How to Evaluate Construction Proposals

For years our company participated in the public bidding market. That is bidding on government work including Local, State and Federal buildings. We worked on Court Houses, Police Stations, Parks and just about every kind of building out there. To be successful in the public market a company needs to be proficient in the trades, knowledgeable in production rates (how long things take), how to read and interpret the bid documents. Whether you win or loose a contract, its super critical to go over your bid and compare it to your competitors after the fact. It's the only way to improve your skills. And it gives one a clear prospective on assessing construction bids. On this page I will share some incites with you.

Public work is awarded to the lowest bidder. If the low bidder is 10% below the next, he has to have his bond company certify the bid accuracy. It's a good practice. Low bidders may have missed something and may need to cut corners to finish the contract. Every contractor awarded a "low bidder" project has an initial fear that he may have left something off. The worry is loosing money if you take the contract. So, you go through the contract, double and triple check before signing the contract.

High bidders are usually unfamiliar with the scope of work or are busy. So they throw a big number at it in order to protect themselves. That makes sense also, right?

All other contractors prices reside in a pack somewhere in the middle. For a contractor, loosing a bid is not as disappointing if your number was at the lower range of the pack. It means that you arrived at roughly the same price as other professionals in your industry. A bunch of experienced guys looking at the same stuff and coming to basically the same conclusion. That's not a terrible thing. The graph below illustrates the phenomenon.

Boca Raton Contractor

You may think I am suggesting to throw out the low and high bidder. The low bidder forgot something and will need to cut corners to avoid loosing money. And the high bidder was greedy. But I am not suggesting that. It might be that the low bidder has some trick up his sleeve and can knock the work out quickly. The high bidder might have some higher standard than the rest. The exercise is useful. With this in mind you can talk to the contractors and narrow down the differences in each bid. Ultimately you will hire the right guy for the job.

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