Construction bidding is the process of submitting a proposal to undertake, or
manage the undertaking of a construction project. The process starts with a cost
estimate from blueprints and material take offs.
The tender is treated as an offer to do the work for a certain amount of money,
or a certain amount of profit. The tender which is submitted by the
competing firms is generally based on a bill of quantities, a bill of
approximate quantities or other specifications which enable the tenders
attain higher levels of accuracy, the statement of work.
For instance, a bill of quantities is a list of all the materials of a project
which have sufficient detail to obtain a realistic cost, or rate per described
item of work/material. The tenders should not only show the unit cost per
material/work, but should also if possible, break it down to labour, plant
and material costs. In this way the individual who is selecting the tender
will be quite confident that the tender is feasible. Bids are not only chosen on
cost alone. Sometimes contractors submit lower tenders to win the contract and
win the work. Either the costs that the contractor incurs are greater than the
price he is charging the client, and thus is likely to go insolvent, or he
will claim for "loss and/or expense" due to discrepancies in the contract
documents. The lowest tender is not always a feasible tender. The lowest
tender is the most likely to increase the contract sum, the most throughout
the course of the project. Bid solicitation
Bid solicitation is the process of making published construction data
readily available to interested parties,including construction managers,
contractors, and the public. There are several services, including government
entities and private plan rooms, that allow project owners to release project
details to solicit and obtain contractor bids. These services act as a gateway
for project owners to release project information to a large group of
contractors, general contractors or subcontractors in an attempt to solicit
bids. Many of these services are subscription based or charge a flat rate
for project data. Contractual Formation
Depending upon the language in the bid proposal, a subcontracting construction
company could make its bid final, and, if accepted, a legally enforceable
contract is created. In these circumstances, upon determination by the
general contractor that a bid is the lowest offer, it can accept the bid and
upon acceptance, a subcontractor cannot renege or revoke its offer. The language
of the bid or offer can impact the court's determination of whether the
subcontractor intended for further negotiations to take place, or whether
the bid was intended to be an option or unilateral agreement to enter into a
contract upon acceptance of the offer. Types of project delivery
The most common methods of construction project delivery include
design-bid-build, the design-build, the construction manager as constructor
approach and a negotiated approach. Each of these methods have advantages and
disadvantages and all can be used to successfully plan, design and undertake
a given construction project. = Traditional procurement=
The traditional procurement method is the most common construction delivery
method. This process begins with an owner selecting an architect to prepare
construction documents. These are prepared using drafting standards such
as the Institute of Civil Engineers ICE Conditions of Contract, or the NEC
Engineering and Construction Contract. In most cases, the architect will
release these construction documents publicly, or to a select group of
general contractors, who will then place a bid on the project which reflects what
they believe cost of construction will total. This bid is inclusive of a
multitude of subcontractor bids for each specific trade. The general contractor’s
fee is generally built into the bid cost. Most government contracts are bid
competitively using this method. = Digital procurement=
The digital procurement method is rapidly emerging. There are various web
sites that provide electronic bidding, tender calls and other related services.
and all of the scope work = Design-build=
Design-Build is a construction project delivery system where, in contrast to
traditional "design-bid-build", the design and construction aspects are
contracted for with a single entity known as the design-builder or
design-build contractor. The design-builder is usually the general
contractor, but in many cases it is also the design professional. This system is
used to minimize the project risk for an owner and to reduce the delivery
schedule by overlapping the design phase and construction phase of a project.
Where the design-builder is the contractor, the design professionals are
typically retained directly by the contractor.
History The design/build delivery system often
cites the original "Master Builder" model used to build most pre-modern
projects. Under the Master Builder approach, a central figure of the
architect held total project accountability. From inception to
completion, the master builder was the key organizational figure and strictly
liable to the owner for defects, delays, and losses. The design/build system is a
return to some of the fundamentals of the Master Builder approach.
Overview of process Design-build focuses on combining the
design, permit, and construction schedules in order to streamline the
traditional design-bid-build environment. This does not shorten the
time it takes to complete the individual tasks of creating construction
documents, acquiring building and other permits, or actually constructing the
building. Instead, a design-build firm will strive to bring together design and
construction professionals in a collaborative environment to complete
these tasks at the same time. Typically the hallmark of a Design/Build
project is that one organization is responsible for both design and
construction of the project. If this organization is a contractor, the
process is known as "Contractor-led Design-Build". If the organization is a
design firm, the process is known as "Design-led Design-Build". In either
case, the organization employed by the owner rarely handles both aspects of
design and construction in-house. In fact, the organization often
subcontracts with on-site personnel as well as architects and engineers.
Potential problems of Design-Build Cost estimating for a design-build
project is sometimes difficult because design documents are often preliminary
and may change over the course of the project. As a result, design-build
contracts are often written to allow for unexpected situations without penalizing
either the Design-Builder or the owner. Several organizations provide
standardized form contracts for design-builders to use, but it is not
unusual for the design-builder to provide its own contractual documents.
This uncertainty requires the owner to rely a great deal on the integrity,
acumen, and competence of the design-builder. As the certainty of
estimates decreases, the opinion of the construction professionals of the
Design-Build firm must be trustworthy, accurate, and reasonably verifiable in
order to minimize risk. Benefits of Design-Build
It is important to note that the design-build method, while not focused
on saving the owner construction costs, nonetheless often saves the owner money
on the overall project. The combined effects of carrying a construction loan
and an earlier useful on-line date usually yields considerable overall
profitability to the project and may make seemingly unfeasible projects into
genuine opportunities. The compression of time is only one
important aspect of implementing this system.
Other attributes include Increased accountability by the service
provider, Single source project delivery, and
A value based project feedback system Accountability
Rather than a parcelized level of responsibility of the classic
design-bid-build, design-build provides an integrated solution for the owner or
client. This moves projects away from the "finger-pointing" that is often
commonplace in contemporary construction projects, and allows the owner to look
to one entity with any questions or concerns.
Single Source Instead of having several contractors
and consultants, an owner has just one entity to deal with. Design revisions,
project feedback, budgeting, permitting, construction issues, change orders, and
billing can all be routed through the design-build firm. This single point of
contact allows a certain degree of flexibility for the owner. Most
design-builders will leverage that flexibility for the owner's benefit by
continually refining the construction program to maximize the owner's value at
the completion of the project. Value-based project feedback
Typically, in order for a contractor to bid on a project, very specific details
relating to the methods and materials must be given to avoid any ambiguity and
to make an "apples to apples" comparison of bids. In a design-build context, the
owner, the owner's other consultants, and the design-builder can work together
to determine what methods and materials will maximize the owner's value. In
instances where marginally more expensive materials, designs, or
construction methods might yield a higher return on investment for the
owner than those of lower cost, the owner is free to adjust the project's
program without having to re-bid the entire project.
= Construction manager as constructor= Under this delivery method, a
construction manager is hired prior to the completion of the design phase to
act as a project coordinator and general contractor. Unlike the DBB method, a
construction manager is hired during the design phase, which allows the
construction manager to work directly with the architect and circumvent any
potential design issues before completion of the construction
documents. After documents are completed, the construction manager
accepts bids for the various divisions of work from subcontractors or general
contractors. = Negotiated=
This delivery method is similar to the Design-Bid-Build method in that design
and construction are performed by different firms. Unlike the
design-bid-build approach, a general contractor and an architect are selected
at the project’s inception. These firms work together throughout the design
phase. When design documents are complete, the final construction costs
are negotiated by the general contractor through bids from subcontractors on
various scopes of work. See also
Construction Estimating Software Presales
SmartBidNet.com iSqFt
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