What a bid is, against what an estimate is
Your estimate is what the work costs you. Your bid is the offer you hand the owner: a price, on the owner's form, for the scope the owner defined, with every document the solicitation demands attached to it. The estimate is arithmetic you control. The bid is a document that has to satisfy somebody else's rules before anyone looks at your number.
An estimate can be wrong and still get read. A bid that is missing a required element does not get read at all, because it is not a valid offer. Our guide on building a construction estimate covers the cost side; this one covers turning that cost into an offer the owner can accept.
Read the solicitation before you price anything
Read the whole package before an estimator opens a drawing. You are looking for the rules of the competition, and they are rarely all in one place.
- The scope and the documents that define it. Drawings, specifications, geotechnical reports, existing-conditions surveys, and any document incorporated by reference.
- The addenda. Every one issued, including any released after you downloaded the set. Where the bid form has a place to acknowledge them, an unacknowledged addendum is a defect in the offer, not a clerical slip.
- The bid form itself. It dictates what you submit: a lump sum, a schedule of unit prices, alternates, allowances, a breakdown by division. If it asks for unit prices, you are committing to hold those rates for quantities the owner controls.
- Bonding and insurance requirements. What bond is required with the bid, what bonds are required at award, the coverage limits, the additional-insured wording, and who has to be named.
- Submission method and deadline. Portal upload, sealed hard copy, or both. A time zone. A physical address or a portal that closes on a clock you do not control.
Federal sealed bidding states the standard the invitation itself has to meet: "Invitations must describe the requirements of the Government clearly, accurately, and completely." [1] Your side of that bargain is responsiveness. FAR Part 14 puts it in one line: "To be considered for award, a bid must comply in all material respects with the invitation for bids." [1]
That is why a missing element beats a good price. Award goes to the responsible bidder "whose bid, conforming to the invitation for bids, will be most advantageous to the Government, considering only price and the price-related factors included in the invitation" [1]. Conformance comes first; price is what gets compared among the bids that conform.
Questions have a deadline too
Where a solicitation sets a cut-off for bidder questions, it falls before the bid deadline. Anything ambiguous in the documents has to be raised inside that window, because after it closes the ambiguity is priced at your risk. Read the solicitation and confirm anything you are unsure of with the contracting officer or the purchasing agency.
Bid/no-bid: decide before you spend the hours
Estimating a job costs real money, and the decision to spend it deserves its own step. These are questions you answer from the documents in front of you, not a scoring sheet with weights.
- Do you hold what the solicitation requires? The license classification for this scope in this jurisdiction, the bond the owner requires at bid and at award, and the insurance limits and endorsements the contract demands. Read the requirement and confirm your standing with your licensing agency, your surety and your agent.
- Is the schedule buildable with your crew? Compare the milestone dates with the work your people are already committed to. A schedule that only works if another job finishes early is a schedule you are betting on.
- Who else is bidding, and does the solicitation say? Some packages state how the bidder list was assembled or whether the invitation is open. That changes what the pursuit is worth spending on.
- How does the contract handle changes and retainage? Find the change-order clause and the retainage clause before you price. They decide how you get paid for extra work and how much of your money the owner keeps until the end.
- Can you learn anything about how the owner pays? Public entities may publish their payment rules and their prior awards. Private owners may not. Note what you can find and what you cannot.
- Does the bid form ask for unit prices you can hold? A unit price is a rate the owner can apply to a quantity you do not control. If the quantity range is open-ended, the rate carries that risk.
If the answers point away from bidding, say no early.
Federal work: sealed bidding
Federal construction bought by sealed bidding runs under FAR Part 14, which defines the method in one sentence: "Sealed bidding is a method of contracting that employs competitive bids, public opening of bids, and awards." [1]
Three features of that method change how you prepare. Bids are opened in public, so your number becomes visible to your competitors on bid day. "Bids shall be evaluated without discussions" [1]: there is no negotiation round in which to explain or repair your offer. And a bid received after the exact time specified for receipt of bids is treated as late and is not considered, except in the narrow circumstances the part sets out [1].
Federal opportunities are posted on SAM.gov, which describes what it carries: "Contract opportunities are procurement notices from federal contracting offices." [2] Those notices "include pre-solicitation notices, solicitation notices, award notices, and sole source notices" [2]. Searching is open: "Anyone interested in doing business with the government can use this system to search opportunities." [2] and "Anyone may search contract opportunities without an account." [2]
Finding the work and being able to take it are separate steps. SAM.gov's entity registration page states the rule plainly: "If you want to apply for federal awards as a prime awardee, you need a registration." [3] and "A registration allows you to bid on government contracts and apply for federal assistance." [3] The identifier comes with it: "As part of registration, we will assign you a Unique Entity ID." [3] The identifier on its own is not enough: "If you choose to only get a Unique Entity ID, you cannot apply directly for federal awards." [3]
Start the registration before you find a job you want, not after. What it takes and how long it runs is a question for SAM.gov's own guidance and the contracting office.
