“How low can you go?” This has long been the expected question from owners soliciting bids for their capital projects, especially if they’re government funded. But when price is the only criterion by which owners judge and accept construction bids, it’s no surprise when underestimated bids are found to be unrealistic — ultimately costing both the owner and the contractor in the end.
Having endured the consequences of relying on the low-bid method — substantial budget overruns and project delays that sometimes result in lost business opportunities and revenue — owners have become savvy. They’ve realized what is actually required from a budget and timing standpoint to more efficiently deliver their projects, and, because of this, are less tolerant of large disparities between what is quoted and what the final tally is.
Consequently, these savvy owners are now favoring bids that are more realistic, even if they’re not the lowest. And to meet these reset expectations, contractors have begun turning to construction bidding software. By digitalizing the process with specialized software, they’re gaining an advantage in producing winning bids that are more accurate, feasible and based on their expertise — rather than on merely the financial bottom line.
For contractors looking to create reality-driven (and more often winning) bids, let’s look at what construction bidding software can help you do.
Leverage real-world data from past projects with construction bidding software
It’s one thing to have experience in the type of capital project you’re bidding on; but where it can make a difference in your bid is being able to back it up with the details of all it actually took to build that comparable structure — not just the overall costs and timeline, but all the labor, equipment and materials. Which is why you’d be unlikely to find more accurate data for your bid than the historical information from your archived projects. Why not repurpose what you already have? With all of this safely contained within construction bidding software, you’re able to streamline the bid assembly process by importing data from the parts of those projects that will be mirrored in the current bid. To accommodate differences between past project specs and the current bid — or even scope changes during the bid process — you can make adjustments to the appropriate variables. The software will update and refigure calculations automatically. Human error is removed, and accuracy is preserved.
Forecast potential impact of actual risk factors with construction bidding software
Just as important as the above overall numbers are your performance indicators from those projects. Think of them as the storyline of your projects as told through your earned value management (EVM) metrics. These metrics are the variable numbers that show cost and schedule fluctuations that occurred in response to changes or risk factors playing out during your project.
Looking back over the gradual trends and any sudden high/low spikes in those metrics can point to the impact of those real-world risk factors. Consider these the “what if” scenarios on which to have the construction bidding software run forecasts to determine the potential effects on costs and schedules for the current bid. So, for example, did supply chain delays occur with certain vendors? Were there issues with availability or pricing of common building materials that could impact this project, and if so, what is the cost of viable alternatives? To what degree did particular weather events in the region impact progress? What contingency plans successfully worked when a risk factor played out?
Ensure commonly overlooked costs are accounted for
Sometimes it’s the not-so-obvious things that are inadvertently bypassed. You can’t see the annual or infrequent monetary outlay associated with taxes, software licenses, insurance premiums or permit fees, nor the unanticipated expenses of equipment maintenance, repair or replacement. Office rent, utilities, personnel and other administrative overhead can seem hidden in plain view. These indirect costs are so easy to forget. Yet they’re necessary to produce an accurate, realistic bid. With industry-specific bidding software you can account for the unique fixed and variable indirect costs that construction projects typically incur so they don’t slip under the radar and wind up taking a bite out of your bottom line.
Deliver a higher degree of cost certainty with construction bidding software
Owners, averse to the frequent cost overruns that have afflicted their projects, understandably want some sort of assurance when it comes to project costs. That can pose an awkward challenge for contractors. But there is no such a thing as 100% cost certainty when assembling a bid for something as large and complex as today’s capital projects have become. However, construction bidding software can deliver a much higher degree than could ever be possible without it. How? By relying on the real-world past project data in its database, the forecasted cost impact of potential risk factors, and the accounted-for direct and indirect costs. Collectively they provide the foundation for developing a more practical bid. Building this level of realism into your bids prepares owners for what to expect throughout construction — and may help boost their confidence in your ability to complete the project in a financially viable way.
Securing realistic bids is the lifeline of your construction company. Consider a robust construction bidding software solution like InEight Estimate to help you put together competitive yet accurate bids with a higher likelihood of acceptance. Schedule a demo to see how Estimate delivers the certainty you and owners expect.
