Before the digital transformation, the key pieces of data for every construction project boiled down to two indicators: time and money. They were used to gauge whether the project came in on schedule and on budget as the hallmarks of a successful project.
Now, with technology becoming inextricably integrated throughout the construction process, the variety and depth of data available has expanded far beyond those two traditional measures, and so has its value. It’s delivering project insights, tracking performance progress, fueling both forecasted and in-the-moment decisions, and providing rationale for possible courses of action. In other words, that data is now helping outline how to achieve the holy grail of on-time, on-budget projects.
There’s another nuance to this digital transformation: it now affords transparency into all that data. Where this transparency can have a huge impact on the overall project is at the bidding stage. While you won’t find this in traditional bidding methods, where you will find it is in construction bidding software. The mere idea of transparency might surface some hesitancy, but bidding software turns it into an advantage in several ways.
Bidding software accounts for the details to deliver greater accuracy
Accuracy has long been a challenge in the bid process. Traditional bid methods are susceptible to human error, making it difficult to achieve accurate bids. The danger of inaccuracies at this stage can lead to dreaded cost overruns in the form of future change orders and expensive rework. This is where bidding software shines. It takes on the more time-consuming and challenging aspects of bid development by streamlining the importing, updating, and calculating of data — rendering human error a moot point.
The software provides transparency not only into the hard costs of resources, but the harder-to-pin-down price tag associated with both anticipated and unexpected risks (as we’ll see below). Any perception of lowballing is more likely to be replaced with trust in the expertise of the contractor.
Basically, it boils down to cost certainty. This becomes more achievable for both the contractor and the owner collaborating on expensive capital projects, especially those that are government funded, and require an accurate accounting of costs. What results is a bid that’s not only real, but risk-adjusted and therefore more predictable.
Bidding software makes bid realism possible
Bids can do more than show owners that their project can be built within a set schedule and budget; it can also show them how and why. This is something they’re ready for. After decades of blown budgets and overshot completion dates — often the result of calculation inaccuracies, unaccounted-for risks, and the common practice of lowballing — owners have become more discerning. They simply want to know where their dollars are going and that the numbers are justified.
Now, having seen how bidding software provides more visibility into bids than they’ve traditionally been privy to, owners are expecting more realistic numbers and details going forward. The key is using past project data — from schedules and labor and material costs to performance metrics showing the financial and timeline impact of actual risk factors. With all details from prior projects stored in the software, contractors can pull in the most applicable of this data for the software to include and calculate. The result is a more comprehensive, reality-based bid that provides proof of what it has taken to build such a project. No historical data? Industry benchmarks work just as well as they’re based on current data. Either way, the realism afforded by bidding software delivers a higher level of schedule and cost certainty for the owner and demonstrates the contractor’s expertise and their own confidence in the bid.
The software’s transparency helps achieve more predictability in the bid
Granted, the software can’t predict the future. But it can still refer to the past as a good indicator of what to expect and how to prepare for it. And where that can matter the most is in assessing the impact of the unknowns.
So, take a deeper dive in the bidding software into that past project data and look specifically at the risk events that occurred. Which were accounted for, and which weren’t? How did contingency plans mitigate the issues that were accounted for? What last-minute plans had to be created for those that weren’t? What effect did each of them have on your performance metrics? What insights were gained from these learnings? How likely are these to occur in the project being bid?
It’s not just risks that can have a measurable effect on a project. Consider all the changes that happen over the course of a build — from swapping out materials to making design modifications to issuing change orders to course-correct risks inadvertently left out of the bid. If you think about it, change orders themselves can be regarded as a risk factor. What change orders were requested, whether by the contractor or the owner? What was the ultimate cost and schedule impact of those that were approved or required? Had the full impact been assessed before going ahead with the changes?
Where the digital transparency afforded by the software turns all this hindsight into more predictability is through forecasting. And the bidding stage is the best time to do this. This early timing and the resulting calculations combine to deliver several benefits.
For one, owners can see how much of a direct effect these surfaced risk and change order variables can have on the project’s budget based on what the data showed from past similar projects and the forecasting exercise. It also shows that, despite the best preparation, the unexpected is bound to happen — especially with the more sophisticated capital projects. Piggybacking on this, better informed decisions can then be made around which contingency plans would best mitigate certain risk factors, as well as whether to allow proposed changes and build them into the bid. Two, this level of predictability offsets the element of surprise coming from the known yet unaccounted for risks that appear further into the project.
Digital transformation and transparency are becoming more ingrained in the bidding process and throughout the project life cycle. Combined, they deliver a level of project cost certainty that many contractors and owners have coveted but have not been able to realize.
And that’s something to consider with the level of detail and requirements necessary for today’s capital builds and infrastructure projects. InEight bidding and estimating can help you confidently build better bids for your portfolio that can greatly improve their odds of acceptance. Schedule a consultation to learn how this bidding software can work for you.
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