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What is Construction Bidding?

Construction bidding is the process of submitting a proposal/tender to build or manage a construction project.

Public tenders, or those with a government department, follow different rules than private tenders. They must be advertised in advance, and they allow any qualified contractors to bid if they choose to. Private owners may opt to limit the construction bidding process to contractors they have chosen as bidders.

The construction bidding 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 (firm price), or a certain amount of profit (cost reimbursement or cost plus). The tenders, submitted by competing firms, are generally based on a Bill of Quantities, a Bill of Approximate Quantities and other relevant specs.

A Bill of Quantities is a list of all the materials (and other work such as the amount of excavation) of a project which outline sufficient detail to obtain a realistic cost or rate per described item of work/material. Construction bidding / 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.

It’s important to distinguish between a Bid and an Estimate. Generally, an Estimate is the calculation of the contractor’s internal costs (including materials and labour), while a Bid is the final price charged to a customer.

At the end of a well-run construction bidding process, the submitted tenders give project owners objective, apples-to-apples criteria to select the best contractor for the job.

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