State and local work
Every state runs its own procurement portal under its own rules. FAR Part 14 is federal acquisition regulation [1]. A state, county or district package is governed by that entity's own procurement rules and by the solicitation itself. Texas is one worked example. The Comptroller's Electronic State Business Daily Search carries state solicitations and prints its access rule on the page: "View any solicitation by selecting or entering a field below. Sign in is NOT required." [4]
The portal does not tell you how to respond. The same page sends you back to the package: "For instructions on submitting bid responses, please review the posting entity's solicitation and attached bid documents." [4] The portal publishes the notice; the solicitation governs the submission.
Texas is the example here because its portal is readable without an account. Your own state, county, school district and transit authority each run their own system, their own registration, and their own rules on bonding, prequalification and electronic submission. Find your state's portal, read its registration requirements, and confirm the submission rules with the purchasing agency before the deadline rather than on the day.
Pricing the bid
The bid price starts from the estimate and adds nothing that belongs in the estimate. Carry the burdened cost across: labor at a burdened rate, materials from dated quotes, equipment and subcontractor scopes. Then add the general conditions that come with running this site for this duration. That total is the job cost. Company overhead and margin go on top of it.
job cost = direct costs + general conditions cost base = job cost + overhead recovery bid price = cost base ÷ (1 − target margin)
Divide by one minus the margin. Multiplying by one plus the same percentage gives you a markup, which is measured against cost rather than price and always lands below the margin you asked for.
The table below runs the roll-up on a labeled example. Every figure is an input you replace with your own.
| Step | Example figure |
|---|---|
| Direct costs from the estimate | $310,000 |
| General conditions | $24,000 |
| Job cost | $334,000 |
| Overhead recovery at this example's 10% | $33,400 |
| Cost base | $367,400 |
| Bid price at a 12% target margin ($367,400 ÷ 0.88) | $417,500 |
| Profit in that price | $50,100 |
The 10% and the 12% are the example's own inputs, set from your own overhead and your own profit target. Our bid price calculator runs this roll-up with your figures and shows each step. Our markup vs margin calculator converts between the two percentages so the number you type is the number you keep.
A hard bid is a fixed price offered against a complete set of documents, decided on price rather than negotiated. That means the price you write is the price you are held to for the scope as drawn, and everything outside that scope has to travel through the change-order clause.
What to hand in
The submission is a checklist, and every line on it is pass or fail.
- The bid form as issued. Filled in, not retyped, not reformatted, and not qualified with your own conditions unless the solicitation invites them.
- Every addendum acknowledged on the form, in the place the form provides.
- The bond the solicitation requires, in the form it requires, with the surety's seal and power of attorney if the package calls for them.
- Signatures from someone with authority to bind the company, plus any certifications, affidavits or non-collusion statements listed.
- Any required attachments: unit-price schedules, alternates, a list of proposed subcontractors, a schedule, a statement of qualifications.
- Submitted by the stated method, to the stated place, before the stated time.
Late is late. Federal sealed bidding treats a bid received after the exact time specified for receipt of bids as late and does not consider it, outside the narrow circumstances FAR Part 14 sets out [1]. State and local packages set their own cut-offs on the same principle. Build your internal deadline ahead of the owner's, and confirm the submission requirements with the contracting officer or purchasing agency if anything in the package is unclear.
Frequently asked questions
What is a construction bid?
A construction bid is a priced offer to perform a defined scope of work for an owner, submitted on the owner's bid form with every document the solicitation requires. It carries the price from your estimate plus overhead recovery and margin. A bid that does not comply with the solicitation is not considered, whatever its price.
What is a bid in construction?
It is the offer, as distinct from the estimate. The estimate is your internal calculation of what the work costs to build; the bid is the external document that states what you will charge and commits you to the scope, the schedule and the terms in the solicitation.
How to bid a construction project
Read the whole solicitation including addenda, decide bid or no-bid before spending estimating hours, build a burdened estimate of the cost, add general conditions, overhead recovery and margin to reach the price, then complete the owner's bid form with every required attachment and submit it by the stated method before the deadline. Confirm anything unclear with the contracting officer or purchasing agency inside the question window.
What is a hard bid in construction?
A hard bid is a fixed price offered against a complete set of documents, where the award turns on price rather than on negotiation. Federal sealed bidding under FAR Part 14 is the formal version of that arrangement: bids are opened publicly and evaluated without discussions. The price you submit is the price you are held to for the scope as drawn.
Related
- Bid price calculator: direct costs, overhead and a target margin to a bid price, with every step shown.
- Markup vs margin calculator: convert between the two percentages before you price.
- Construction proposal template: a Word form for scope, price, schedule and payments, for work that comes with no owner bid form.