Definitions

Invitation to Bid: Bid Documents sent out to a specified list of people (Contractors) for bid

Base Bid: Money stated in the bid for which the bidder offers to do the work. This sum does not include any alternates in the bid

Advertisement of Bid: Publicly advertising the bid documents. This is extremely popular on public projects and many times will be required anytime public (tax) money is being used to construct something. For example bridges, highways, or other public works projects.

• Everything is public about these types of bids, including the date, time, and who is bidding.
• Typically contains the name and location of the project, Architect, Owner, description of scope and major materials and construction systems.
• It will not contain the Bid Form, which is included with the Instructions to Bidders in the Project Manual
• This type of bidding process is meant to increase transparency and reduce any ability of ‘hidden deals’ or kickbacks or any other nefarious intent.
• Typically, anyone is able to bid for these projects, however, the requirements will discount who is able to submit an actual bid. For example, years of experience or experience working with projects of a certain $ amount may preclude many from bidding.

Unit Price: An amount stated in dollars per unit, provided by the Contractor with the bid for adding or deleting specific portions of the Work. This could be by weight, volume, or another measurement metric and can sometimes scale based on the amount of work.

Bona Fide Bid: A bid that meets all the bidding requirements and is submitted (signed) in good faith by someone who is authorized (legally allowed) to do so.

• The bid that is awarded is going to be the Lowest Acceptable Bona Fide Bid. (see note below).

Alternates: Money for specific items in the bid to add or remove to the base bid. This may be required by the bid documents for a certain scope of work, or may be proposed by the contractor if the bid documents requests ‘creative’ thinking or ‘value engineering’ approaches.

• Can be Additive Alternates or Deductive Alternates

Introduction

Sending out documents to bid is how the vast majority of projects are constructed. This page goes over a general and light overview on the process and aspects to be aware of.

Construction contracts are typically awarded to the Contractor who submits the lowest acceptable bona fide bid.

If all the bidders are equally qualified, and their bids are all based on the same set of documents and they are all bona fide bids… then price is theoretically the only variable. This means that the lowest price should be awarded.

• ARE Test Note: This is how the ARE tests are written and will question you. However, in reality there are relationships, scheduling, company history, trust; and other factors that play into the decision on who to award the bid to. Many times the lowest bid is not given the contract and instead the middle bid will be awarded it.

Qualification of Bidders

At any time during or after the bidding process, a bidder may be required to prove they are qualified for the project. This includes proving machinery, personnel, other projects completed, and references with visits to other completed sites. If a Contractor is bondable, it indicates that a surety company has done due diligence into many of the factors mentioned preceding and found them to be pre-qualified and financially capable. Proof of bond would be required.

Bid Deadline

Bid Timeliness

Bid must be received by the time they are due. Even a minute late will sometimes result in the bid being thrown out (see next section).

Up until the bid deadline, a Contractor can withdraw and replace their bids without penalty. If they withdraw the bid before the deadline, they are not legally held to that bid.

Submitting an update after the deadline

After the deadline, if a bid is submitted, it is up to the Architect and Owner to decide whether or not this new bid or bid update will be accepted. If not a lot of time has passed and the bids have not been opened, it is common to accept the bid and bid update (However, this is against AIA recommendations).

• Typically, for bid updates after the deadline, you are allowed to hold the bidder to the first bid and could reject the second bid.
• If the bid is submitted after the bids have been opened, this ‘late’ bid is returned to the bidder, unopened.

Bid Aspects

Getting good quality Bids from multiple sources is an extremely difficult job. You need to make sure that you give everyone good documents, they are qualified, they have enough time, but not too much time… etc. Pre-Construction services from companies will help in this process, and additionally companies such as Owner’s reps have contacts and have been through the process before; making sure that the process goes as smoothly as possible. 

With bidding, clear and established rules by focusing on these main bidding aspects, will improve the quality and overall outcome of the bidding process.

Bidding Time

Bidding time should not be too short or too long. Too short is especially disadvantageous as GCs may rush through documents and inflate bids for documents they don’t have time to properly review.

