Seatbelts? Check! Date and time? Set! Let’s travel back in time and rectify estimating and bidding mistakes. Unfortunately, time travel is only possible in sci-fi movies. For now, estimating tools and bidding solutions can save the day. If you’re a contractor trying to understand the differences between the two, you’ve come to the right place!

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What This Article Covers:

• What Is Construction Estimating?
• What Is Construction Bidding?
• Estimating vs. Bidding
• Ethics
• How To Select the Best Solution
• Market Trends
• In Conclusion

What Is Estimating?

Estimating is the process of forecasting project costs. These include direct, indirect and overhead expenses. The process leads to the creation of an estimate. Contractors submit estimates to company owners to help them budget.

You must be careful while estimating because one mistake can result in submitting noncompetitive bids. You can take the help of estimators to generate precise estimates.

The American Society of Professional Estimators (ASPE) introduced a five-tier system for determining estimating accuracy. We’ve outlined the same below.

• Level 1 — Order of Magnitude: You generate a rough estimate based on historical data to determine financial feasibility.
• Level 2 — Intermediate or Schematic: At this level, you factor in costs according to the schematic design provided by the client or architect.
• Level 3 — Preliminary or Design Development: Here, the architect sends you a rough plan and specifications to help you initiate budget planning.
• Level 4 — Substantive or Construction Document: Once the architect shares the final drawing, you can compare the rough estimate with it and make necessary changes.
• Level 5 — Definitive or Bid: This is the stage where you calculate the final project cost in order to create a reliable estimate that you can attach with your bid proposal.

You should clearly understand your client’s expectations before creating an estimate. If you present an unrealistic estimate, the client might think you’re unfit for the job. You should produce a reasonable estimate at all costs.

Methods

How do you brew your coffee? Do you use the french press method or prepare it using the instant brewing technique? Just like you can prepare coffee using several methods, you can generate estimates using different estimating approaches.

We’ve highlighted the same below.

Parametric

The parametric estimating technique leverages historical data and statistical algorithms to help you calculate the cost and duration required for project completion. It assists you in achieving estimating accuracy.

To employ this method, you must determine parameters like project measurements and dimensions in the early design stages.

Use the formula mentioned below for parametric estimating.

E_parametric = A_old / P_old x P_curr

Where:

• E_parametric = parametric estimate
• A_old = historical amount of time or cost
• P_old = past value of the parameter
• P_curr = parameter value in the current project

You get two types of results after using the parametric technique:

• Deterministic: This gives you a single number that shows the expected cost and time required to complete the current job.
• Probabilistic: This generates several estimates based on varying durations and costs. You can produce a probability density curve consisting of three benchmarks — optimistic (best-case scenario), pessimistic (worst-case scenario) and most likely (the cost and time estimates with the highest probability).

You can define the parameters using regression analysis. It enables you to identify similar trends in complex datasets, helping you select appropriate parameters for your estimation model. Don’t forget to backtest your results against historical data.

You should employ this technique if you have access to previous records and can quantify and scale them. You can reuse the parametric model for similar projects to save time.

Analogous

You can estimate current project costs by leveraging historical data using the analogous estimating technique. You don’t need to perform data manipulation or statistical analysis. You just require access to past estimates.

This technique can be your best friend when company owners don’t provide detailed information about the project.

It is the easiest way of estimating project costs, but it’s not very accurate. You can use it to generate a rough estimate and later modify the values as you receive more details.

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Assembly

An assembly is a combination of materials, devices or equipment that serves a specific purpose. For instance, you might need frames, hinges, shims, doorknobs and nails to construct a door. When grouped, these elements make a door assembly.

You can calculate costs based on the list of assemblies using the assembly estimating method. Most estimating systems enable you to perform assembly takeoffs to help speed up estimating processes.

For example, if you’re calculating costs for a residential switch assembly, the estimating solution would add a single gang box, pole, cover plate and 20 feet of NM-B 12 gauge wire to the detailed estimate, helping you simplify processes and increase productivity.

Some of the other benefits you can reap by employing this technique are as follows:

• Maintain cost databases
• Reduce the number of order quantities
• Auto-update costs if changes take place
• Build assembly libraries to save time

You can invest in cost books to locate assembly prices. Several software vendors like RSMeans and ProEst provide cost books too.

Plinth Area

The plinth area refers to the external dimensions of the walls of the buildings. It’s generally 10–20% more compared to the carpet area.

