How does the bidding in the construction area work

The process

When a construction project is put out to tender, the landlord is looking for a qualified and responsible contractor to do the work at a reasonable cost. The bidding process ensures that potential bidders are working on the same information, which leads to the possibility of comparing not only prices but also the meticulousness of supply.

The importance of information

The chances of a successful project are much greater when the owner prepares objective and complete information for the bidders. This information is known as a bid package or bidding documents. These documents include the project plans, specifications, quantity lists, calendar information and data of any specific equipment or product to be used. Relevant information on site conditions is also included. Generally, a copy of the contract that will be signed forms part of the package giving the bidding company’s time to review it. The bases of the tender, as a whole, usually become part of the contract of the company awarded.

Public and private tenders

Public tenders, or those that have a government owner or agency, follow different rules than private ones. They must be published in advance and allow qualified contractors to bid if they wish. Private owners may choose to limit the process to contractors they have selected as bidders.

Estimates and problems

When bidders receive the tender packages, they work on or start their estimating programs, and determine the costs and availability of materials, labor and equipment, work order and scheduling requirements. Problems arise at some point when considering a project. An example would be to find that an important component has a long waiting time for delivery which will conflict with the building program desired by the owner. Another typical problem occurs when the quantities supplied by the owner do not match the amounts that the tenderer has calculated.


Visits are often arranged to give contractors the opportunity to identify potential problems that can be costly, such as access problems or conflicts with existing structures or improvements.

Criteria for awarding

When the bidding date arrives, government agencies may or may not open them publicly. Some agencies require that the tender be awarded to the tenderer with the lowest bid. This is sometimes problematic as it may have made a mistake in calculating the actual cost of the project, which can result in reduced quality or poor construction work. Private owners do not usually launch public offers. They have a great discretion when applying criteria that do not have to do with the price for the selection of the offer. A contractor may have a higher price, but he may identify the efficiency of the programming to finish the project faster, for example.

Inclusion of all documents

Whatever the process followed, whether public or private, the offers are fully evaluated. A contractor who has excluded some of the work, for example, can be considered as “not responding” and that offer could be rejected. The information requested, but not provided, perhaps in relation to insurance or a list of previous projects, may also be grounds for rejecting an offer. Contractors should be very careful to include all requested documents.

Objective criteria

At the end of a good bidding process, the offers give project owners objective criteria to select the best contractor for the project.

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