Let’s talk about how to bid a construction job. You are going to want to provide a professional looking bid that clearly matches the requirements of the job. The bid will be divided into sections called “headers” and “bid items.” Headers are top-level items that consist of one or more bid items.
To create a bid, you have to know your bid items – especially if you are going to use a program like ProfitDig or something similar to create the bid.
Bid items are items that you ordinarily bid on in your line of work, whether it be structural work, excavation work, underground utilities, concrete – whatever. Everybody is going to have their own set of bid items that they normally bid on depending on their field.
Let’s take excavation as an example. With excavation, your standard bid items will start off with mobilization. You have to figure in mobilization because it costs you money to move into a job. You’ve got X pieces of equipment you’ve got to move in and fuel associated with that. You have labor costs that you have to associate with that because those trucks don’t load equipment and run themselves up and down the road. Somebody has to drive the trucks.
If you have big equipment, you have permits you’ve got to buy to move that oversize equipment up and down the road. That will require special insurance. Sometimes it requires escorts. There’s a lot of stuff to take into account. And that’s just one bid item getting started. You’ve got a lot of stuff to think about as far as what it’s actually going to cost you.
You may have a hundred bid items in your categories that you normally bid on.
A lot of times jobs share phases. You may come into this one job and it’s got three phases. Not only do you have to move in, you’ve got to move out. Then you have to move into phase 2. Then you’ve got to move out again and prepare for the next phase. Then if you don’t have another job to go to you’ve got to move the equipment back to your yard or somewhere else. That all costs you money.
When setting up a construction bid, or an estimate, bid items are not really the top level items. As mentioned above, there is a level above that called a “header.”
Say it’s erosion control. That’s going to be one of the first things you bid on. You’re going to have to put up a silt fence on the project. You’re going to have erosion hills. You may have inlet protection. A lot of times you have a preliminary and a secondary erosion control plan, depending on how your engineer has designed it. You also have to do erosion control monitoring. So you may have ten bid items under your erosion control category. That’s one header.
So you put in those bid items for that header, and then you go to your next header, which would be grading and excavating. Then you enter your bid items for that one. Then your next one may be storm drain. Same thing, keep on going – water, sewer, whatever that project may consist of.
How much or how little detail you put into your bid will depend on the client. If you’re bidding DOT work, you’ll have to show your line items, values and what each one costs. They will want a lot of detail. If you’re bidding to an owner or specific entity that’s not associated with a government, then they’re not necessarily going to require you to show that level of detail. You don’t necessarily have to show your extensions. You can just show subtotals for each category, such as grading, erosion control, or storm drainage.
Just showing subtotals gives you a little more flexibility if the client wants to take something out of your contract. If you haven’t broken everything out in your bid, then you can still keep some of that profit in your bid even if you are cutting an item out at the client’s request. You don’t have to give it all back because they don’t know exactly how much you had for that particular item.
A bid needs to include manpower, equipment, materials – everything. If you’re bidding grading, most of your expense is just going to be labor, fuel and equipment. But when you get into storm drainage, water, sanitary sewer, electrical, fire lines, concrete work and structural work, your materials add up pretty quickly.
There is going to be a fairly standard set of bit items that most of your bids are going to have, depending on your particular specialty. So your job estimating will go a lot quicker if have some kind of system where you’re not having to write (or type) those all out from scratch every time. This is another area where a solution like ProfitDig can make your life a lot easier, because once you set those items up once, they are there for you to use over and over.
You can set up your bid items however you want as long as it makes sense for you and the client, but I recommend a logical numbering system. I start off at 1000 for my first header, which for the bids I create is always erosion control. I start them off in the one thousands. I leave a few numbers between each bid item for flexibility. So my first bid item will be 1000 for silt fence, then the next one will be 1005 for erosion hills. I like to leave five places between each one. That way if I need to add something it’s not going to break the system. So leave room for items that may need to be inserted between your standard set of bid items.
You may use the same bid items for five years. But then you pick up one client that says, hey, on this one particular job I need you to add this, this and this. So then there are three or four more bid items that you’ve got to include that you normally don’t. After this particular job, that may be something you make your new norm. You may want to bid on that stuff on a regular basis, especially if you’re able to show a profit from doing it.
If a prospective client requests changes to a bid, you just have to go in and edit your bid to account for the requested changes. If you’re not showing extensions, or your actual unit prices, then a lot of times you can give back the cost of that specific item but still keep the profit you had figured in the bid for that item. That way you’ve got a little more incentive in your bid and you are seeing some return because the client has asked for something in return. It’s kind of a win/win for those situations. Just don’t get greedy, to the point where you can cost yourself a job if you keep too much.
You should also strive to present your bid in a very professional looking manner. Have some kind of logo, have everything neat and orderly, and make it easy for the client to understand what you are proposing. You want your bid to be neat, clean and understandable. There is no worse feeling than giving your bid to a client and then having them call back and say, well, I don’t understand this, I don’t understand that. You want it to be cut and dry. You want them to be able to look at it and not have any second guesses on what you are actually bidding on. Not to beat a dead horse, but having a system in place that lets you create a professional quality bid from a standard set of items will save you a ton of time and very likely help you win some jobs.
Which is why I recommend ProfitDig. After struggling with spreadsheets and software that is extremely difficult to understand, I finally decided to develop a product that did exactly what I needed – let me quickly create construction job bids from a preconfigured set of bid items and headers. And that wouldn’t require weeks of training for me to know how to bid a construction job.