When calculating the plinth area, do not measure the balcony, loft, internal shaft area, domes, turrets, cornices and box louvers.

Calculate it using the below-mentioned formula.

Plinth area = Carpet area + Wall area

You can generate a plinth area estimate by multiplying the plinth area of the building with its plinth rate.

Let’s say the plinth area of a building in a particular locality is 200 sq.m, and its rate in the same vicinity is 4000 sq.m. The estimated building cost will be: 200 X 4000 = $800,000.

You should generate a separate estimate for each floor if it’s a multi-storied building.

Unit Rate

A unit rate is the monetary value assigned to items listed in the bill of quantities. To produce a unit rate estimate, you need to calculate each unit price separately and then sum them up to determine project costs.

You should consider the following factors to produce a precise unit rate estimate.

• Labor Costs: They include hourly wages, overtime payments, sickness and injury benefits, CITB levy, and any other employer-paid benefits
• Material Expenses: They consist of purchasing, transportation, waste allowances and storage costs.
• Plant: They include operating (fuel, operator expenses and consumables) and fixed (maintenance, overhead, insurance and capital expenses for purchasing equipment) costs.

You should conduct thorough market research to determine accurate unit prices.

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Process

Estimating is more than preparing a list of indirect and direct costs. To generate reliable estimates, you must conduct an in-depth analysis of the project’s scope.

Below, we’ve outlined the key steps you should follow to make estimating processes a breeze.

Choose the Right Project To Bid

Would you award a landscaping job to a subcontractor specializing in flooring projects? We bet not! Similarly, bidding on a job you have limited experience in could invite mistakes. Challenging projects help you grow. But you should ensure that you have the resources to complete the job. It’s good to practice bidding selectively.

Review Specifications and Drawings

It’s important to review specifications and note general requirements like payment terms, bonding capacity and team qualifications.

After examining general specs, it’s time to review divisional specifications such as installation methodologies and material grade. We recommend you create a spec checklist to avoid missing critical steps.

You should review drawings to help gain insights into the project’s scope. There are usually two sets of drawings — architectural and divisional. When you overlay both drawings, you can identify the overlap between trades and elevations that can affect labor, equipment and material costs.

If you find any discrepancies between specifications and drawings, you should send an RFI to the company owners or architects to gain clarity. This will help you avoid disputable change orders and financial risks.

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Perform Takeoffs

Now, it’s time to quantify materials based on specifications and drawings.

You can perform takeoffs using highlighters, digital scale masters, click counters or takeoff software. If you’re conducting takeoffs using manual techniques, you can record quantities in an Excel spreadsheet for better visualization.

Accurate takeoffs help you order correct material quantities and avoid project delays and budget overshoots.

Calculate Costs

Now that you’ve got a list of quantities required for project completion, you need to determine labor and material costs. You can invest in RSMeans or Craftsman cost books to assign material and labor prices.

You’ll have to calculate indirect expenses like profits and overheads too. These can include office lease, marketing, sales and other operational costs. Not considering overhead expenses can put you in financial trouble. The rule of thumb is to consider all costs that might affect your budget.

You can implement a job cost recording system to avoid cost overruns. It also enables you to generate revenue reports to help you make strategic decisions.

Generate the Estimate

It’s finally time to produce the estimate after the long process of calculating direct and indirect costs. You should use the estimate format provided by the client to avoid reformatting the estimate.

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Quotes vs. Estimates

It’s not uncommon for people to use the terms quote and estimate interchangeably. It can cause communication issues with clients, though. That’s why it’s important to understand the differences between a quote and an estimate. We’ve highlighted the same below.

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Estimating Pitfalls

Estimating is not an easy task. You might make errors on the way. Unfortunately, those mistakes can cost you the bid.

Below we’ve mentioned some estimating mistakes you should avoid if you want to win bids.

Performing Inaccurate Takeoffs

How much damage can a single inaccurate takeoff cause? We say a lot! It can result in incorrect construction costs, resulting in a faulty estimate. And when company owners think that the costs are unrealistic, they reject your bid.

Imagine you using square yards instead of square footage to calculate prices. It can affect your cost estimates drastically.

You should review plans and specifications at least thrice before you perform takeoffs. They often come with calculation instructions. When in doubt, contact the architect for clarification.

You can leverage takeoff software to calculate precise measurements. Such solutions also enable you to view building models in 3D for better visualization.

