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To Bid or Not to Bid

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When to Bid or not Bid a Project

Builderspace.com brings us this great article:

The decision to bid or not bid a project is often times one of the greatest dilemmas a contractor faces following an inquiry to bid. Often times, the immediate temptation is to bid on most projects that become available in order to keep work coming in and avoid idle production.

Yet the decision to bid on a construction project which is not suitable for a particular company can have costly ramifications not only financially, but could just as well damage the future credibility of the company. Often times, passing up on the opportunity to bid on a project is the best decision a builder can make.

How then, does a contractor faced with this dilemma make an informed decision whether to bid the job? While there is no clear cut answer to this question, the builder should consider the following after receiving the bidding documents and reviewing the project:

Competition: Who else is likely to bid this job? How many bidder will there be? Are the bidders equal, or are they smaller contractors with lower overhead?

Nature of the job: Is the firm capable of building the project? Has the company done any similar work in the past? Do the firm’s superintendents and project managers have the right kind of experience to handle the job?

Market conditions: Is the job extended over a long period? Will there be many unknown factors such as labor rates, material prices, or other prevailing economic conditions which may upset the project?

Firm’s previous experience with the owner or architect: Has the company done any work with them in the past? Has the relationship been satisfactory? Are they a good client or a good architect? Would it be prudent to work for them again? Is the company obliged to submit a bid due to this past relationship?

Cost to prepare a proposal: Does the probability of getting the job warrant the cost of preparing the proposal? What are the chances of winning the job at a reasonable profit?

All of these factors should be considered in a logical way in order to reach a decision to bid or not bid a job. It is also important that the contractor pursue this thinking as early as possible and reach a firm decision in order to allow as much time as possible for the estimating staff to prepare an accurate bid.

Good planning and sound decision making during the bidding process can make the difference between a successful project and an unsuccessful one, but the decision to bid or not bid a project is arguably the most important factor in the success of a business.