.

Bid Submission Guidelines

Every client has a preference on how they prefer construction bids submitted, and they highlight it in this section of a bid package. The guidelines include the bid submission deadline that every general contractor must beat. They also specify whether the bid would be submitted electronically or in person.

Bids Evaluation 

Project owners focus on many things when evaluating bids. They explain their bid evaluation criteria here to help contractors align with these requirements for a successful bid selection. The most common evaluation criteria are the lowest prices, experience in a similar project, or the contractor’s technical capabilities. 

Contract Award Process

Contractors learn how the project contract will be awarded to the winning bid. The client outlines how they will notify the winning bidder in this section of bid packages. The most common notification methods are phone calls or emails. Clients also explicitly explain how they wish the contract to be executed depending on the project requirements. 

Scope of Work

It’s perhaps the most important section of a bid package. The scope of work breaks down the entire project into smaller segments, creating a construction blueprint that contractors must follow. Here are a few details included in the scope of work:

Specific Project Tasks

The project scope details specific tasks involved in the project. Let’s take a residential building construction project as an example. A client would include specific tasks like land excavation, foundation walls, damp proofing, etc. 

Project Deliverables

In this section, the client breaks down the entire project into phases with predetermined deadlines for each phase. A contractor is expected to complete each phase and deliver it to the client for inspection and approval.

For instance, a client may determine framed structures, install MEP systems, and complete exterior finishes as project deliverables. 

Project Milestones

Milestones are incredible for tracking a project's progress. Let's take a road construction project as an example. A client could include milestones like subgrade preparation, drainage and base course installation, and asphalt paving as potential milestones.

The essence of milestones is to ensure the project proceeds as required. Some benefits include proper resource allocation according to project stages and risk identification.

Performance Expectations

Clients have performance expectations from interested contractors, which vary depending on the project. They mostly check whether the contractor complied with project specifications, delivered a defect-free construction, and the project’s durability.

Performance expectations help clients determine the project’s success. It also helps contractors stay within the project’s requirements. 

Bill of Quantities or Bill of Materials

A bill of quantities is a comprehensive list of labor and materials needed to complete a project. On the other hand, a bill of materials is a list of components, materials, and assemblies required to complete a project. 

These documents help clients and contractors estimate the direct construction costs. A cost estimator is responsible for creating these documents, which include specific materials and labor skills needed to complete the project. 

Project Designs and Drawings

Drawings and designs provide a visual representation of the entire project, helping contractors make sense of everything. Contractors must prove they understand these documents during the bidding process by explaining their construction approach.

Project designs are a bit broader than drawings. They include functional layouts, material choices, 3D models, and sketches. 

The client includes project drawings depicting specific dimensions. These drawings help contractors plan for the construction by knowing the amount of materials needed to complete the project. 

Reading construction drawings allows you to obtain more specific and detailed information regarding the project, like individual components and how they should be placed and connected. 

Common drawings in a bid package include site plans, elevation, section plans, landscape, and details. 

Bid Forms

These are templates that contractors use to pitch their bids. They list their experience on a similar project to help convince the client that they’re up to the challenge. Contractors also list their competitive prices, covering all the expenses, relevant markups, and profit margins. They also include innovative solutions to make the project better and beat the deadline. 

A bid form provides a contractor with an opportunity to impress a client. They show their prowess That’s why it’s crucial to spend enough time working on this section in the bid process and provide verifiable information. 

Contract Terms and Conditions

A construction contract is a legally binding document highlighting sensitive details like remuneration and disputes. The contract explains the payment terms, timeline, and the amount to be paid. 

In case of dispute, the parties involved refer to the contractual terms to mitigate this problem. Let’s consider an example where a contractor isn’t able to beat the predetermined deadline. The contractual terms would account for this and lay out a solution to avoid disputes. 

How do you Put Together a Construction Bid Package?

As a general contractor, it's your duty to convince project owners that you're the right fit for the project. The best way I managed to achieve this was by structuring my bids to match the construction bid package's requirements.

Think of a construction bid package as pieces of a puzzle created by a project owner. As every contractor competing for the project, you should put together these pieces to come up with a complete puzzle.

When you do this successfully, you convince the client that you understand the requirements. You will be surprised how much your proposal stands out from the crowd.

Here are a few tips to help you out.

Understand the Project Scope and Requirements

Take your time to go through every document in the bid package. Absorb the information and double-check any unclear project details. Take your time reviewing these documents, as they hold the clues to winning the contract. 

Avoid working alone on the documents as it’s easy to miss crucial details. Instead, work as a team and exchange ideas. 

Mention your Experience and Success

Clients love working with contractors who have had success working on similar projects. Showcase your experience in your line of work and the success you’ve accrued in the process. 

Have you ever worked on a similar project? Mention that. Doing so convinces the client that you understand the scope of work and will deliver great results.

Account for All Project Costs

Submitting competitive bids may improve your chances of winning the contract. However, submitting the lowest bid also means you risk getting a smaller budget for the project. When this happens, it's possible for the unexpected costs to eat up your profit margin.

That's why you should be realistic with the expenses. First, you should identify and calculate all the direct costs and project overheads. Next, you must come up with a realistic markup to ensure you remain in the profit zone.

Start by contacting local suppliers to have enough information to compare material prices. Don't forget to factor in labor costs, including overtime and time theft. Project overheads, like fees and administrative expenses, are also crucial to the overall project cost.

Every construction project runs into some unforeseeable challenges that derail the project. These obstacles could be material shortages that usually lead to price hikes. Economic inflation also leads to higher material prices, while bad weather forces workers to work overtime. Set aside some funds to mitigate these challenges.

Communicate Clearly

Information is power, and the bidder who expresses their plans clearly to the client always wins the bid. Think of this section as your audition. Your chance to convince the client you know your craft. Make sure you include all the documents that the client requested.

If there's something you don't understand about the construction project, contact the client and ask for clarification. Use clear language so that anyone can read your bid documents easily. Don’t forget to proofread your documents before submitting them. 

Final Thoughts

A construction bid package helps contractors understand project requirements and structure their bids to match these requirements. It acts as a guide to bring the client’s thoughts and ideas to life. 

Without a construction bid package, a contractor wouldn’t understand the project. Instead, they're more likely to deliver a different or substandard project.