Failing To Perform Site Visit

Most company owners conduct pre-bid meetings to brief you about complex requirements. These meetings offer you the opportunity to visit the project site. And opting out of these visits can result in inaccurate estimates.

No two job sites can be identical. If you think you can use the measurements of a similar project you completed in the past, you’re making a big mistake. The job description might be the same as the current project, but the dimensions aren’t.

While conducting a visit, you should inspect the landscape thoroughly. You should also determine the space required for staging, material delivery and equipment storage.

Furthermore, study the environmental protection rules you need to follow during construction.

Ignoring Equipment Needs

You might require additional equipment to complete the job. There might also be situations where your equipment stops functioning, and you might need to rent a new one. Not considering these scenarios beforehand can result in change order disputes.

Failing To Review Subcontractor Estimates

As a contractor, you might have to delegate some work to subs. Placing blind trust in your subcontractors’ estimate can cost you the bid. No matter how great your relationship is with the subs, you should always review their estimates to avoid double-entry and accounting mistakes.

Underestimating Labor Costs

There are several factors such as qualifications, rate of pay and experience levels that you should consider while estimating labor costs. You can also access historical data to determine labor expenses to help create detailed estimates.

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What Is Bidding?

Bidding is the process of submitting tenders to clients to undertake or manage a particular project. It leads to the generation of bid proposals that typically consist of cost estimates, blueprints and takeoff details. You can leverage construction bidding solutions to produce a winning bid proposal.

You cannot undertake just any project you wish to. Well, not unless you have a magic lamp to summon a genie who can grant your wishes! You need to submit an appealing bid proposal to the client. And if the client finds your tender reasonable, they might ask you for additional details.

If everything goes great, congratulations, you won the job! It sounds easy, but in reality, it isn’t. You have to compete with other bidders in order to win the project.

Before you prepare a proposal, you should ask a certified quantity surveyor to generate a bill of quantities (BOQ). This will help you develop an advantageous tender and effective statement of work.

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Process

Bidding is tedious. The bidding process can help you manage workflows, win profitable jobs and achieve successful business outcomes.

We’ve outlined the process below.

Bid Solicitation

At this stage, clients send a request for proposal (RFP), invitation to bid (ITB) or request for qualifications (RFQ) to contractors. If it’s a government project, clients upload project details on a public bidding website, offering all contractors an opportunity to bid.

Company owners attach project drawings, specifications, bid deadlines and scoring methods to bid packages. They can request additional documents like the company’s resume, preliminary project schedule or portfolio.

Sometimes the clients request subcontractors’ qualification details too. We advise you to read the bid package carefully before submitting the proposal to the clients to avoid bid rejections.

Subcontracting

Once you receive the bid package, you should thoroughly review project requirements and develop an ITB to send to subcontractors. You can share the bid package with the subs to help them better understand the scope of work.

You can leverage bidding solutions like PlanHub to send bid invites to multiple subcontractors with just a few clicks. You can also filter subs by trades and locations.

After subcontractors review project details, they send you the submittal via your preferred communication channel. You need to select a bid that matches the project requirements.

You can always choose a high-priced offer. But remember, low-priced bids don’t always deliver sloppy work, and high-priced bids don’t guarantee exceptional work. So, choose wisely.

Bid Submission

It’s time for you to submit the final bid proposal to the client. You can make a checklist of documents you need to attach to your proposal to avoid missing any critical requirements. Proofread and recheck your submittal several times to avoid mistakes.

Bid Selection

Clients review and compare your bid package with others based on several factors like previous experience, scheduling philosophy and safety record.

They might also invite you for an interview for assessment purposes. After evaluating all the factors, they generate bid scores. And then award the project to the contractor with the highest score.

Contract Negotiation

After the company owner decides to hand over the project to you, it’s time for negotiations. Before producing a contract, you and the client must decide on contract terms and conditions.

Conflicts might arise while negotiating, and both parties (you and the client) might reach a disagreement. In this case, the client can award the job to another contractor. That’s why you should be smart while negotiating. Nobody wants to lose a job, do they?

After successful negotiations, both parties sign the contract. Remember always to request a copy of the agreement to avoid legal troubles.

Project Delivery

This is the last stage where you begin the construction work based on the selected project delivery method.

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Methods

Bidding consists of three primary methods — procurement, project delivery and contract. The clients make these three major decisions to help their projects succeed.

Why should you know them? Because they can help you understand the client’s mindset and make strategic decisions.

We’ve highlighted these methods in detail below.

