Construction bidding is the process of submitting a proposal (tender

Request for tender

A request for tender, commonly abbreviated to RFT, is a formal, structured invitation to suppliers for the supply of products or services. In the public sector, such a process may be required and determined in detail by law to ensure that such competition for the use of public money is open, fair...

) to undertake, or manage the undertaking of a construction project. The process starts with a construction estimate

Construction estimate

Accurately forecasting the cost, size, and duration of future projects is vital to the survival of any business. Cost estimators develop the cost information that business owners and managers need to make a bid for a contract or to decide on the profitability of a proposed new project or product...

 from blueprints and 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 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

Statement of work

A statement of work is a formal document that captures and defines the work activities, deliverables and timeline a vendor will execute against in performance of specified work for a client...

.

For instance, a bill of quantities is a list of all the materials (and other work such as amount of excavation) 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 is greater than the price he is charging the client (as a consequence of a lower tender determining the contract sum), and thus is likely to go insolvent, or he will claim for "loss and/or expense" due to discrepancies in the contract documents (this can be done deliberately). 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 planrooms, 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.

• There is a new website out called www.bidslist.com . It has new age bidding system to revolutionize the service industries. *

Types of project delivery

The most common methods of construction project delivery include design-bid-build

Design-Bid-Build

Design–bid–build , also known as Design–tender and traditional method, is a project delivery method in which the agency or owner contracts with separate entities for each the design and construction of a project.Design–bid–build is the traditional method for project...

 (DBB), the design-build

Design-Build

Design-build is a project delivery system used in the construction industry. It is a method to deliver a project in which the design and construction services are contracted by a single entity known as the design–builder or design–build contractor...

 (DB), the construction manager as constructor

Constructor

Constructor may refer to:*Constructor , object-organizing method* Constructor , a 1997 PC game by Acclaim, the prequel of Constructor: Street Wars...

 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

Procurement

Procurement is the acquisition of goods or services. It is favourable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality and quantity, time, and location...

 method is the most common construction delivery method. This process begins with an owner selecting an architect

Architect

An architect is a person trained in the planning, design and oversight of the construction of buildings. To practice architecture means to offer or render services in connection with the design and construction of a building, or group of buildings and the space within the site surrounding the...

 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

NEC Engineering and Construction Contract

The New Engineering Contract , or NEC Engineering and Construction Contract is a formalized system created by the Institution of Civil Engineers that guides the drafting of documents on civil engineering and construction projects for the purpose of obtaining tenders, awarding and administering...

. 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 the emerging method. There are various sited such as Tender Chamber, Callbids.com and so on that provide Free service for tender calls. The casual and home owners projects usually announce free while the formal tenders need to be secured by deposits.

Design-build

Design-Build (or design/build, and abbreviated D-B or D/B accordingly) is a construction project delivery system where, in contrast to traditional "design-bid-build" (or "design-tender"), 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 (architect or engineer). 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 (working drawings and specifications), 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 (if design-led) as well as architects and engineers (if contractor-led).

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 (such as the Design/Build Institute of America) 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 (which typically carries a higher interest rate than permanent financing) 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 the implementation of 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.

External links

• Associated General Contractors of America