• The correct bidding time depends upon many different factors similar to the design length needed on a project. It should increase for more complex and larger size buildings, and decrease proportionally as needed.
• Generally 2 weeks is considered the minimum time needed for bidding smaller projects. 3-4 weeks can be justified and expected in other circumstances. Large complex projects such as hospitals may need 1-2 months, however, the scope can be divided up to decrease needed bidding time.
• A General Contractor is reliant on bids from subcontractors. It is common practice for these subcontractors to issue bids at the last second to avoid giving competition advance information or ability to undercut their bid.

Construction Time

Bidding documents will state the specific amount of time the Owner requires for construction either by dates allowed for construction or specific dates for milestones. Similar to a bidding length, the construction time given will greatly affect the bids. 

• Shorter time allowed for construction will be more expensive, and many times less efficient. As more people work within a confined space, they will run into each other and cause delays. This will be compounded by trades inadvertently damaging other trades or rushing jobs and making mistakes more frequent.
• There is not a 1:1 relationship between workers and work done. Doubling the amount of workers will not double the amount of work done on a project.
• Liquidated Damages are sometimes stipulated by the Owner. This could be damages paid to the owner (or reduced from contract). One example is expressed as a value per day for every day over schedule.
  • Example: $10,000 damages per day over schedule. If the GC calculates they need 100 more days than the Owner stipulated contract allows; in this case, at a very minimum they will add 100 * 10k = $1 million surcharge to the bid price. This is for something that may never occur.
  • Not every day added would be considered for damages. For example, acts of god are typically stricken from schedule delays in contracts. Meaning if a tornado causes a week of work to be lost at no fault to the GC, these days will not be considered as schedule overruns, and the schedule is adjusted accordingly. 

Supplemental Conditions & Ambiguous Requirements

Supplemental conditions modify the general conditions of a project and make the Contractor aware of special and ambiguous requirements for the project. 

Pre-Bid Conference/Meeting

Many times a pre-bid meeting will be held, shortly after the bidding documents are distributed to the Contractors, but well before the bids are due and opened. A pre-bid meeting is often appropriate for large complex projects, in order to give bidders an opportunity to ask questions about the bidding documents or other matters. 

• Statements made at the pre-bid meeting should not be considered to modify the bidding requirements or the requirements of the contract documents. Bidding documents often contain provisions that prohibit reliance on oral representations made by the Architect or any other party.
  • If changes are required to be made pre-bid, the Architect should issue an addendum package of drawings.
  • Addenda/Addendum: Changes to the documents after being sent to GCs, pre-bid.
  • Bulletin: Changes to the documents after bids are received/contracts signed.
  • Learn more about conformed sets here
• A pre-bid conference provides a practical way to inform Contractors about unique or special aspects of a project. An Architect can describe important factors to the project which contribute to the project’s success, and that may not be as evident in the construction documents.
  • By itself, a detail or system may not be the most efficient or optimum solution, however when considered in the context of the overall design, it may clearly be the correct choice.
  • Only the Architect theoretically understands the rationale behind all elements and therefore, this conference can stop inappropriate substitutions from happening
• If construction documents are ambiguous and there are two or more reasonable interpretations, a bidder will usually choose the less expensive one. If the Contractor in practice was asked to utilize the more expensive option, a change order would be required.
  • Note: Some Architects have provisions in their documents requiring the Contractors to bid for the most difficult or most expensive alternative, whenever there is more than one interpretation possible.

Plan Room

An Owner can increase the quality of bids (at least remove as much friction as possible) by providing an adequate number of sets to all parties, all data/documentation as required, and sometimes can even set up a plan/project room. Some Owners may go even further enlisting companies such as Owners representatives to help facilitate the process.

Site Walk

Many times as part of the bidding process, the GC is required to, ‘make themselves aware of existing conditions and walk the site’. This is generally required on most projects so that the GC familiarizes themselves with aspects of the site, surrounding conditions, etc. When this occurs, everyone walks the site with an Architect or someone else familiar with the site and questions can be asked.

Published Questions

In order to keep a fair bidding environment. All questions that were asked at the pre-bid conference meeting, or site walk, should be published with their provided answers and then distributed to all bidders. This ensures that all parties have access to all information, so that there is a fair bidding level for everyone.