Procurement

You should understand the client’s procurement strategy to make informed bidding decisions. Below we’ve outlined the same.

Best Value Source (BVS)

The company owner awards the job to the contractor based on past performance, qualifications, time managing capabilities, financial stability, robustness, credit rating and safety record.

The client might send you a request for qualifications (RFQ) before they send an ITB, or they might ask you to attach your credentials with the submittal.

Low Bid

The procurement officer awards the project to the contractor with the lowest bid. You’ll witness this method in action while bidding on public projects. Government and federal agencies adopted the low bid strategy in response to corruption. By awarding the job to the lowest bidder, the client ensures the taxpayers that they’re utilizing the budget in the best possible manner.

Negotiated

The company owner contacts the contractor with who they have a meaningful relationship. They discuss specifications and pricing with them. They hand over the project to the contractor if they find the proposal appealing.

Direct Select

Here, the company owner awards the project to a contractor who can fulfill all project needs — designing, management and construction. It’s commonly known as the non-competitive method.

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Project Delivery

You cannot execute a project successfully without a plan. Project delivery methods enable you to organize jobs to help you gain the desired output. We’ve highlighted some of the delivery techniques below.

Design-bid-build

This technique consists of three phases — design, bid and build. The company owner hires an architect in the design phase to create a project layout.

When the design’s complete, the owner starts the bidding process, where they evaluate multiple bids and award the job to a competent contractor.

At the last stage, the contractor begins the construction project.

The architect supervises the project to ensure that the contractor delivers quality work. This technique fits clients who have little idea about construction processes.

Design-build

Here, the company owner replaces the architect with a contractor that can fulfill designing duties too. This helps the client cut the lengthy timeline involved with the design-bid-build process.

According to the Design Build Institute of America’s (DBIA) Utilization Update report, design-build construction spending is anticipated to grow at a CAGR of 7.6% from 2021–2025.

According to Lisa Washington, DBIA CEO:

“As our nation considers the passage of historic infrastructure investment, it’s clear design-build will play a significant role in delivering the nation’s most time and cost-efficient projects to our communities.”

Construction Manager at Risk (CMAR)

The company owner hires a construction manager (CM) to supervise the project from inception to completion. It’s the CM’s duty to contact and hire contractors and subcontractors for the job.

When the project’s halfway through the design stage, the CM submits a guaranteed maximum price (GMP) to the client. This ensures the client that the job won’t exceed the price threshold. If the project cost surpasses the GMP, the CM’s organization becomes financially responsible for the project, putting them at risk.

Integrated Project Delivery (IPD)

The company owner selects the architect, contractor and subcontractor and binds them into a single contract. This project delivery technique promotes collaboration and maximizes efficiency. It’s best suited for complex projects.

Contract Type

You need to generate a formal agreement at the end of the bidding process.
First, you and the company owners discuss terms and conditions, and when both parties agree, they sign the contract. Some of the common contract types include:

• Cost plus
• Guaranteed maximum price (GMP)
• Lump sum
• Unit price

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Public Bidding vs. Private Bidding

Take a look at the table below to understand the differences between public and private bidding.

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Mistakes To Avoid

Everyone makes mistakes under pressure. Unfortunately, there’s no room for errors in bidding. One mistake, and it’s time to say goodbye to the project.

We don’t want you to lose bids. To make you more diligent than you already are, we’ve outlined some mistakes that you should avoid to win jobs.

Bidding on the Wrong Projects

Bidding on every project you set your eyes on is not the best practice. You should bid on jobs you know your team will excel at. Yes, you should take on new challenges but make sure they help your company grow and make profits.

There’s no shame in abandoning your bid. Let’s say you attended the pre-bid meeting, contacted subs to understand their pricing and created a material pricing list. But midway, you realize that the job won’t be profitable. You need to make the smart decision to dump your bid at that moment.

Bidding and winning several projects is great. But the work quality might degrade if you don’t have the adequate workforce to manage those jobs. And delivering sloppy work can damage your reputation. That’s why you should bid selectively.

Submitting Incomplete Documents

The deadline is nearing, and you still have a lot of work to complete. The pressure is on! In such situations, it’s possible to miss attaching vital documents. We recommend you create a checklist to ensure you completed and attached all the required paperwork.

We’ve prepared a general checklist to help you save time creating one from scratch.

• Bid form
• Requisition worksheets
• Bid bonds
• Acknowledgment receipt of the addendum
• Bid tabulation sheet
• Approvals from ABC or other organizations
• Plans and specifications

You can add more elements to the checklist according to project requirements.

