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Putting together a bid proposal for a construction job is a fairly routine matter, but one that carries with it a certain amount of stress. Additionally, the more experienced the business owner or manager responsible for putting together a bid proposal, the more successful that bid is likely to be. Providing accurate estimates of the time it will take to complete a job and the costs of materials and labor that will be required is largely a product of the amount of practical experience the business owner has accumulated. He or she will, over time, develop business contacts and relationships that can prove beneficial in preparing a winning bid, and he or she will only truly be able to provide reasonable time estimates to complete jobs through the practical experience of actually working on different types of jobs.
The basic formula for putting together a bid proposal involves careful study of the project for which bids are being solicited. That means sitting down with the organization or individual responsible for soliciting bids, selecting the winning bid, and seeing the project through to completion. Measurements have to be taken, calculations have to be made of the types and amounts of building materials that will be needed – for example, how many 2 x 4 boards, how much sheetrock, how many sheetrock screws and carpentry nails and screws, how much cement, if relevant, and so on – and then precise estimates of the costs of procuring those materials have to be prepared. Finally, and in accordance with the wishes of the contracting party, a determination has to be made regarding the method of billing labor. Does the contracting party want to pay for the job irrespective of hours required to complete it, or does he or she want to pay the hourly rates for skilled laborers, for example, carpenter, glazers, plumbers, electricians, etc., with the awareness that paying by hour can disincentivize some employees from working as expeditiously as he or she is able. Realistically, the reputation of the average contactor is contingent upon timely and satisfactory completion of each job, so this latter consideration is not usually a factor, but it may something to consider nevertheless. General contractors often develop stable relationships with subcontractors with whom they work on numerous projects. These relationships, again, a product of experience, make the preparation of reliable cost estimates easier because each of the parties knows each other. This, however, raised another issue: what if established relationships are complicated by scheduling conflicts? A general contractor may prefer to work with a particular electrician, for example, but the latter may be committed to jobs with other general contractors, complicating the former’s ability to provide a reliable bid proposal. As scheduling is one of the most difficult but important elements of the equation, the ability of those preparing a bid proposal to guarantee availability of requisite specialties can be the difference between a winning and losing bid.
All of this aside, however, the core requirements of a bid proposal involve the accumulation of accurate cost estimates associated with parts and labor. Underestimating such costs can be fatal to a contractor’s reputation, as customers don’t like being informed that they will owe more money than previously understood, and contractors don’t like having to take a loss because of the inaccuracy of their estimates. Also, inevitably, problems will emerge once work has commenced, and those problems always entail cost increases for the customer. Discovering, for instance, that the foundation needs to be reconsidered because of recently discovered information regarding the type of soil on top of which that foundation will rest can prove a nasty and expensive problem. The bid proposal, therefore, needs to reflect as much information as possible on the physical characteristics of the site on which a construction project will take place.
Bid proposals are largely formulaic. The key is in understanding how to estimate the time it will take to complete a project, calculate labor costs involved, and provide accurate estimates for the materials that will be required.
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