Competitive Bid Climate

There are many aspects to construction that will influence costs artificially of a bid. During the Covid lockdowns, it was extremely hard to find people to work and many GCs in vacation town areas became overloaded with renovation and new construction of homes and cabins. This created an environment where the GCs did not need the work and instead artificially raised their bids to boost their profit margins. 

Other Construction in the Area

• If there are lots of other projects occurring that are similar in size/scope/quality, this could mean less potential workers and equipment, meaning increased costs.

Materials

Materials are needed for every project, and there are only so many places to get each material from. Supply constraints or other projects using certain materials can cause delays or inflated prices.

AIA A701 – Instructions to Bidders (Notice to Bidders)

The AIA has document A701 which has been prepared to help facilitate the bidding process. It covers all of the aspects discussed here and is a great starting point to take to a lawyer to then adjust for your project needs. In general many of the pieces derived here are stated in this document such as:

• Bidders state the bid is based on the construction documents, and must not base their bid price off substitute materials, even if they are considered equal.
  • If there are conflicting materials called out in the bid documents, the bidder should write to the Architect requesting formal written clarification by means of an addendum
• Provides instructions for how to propose a substitution and time limits for those. Note that with all contracts and documents, times can of course be changed along with all aspects of the contract. In general, all documents should be looked over for required changes by office/project lawyers to be project specific.
  • Bidders may propose alternatives to the Architects at least 10 days in advance of the bid due date.
  • If the Architects and Owners agree it’s an acceptable substitute, they issue an addendum to all bidders at least four days in advance of the bid due date. If drawings are required this can lead to some tight deadlines and late nights.
  • Only substitutions approved by addenda may be used as a basis for bidding.

• Bidders must acknowledge they received the addenda and will bid on it in lieu of the previous bid documents it is replacing.
• They may only rely on information appearing in addenda, and not information orally presented.

• Bidders state that they have made themselves acquainted with the property, understand the bidding documents, and have become familiar with the local conditions under which the work is to be performed.
• Note: Bid documents will not be sent out to a Subcontractor or split up from the full bid documents. This prevents anyone from only seeing partial information about the building/set and bidding off those. It is the responsibility of the prime contract bidder to facilitate their subcontractor bids as required.

Bid Amounts

Bids must be typed or handwritten in ink, and must show prices in both numeral and words. Discrepancies between these numbers, the words prevail. If a bidder produces clerical or computation errors and they make the Owner aware of this, they are—strictly speaking, allowed to get their bid back without penalty.

• $1,000,000.00 and One Million US Dollars and zero cents.

Bid Security / Bid Bond

A bid bond is issued as part of a supply bidding process by the contractor to the project owner, to provide a guarantee that the winning bidder will undertake the contract under the terms on which they bid.

The bidder is not allowed to get his bid bond back due to a judgment error of their own fault. So, if the error is due to a misunderstanding of the bid documents (at no fault of the Architect or Owner or bid documents), then they would be allowed to accept the lower bid price they presented and take the contract/project, or, are not entitled to their bid security back.

Bid Qualifications

On occasion a bidder may attach a list of qualifications or exclusions to their bids. In the typical AIA 701, the instructions to bidders require the bidders to furnish bids based solely on the bid documents. Therefore, the submission of any qualifications or exclusions without direction would violate the bidding agreement.

• The Owner can reject the bid, rebid the project, or award the contract and adjust the contract sum by change order if the submitted items affect cost. The last point not being allowed in publicly funded projects.

For example, if the bid documents require base bid + 3 additive alternates, but the Contractor stipulates a base bid + only 2 of the additive alternates, and cannot do the 3rd because it makes them unable to be bonded— the bid must be rejected. If not, the Owner could open himself up to liability for creating an unfair bidding environment.

Post Bid

Pre Construction Meeting

Once bidder(s) are awarded, the whole team should sit down and have a pre construction meeting. If there are multiple prime contracts, this meeting can discuss how those contracts will interact and responsibilities of each party involved. It may also go over scheduling weekly meetings, billing processes, and all other aspects to the project.