Remember, creating a perfect bid proposal takes time and effort. And if you rush through the process, mistakes are bound to happen.

Making Calculation Errors

Arithmetic mistakes can invite bid rejections. Imagine the client awarded you the bid, but when you recheck the proposal, you realize you made a calculation mistake. You inform the client about it and revise the proposal. The client might reject your proposal. In the end, not only did you not procure the job, but you also ruined your image in the eyes of the client.

You should use calculators or bidding systems to make accurate calculations. You should always double-check the submittal for mathematical errors before submitting it to the company owner.

Failing To Qualify Subs

You might decide to work with your trusted subcontractor or award the project to a new sub. In either case, you need to set up a prequalification process. This assists you in selecting the best sub for your project.

You can leverage subcontractor software to compare multiple bids simultaneously. They also provide subcontractor databases to help you contact the right sub for the job.

Making errors can lead to submitting overpriced or underpriced bids. To produce a winning bid, you require precision at every stage.

Failing To Seek Clarification

Sometimes, you find it hard to understand a specific bid requirement. And human nature forces you to assume instead of seeking clarification. Assumptions stop you from generating a winning bid. That’s why when in doubt, always ask!

You can seek clarification from the company owner or architect. If you’re still unclear, you should reconsider your bidding decision.

Overlooking Risks

You can witness construction projects without risks only in a parallel universe. In this universe, risk-free projects are a long-lost dream. That’s why it’s essential to identify potential issues before they arise to avoid cost overruns.

While creating a bid, prepare a risk management plan to prevent chaos on-site. It’ll help you identify consequential expenses.

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Estimating vs. Bidding

Estimating and bidding are two opposite sides of the pole. They’re interdependent — you cannot submit a bid without an estimate.

Below, we’ve listed some differences between the two.

Purpose

Estimating refers to the process of predicting project costs. It assists contractors in avoiding financial risks and ensuring that the project meets scope requirements. With the help of an estimate, you can make bid/no-bid decisions.

Bidding involves submitting tenders to company owners for managing construction projects. Clients evaluate bids and grant the project to the contractor with the most competitive bid.

Approach

Estimating uses a mathematical approach to count quantities and predict labor, material and equipment costs. Some of the cost estimation techniques you can use are:

• Parametric
• Unit price
• Assembly
• Plinth area

On the contrary, bidding uses quantitative (arithmetic) as well as qualitative methods to determine bid prices and generate error-free submittals. It requires you to have qualitative abilities like good decision-making skills, knowledge about the bidding landscape, risk management capabilities and an understanding of legal guidelines.

Important Project Documents

The documentation requirements for bidding and estimating are different.

You’ll need the following documents for estimating.

• Architectural Drawings: Such drawings contain a schematic diagram of the job. They include floor plans, exterior and interior elevations, roof framing, sections, and excavation dimensions. They also consist of written instructions, providing a holistic view of the project’s scope.
  • You should review these drawings to detect missing technical details, model clashes and unrecognizable symbols. Contact the architect immediately if you find any errors because even minor mistakes can affect your calculations. You can also send a request for information (RFI) to gain clarity.
• Specifications: It lists the technical requirements of the job. Architects and designers build specifications during the design phase. They include common standards, acceptable material deviations, installation methods and acceptable equipment usage.
  • You should inform the architect if you identify a conflict with specs or building codes. You won’t get a construction permit if you don’t comply with the state or local building codes.
• Contracts: They outline the project’s terms and conditions. If clients accept your bid, the drawings and specifications become part of the contract package.
• Bonds: Construction bonds are like insurance policies. Company owners request you to purchase bonds to protect themselves from potential financial losses. If you fail to complete the project according to contract terms, the client can file a claim with the insurance company and get reimbursed for additional expenses.

Bidding documents include:

• Bid Invitation: Clients send you an invitation to bid (ITB) containing information like the project’s scope, minimum qualifications, service standards and required warranties. It helps you understand clients’ expectations.
• Bid Instructions: The company owners attach bid instructions with the ITB to help you submit precise bids. They usually include specifics about bid submission guidelines like the expected proposal format and timeline.
• Bid Forms: They consist of a single-page summary of bid details like your contact information, lists of documents attached, potential delays and exclusions.
• Supplements: These include documents vital for the bidding process, such as property surveys and soil analyses.

You need access to all the above documents to simplify business processes.

