Construction Bidding Basics for New GCs
Winning work at a loss is not growth. New GCs often underbid because they price materials carefully and then guess at labor productivity, supervision, and risk. A reliable bid is a structured story about scope, assumptions, and contingency—not a single number.
Define scope before you open the spreadsheet
Read the plans, specs, and addenda twice. List inclusions, exclusions, and open questions. If the owner’s RFP is vague, your bid cover letter should restate the scope in plain language so both sides share the same picture. Ambiguity you absorb silently becomes change-order conflict later.
Build cost from quantities, not vibes
- Take off quantities by assembly (demo, framing, MEP rough, finishes).
- Price materials with current supplier quotes, not last quarter’s memory.
- Estimate labor using crew mix × hours × burdened rate, then sense-check with production rates from similar jobs.
- Add equipment, dumpsters, permits, temporary facilities, and cleanup as explicit lines.
Overhead, profit, and contingency are not optional
Office overhead (insurance, vehicles, software, unpaid estimating time) must land somewhere. Many small GCs bury it in a “markup” without knowing the percentage they actually need. Calculate annual overhead, divide by expected volume, and apply deliberately.
Contingency covers unknowns that are still your risk under the contract. Design gaps, inaccessible existing conditions, and volatile material lead times deserve a visible contingency line or a clearly stated allowance. Profit is what remains after you pay yourself for risk—protect it.
Clarify assumptions in writing
State working hours, site access, who provides dumpsters, whether hazardous materials are excluded, and how long the price is valid. Note what happens if drawings change after bid day. Clear assumptions make apples-to-apples comparisons possible and reduce the race-to-the-bottom on incomplete scopes.
Review before you submit
Have a second person check math and missing trades. Compare the bid to a past job with similar square footage. If your number is dramatically lower than competitors you trust, find the miss before the owner does. A disciplined “no-bid” is better than a job that drains cash for six months.
Treat every bid as practice for your estimating system. Archive takeoffs, quotes, and win/loss notes so the next bid is faster and sharper.
Risk register inside the estimate
List the uncertainties that could move cost: unknown soils, occupied-home productivity loss, long-lead equipment, volatile commodity pricing. Decide whether each risk is priced into the number, covered by allowance, or excluded in writing. Silent risk is how “competitive” bids become loss leaders.
Labor productivity assumptions
New GCs often underprice labor by using optimistic crew outputs. Track actual hours on early jobs and feed them back into your unit database. A bid that wins every time and loses money every time is not a growth strategy—it is a slow liquidation.
Clarifications before you submit
Ask written questions during bidding. Document answers and note assumptions on your proposal cover sheet. If the owner’s documents conflict, highlight the conflict rather than guessing. Clarity now prevents the change-order war later.