Winning construction bids isn't just about being the lowest price. The subcontractors who build thriving businesses win the right jobs at profitable margins by combining accurate estimating, strategic positioning, and strong relationships.
Understanding the Bid Process
Most construction bids follow a similar process. The GC receives project plans and specifications, distributes bid invitations to qualified subcontractors, subcontractors prepare and submit their bids, the GC evaluates bids based on price, qualifications, and availability, and the GC awards the subcontract.
Your bid is your first impression. A professional, detailed, and accurate bid signals that you'll deliver professional, detailed, and accurate work.
Step 1: Qualify the Opportunity
Before you invest time in preparing a bid, evaluate whether this is a project you actually want. Research the GC's payment history and reliability. Assess whether the project fits your capabilities and crew availability. Consider the timeline and whether it conflicts with existing commitments. Evaluate the travel distance and logistics.
Bidding on every opportunity wastes time and often leads to winning the wrong projects. Focus your energy on projects where you have a competitive advantage and the client has a track record of fair dealing.
Step 2: Accurate Takeoff
A thorough quantity takeoff is the foundation of an accurate bid. Review the plans and specifications carefully. Count every item, measure every run, and account for waste. Factor in connections, transitions, and details that are easy to miss. Use estimating software to improve accuracy and speed.
Mistakes in takeoff are the number one cause of money-losing jobs. Take the time to get it right, or you'll pay for it during execution.
Step 3: Price Your Labor Correctly
Labor is typically the largest component of a subcontractor's bid. Calculate your fully-burdened labor rate, which includes the hourly wage, payroll taxes, workers compensation, benefits, and non-productive time. Estimate the hours needed for each task, then add a realistic productivity factor.
Don't use the same productivity factor for every project. A new construction project with easy access is very different from a renovation in an occupied building. Adjust your labor estimates based on actual job conditions.
Step 4: Build Your Bid Price
Combine your direct costs (labor, materials, equipment) with your overhead allocation and profit margin to arrive at your bid price. Overhead should include your annual fixed costs divided across your expected project volume. Profit margin should reflect the risk level, market conditions, and your desired return.
Step 5: Present a Professional Bid
Your bid document should be clear, detailed, and professional. Include a cover letter summarizing your qualifications and approach. List every inclusion and exclusion clearly. Specify your payment terms and any required conditions. Reference your insurance coverages and license numbers.
When to Be Aggressive on Price
Sometimes it makes sense to bid aggressively: when you need to fill a gap in your schedule, when the project positions you in a new market you want to enter, or when the client is someone you want a long-term relationship with. But never bid below your true cost. The cheapest project in the world isn't worth doing if you lose money.
Building Relationships That Win Bids
The best subcontractors often win bids without being the lowest price. GCs value reliability, quality, communication, and professionalism. If you consistently deliver on your promises, your reputation becomes your competitive advantage. Invest in relationships with GCs who value quality over just finding the cheapest price.