Level of Detail

In estimating, when new data surfaces, the estimate values change too. That’s why estimates are general in scope and don’t provide high-level details. They don’t just highlight costs but also provide an overview of:

• Included services
• Project scope
• Timelines
• Exclusions

If the client requests just an estimate, don’t overwhelm them with details, but don’t exclude any critical insights either.

On the other hand, bidding helps the clients gain in-depth information about the project. It includes the following information:

• Safety documents
• Supporting information like testimonials
• Detailed scopes of work
• Deliverables
• Exact job costs

Unlike estimates, you need to include as much information as possible in submittals. It should be free of ambiguity.

Negotiability

Because estimates can change if the client introduces a new component, they are negotiable in nature. Clients review estimates in stages to help easily substitute materials when required. They can schedule a negotiation meeting with you if they feel a particular material or equipment can burn a hole in their pockets.

On the contrary, bids are non-negotiable. Clients who find your proposal reasonable will award the job to you. But once you sign the contract, there’s no room for negotiations. You have to deliver what you promised. Why’s that? Clients want to avoid budget overshoots. And you suddenly changing project expenses can trigger cost overruns.

Legal Standing

In estimating, an estimate is not legally binding because it’s not the final cost. It helps you determine the final amount.

Suppose you generate an estimate of $40,000 and send it to the client. After reviewing it, the client might request additional services. So, you add those services and provide a new estimated value to the client. This process can continue until you have enough details to calculate the bid price.

On the contrary, a bid is legally binding because when the company owner awards you the job, they generate a contract. And once you sign the agreement, you cannot violate its terms and conditions.

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Ethics

Nobody wants to follow unethical practices. But sometimes, the dark side takes over, forcing you to support the wrongdoings. Adopting illegal methods can damage your reputation and destroy relationships with clients and subs.

Below we’ve outlined some unethical practices you should run away from when you see them.

Bid Shopping

Bid shopping is the practice of disclosing the lower bidder’s price to other subcontractors to acquire an even lower offer.

The Associated General Contractors of America (AGC) refers to bid shopping as an abhorrent business practice. They believe that it risks the integrity of the competitive bidding process.

Dr. Kenneth Sands, a professor teaching construction management at Florida Gulf Coast University, says, “trying to convince subs to reduce their costs can result in reduction in quality overall.”

When you beat down subcontractors to lower their prices, they might reduce the required workforce and use substandard materials to complete the project. The end result — dissatisfied clients.

Several U.S. states implemented acts to prevent this illegal practice. For example, California introduced the Subletting and Subcontracting Fair Practices Act, whereas the Washington State Legislature amended its subcontractor list statute (RCW39.30.060) to discourage bid shopping.

Bid Peddling

Bid peddling refers to the practice where subcontractors offer general contractors a lower bid price than the bidder who initially won the job. Construction professionals often call bid peddling a reverse of bid shopping.

The American Subcontractors Association (ASA) prepared a document highlighting the model code of ethics for construction subcontractors. They strongly agree that bid peddling is unethical and anti-competitive.

Bid Rigging

Bid rigging is an illegal activity where competing bidders collude to determine the project winner. Contractors involved in the bidding process decide who will submit the highest and lowest bid in advance. In simple terms, contractors rig the process.

Some forms of bid rigging include:

• Bid Rotation: Contractors take turns being the winning bidder.
• Bid Suppression: One or two contractors don’t participate, so the third bidder has a greater chance of winning the project.
• Complementary Bidding: This is also known as courtesy or cover bidding. Bidders purposely submit noncompetitive bids to ensure that the clients award the job to the preselected contractor.
• Phantom Bidding: Here, contractors bid higher than they generally would just to raise bid prices.

The Sherman Anti-Trust Act made bid rigging a punishable offense. Any contractor violating the act could incur heavy fines, imprisonment or both.

In the recent United States vs. Contech lawsuit, Contech agreed to pay a criminal fine of $7 million and over $1.5 million in restitution to the North Carolina Department of Transportation for bid rigging practices. Brent Brewbaker, a Contech executive, has to serve ten years in prison for devising rigging strategies.

As Craig D. Lounsbrough rightly said, “ethics might be optional, but the consequences are not.”

Following illegal practices might jeopardize the future of your company. We’ve mentioned below some ethical principles you can follow to avoid legal troubles.

• Never ask or accept information about competitors’ bids before the bidding process ends.
• Cross-check estimates to identify errors.
• Bid on only those jobs you’re qualified for.
• Do not share your estimates or submittals with other bidders before bid closing.
• Comply with federal and state bidding and estimating regulations.
• Don’t associate with firms known for bid shopping, rigging or peddling.
• Never engage in bribery.
• Don’t inflate or pad bid prices.

Unethical bidding practices are unlikely to disappear. That’s why you should always stay aware of what goes around during the bidding process. Remember, prevention is better than cure!

Your reputation in the construction industry relies on the way you conduct business. And it’s possible to get blinded by profits and violate ethical principles.

While preparing estimates, you can follow the code of ethics outlined by the American Society of Professional Estimators (ASPE).

How To Select the Best Solution

Embarking on a software selection journey opens the gateway to challenges. If you type “best software for construction estimating and bidding” into Google’s search box, you’ll come across hundreds of products. To make this journey relatively easy, we devised a lean selection methodology. We’ve listed the same below.

Step 1: Establish

You can’t find the right solution if you don’t know your business needs. That’s why conducting a needs assessment is important before you go through hundreds of product web pages.

Use these questions to identify your needs.

• Why do we require a new solution?
• What objectives do we want to achieve?
• What’s our company’s budget?
• Do we need a technical team for implementation purposes?

Remember to be descriptive while jotting down your requirements. For instance, you might want to boost production. But do you want to boost overall production levels, or are you targeting to solve production issues of a specific department? Be clear!

Step 2: Collaborate

Just like you need a skilled army to win battles, you need a selection committee to make informed decisions during your software selection process. It should consist of technical evaluators, project managers, leaders, end-users, colleagues and stakeholders.

Step 3: Define

Now that you have your selection team, it’s time to list software requirements. Remember, estimating and bidding systems carry out different functions. So, create a requirements checklist accordingly.

You can use our decision platform to generate functional, technical and vendor qualification requirements.

If you’re in a hurry, refer to our construction bidding requirements checklist to save time.

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Step 4: Distribute

Once you have your requirements listed, compare potential vendors against them. You should immediately strike vendors off your list who don’t provide the features you’re looking for. You can create an RFx questionnaire to make this process easier.

Step 5: Justify

After analyzing vendor responses to your RFx questionnaire, you should shortlist vendors based on their scores.

It’s only at the end of your research phase that you’ll know whether or not you need a new solution or additional modules to your current system. If you need add-ons, ask vendors if their software can integrate with your current solution.

You and your team might feel that your current system is the best for now. So, it’s safe to conclude your selection journey here.

Step 6: Prove

If your team decides to implement a new solution, it’s time to prepare for demonstrations, analyze use cases and conduct proofs of concept (POCs). These will help determine whether or not the solution is perfect for your company.

Step 7: Rank

You’ve finally completed software and vendor research. At this stage, you need to rank vendors according to demo points, requirements and the total cost of ownership.

Step 8: Negotiate

You should meet with the selected vendor to discuss contract terms and conditions. If you disagree with the terms outlined in the contract, you should approach the provider that ranked second. If you feel the terms are fishy, it’s better to consult with lawyers for a second opinion.

Step 9: Sign

This is the last stage where you sign the contract. Make sure to make an extra copy of the contract for safety purposes. After signing the agreement, get ready to draft an implementation plan.

Voila! You did it! Give yourself a pat on the back for selecting the best solution for your organization.

Market Trends

The construction industry is growing rapidly. According to a report published by Research and Markets, the U.S. construction industry is projected to grow at a CAGR of 8.8% in 2022.

You need to know what’s trending in the construction landscape to stand out from your competitors. We’ve highlighted some trends below.

Estimating

Building Information Modeling (BIM)

Inaccurate takeoffs can result in incorrect estimates, lowering your chances of winning the bid. BIM enables you to perform precise takeoffs and generate error-free estimates.

According to a report published by MarketsandMarkets, the global BIM adoption rate is projected to grow at a CAGR of 12.5% from 2021–2026.

BIM helps you automate material takeoff processes, saving time and money. You can also compare original and revised estimates to develop cost-effective strategies.

You can extract quantities from 3D models in just a few clicks. Furthermore, you can categorize model objects by work breakdown structure (WBS). It assists you in reducing unbudgeted changes on projects and creating an optimum design-cost scenario.

The Accelerating Digital Transformation Through BIM report published by Dodge Data and Analytics observed that 27% of architects, 17% of structural engineers, 29% of civil engineers and 25% of contractors use BIM for cost estimation.

You can leverage BIM software to detect model clashes to help calculate accurate measurements automatically. They also integrate with estimating solutions to assist you in preventing costly mistakes.

Big Data

As a contractor, it’s impossible to imagine life without data. Construction projects contain large data repositories to help you make data-driven decisions. Professionals refer to such datasets as big data.

Just recording information isn’t enough. You need to use it to your advantage. Enter big data analytics. They provide advanced analytic techniques to help you make sense of the data you possess.

According to a report published by Fortune Business Insights, the global big data analytics industry is anticipated to grow from $271.83 billion in 2022 to $655.53 billion by 2029.

You might be wondering about the relationship between big data and estimation. Well, the relationship’s quite serious! Big data analytics enable you to analyze past and present estimates to help you avoid cost overruns.

You can leverage big data analytics tools if you need a helping hand in organizing and analyzing data. They assist you in generating conceptual estimates and forecasting potential risks.

We’ve outlined a few benefits of big data platforms below.

• Promote Collaboration: Enable several estimators to work on the same estimate to avoid calculation mistakes.
• Make Data-driven Decisions: Identify trends and resolve issues to stay ahead of your competitors.
• Save Costs: With cloud storing and data retrieving capabilities, you can save on operating expenses.
• Detect Economic Impacts: Access external databases to identify economic factors affecting your estimates, such as cost indexes, labor availability, material costs and time escalations.

Big data tools enable you to centralize your estimates and provide functionalities to extract, sort, compare, visualize, benchmark and present the data.

Artificial Intelligence

Estimating is an arduous task. Imagine you generated an estimate only to realize at the end that you made data-entry errors. Artificial intelligence and machine learning algorithms help you avoid such mistakes.

Machine learning technologies help you extract data from BIM models or applications like CostX and Stack, eliminating the need for manual input.

According to a report published by Mordor Intelligence, AI in the construction market is projected to rise at a CAGR of 33.87% from 2021–2026.

Artificial neural networks (ANN) assist you in generating predictive models to prevent cost overruns. These networks understand the cause-effect relationships between data patterns, helping you detect potential estimating issues.

Visual Estimating

Earlier, construction professionals used spreadsheets to calculate quantities. For instance, if estimators needed to search a quantity, they used to pull out the set of plans, digitize them and then add the particular quantity into the spreadsheet.

Visual estimating replaces this process for good! You no longer need to pull out paper plans just to calculate quantities of a single element. You can load 3D models into your visual software and integrate them with takeoff or estimating systems.

Such tools enable you to count quantities using the drag-and-drop functionality. Changing a single element in the model updates the estimate automatically.
So, it’s time to bid farewell to manual processes and welcome automation.

Compare Top Construction Bidding Software Leaders

Bidding

Opportunity Map

Earlier, you had to access government and private websites to find bidding opportunities. Now, you just need a solution that provides an opportunity map to help you locate jobs within proximity.

For instance, Dodge Data and Analytics’ opportunity map lets you view project count in a particular state. When you click on a state, it shows you a list of available projects. You can filter them by trade, project size, division and bidding deadline.

Some solutions alert you when company owners post new projects in your area, enabling you to identify the latest jobs and make quick bidding decisions.

Cloud Technology

Preparing a bid proposal requires you to house several important documents. You’ll have to create the document from scratch if you misplace the file. Cloud-based solutions help you store files in a secure location. Even if you unintentionally delete the document, you can retrieve it from the recycle bin or the trash box. Because you save everything on the cloud, you never run out of storage.

According to a report published by Grand View Research, the global cloud computing market is forecasted to grow at a CAGR of 15.7% from 2022–2030.

Cloud-based applications provide pre-built proposal templates to help you generate error-free proposals. You can also brand documents with your company logo. Furthermore, you can exchange information with clients using a secure messaging portal.

Read our article — Construction Trends: Industry, Technology and Market Landscape in 2022 — to gain detailed insights into the latest trends.

Compare Top Construction Bidding Software Leaders

In Conclusion

Estimating and bidding are tedious. But you can win profitable jobs by following the right processes and employing the correct methods.

You don’t have to travel back in time when you have digital technologies that could help you streamline workflows. But selecting a solution that fulfills your business needs can be challenging.

Don’t worry. We can help! You can leverage our construction bidding comparison matrix to compare multiple products and generate scorecards to make informed buying decisions.

What other differences would you like to add to our estimating and bidding comparison list? Please let us know in the comments below!