Maintaining consistent cash flow is the biggest challenge for any construction company. Right bidding is the first step in accomplishing it. But irrespective of your experience, bidding is a difficult task. Unfortunately, a contractor is trained only in trained in construction skills. He learns about the bidding process and the means to develop a powerful construction bid on the job. So the pains of bid failures are faced on the job.
This guide will help you understand the working of construction bidding, and how it should be done for residential, commercial and governmental projects, make the necessary improvements in the bids and get more out of the bids. You can also find worksheets, templates, advice from top experts and more including construction bidding software for the general contractor.
Generally, a construction contractor prepares a tender or quote to compete for a job. Initially, while preparing a bid, a cost quote is prepared to recognize the costs and then initiate the rates. An estimate is prepared to submit a tender or bid to compete for a contract. This comprises the evaluation of the project plan and the requirements to prepare a quantity. This has all the items and products of the work required for the construction project. Along with the costs for these, the amount estimated is the sum total of the direct cost. Indirect expenses are added to.
Though you need to be specific as per the needs of the project in a majority of construction cost estimating for tenders, however, there are certain things common to all.
Cost Categories for an Estimate
There are four categories of costs. These should be used to build any construction, repair or renovation, estimate: labor expense, material costs, overhead costs, and the profit. Making an estimate is a simple process of analyzing the product cost and the core labor. This is the base on which you can build your profit and overhead goals. Have a look below:
Material expense
these can be estimated with the type of products and materials required, the amount required and the purchase cost.
Labor expense
these can be recognized with the type of work performed, the productivity of the staff or the subcontractor and the pay rates.
Overhead cost
it is different for different products. It comprises of everything required for the functioning of business from your income, utilities, leasing, and from telephone service to advertising and so on. Without understanding the overhead cost, it is impossible to make an accurate estimate.
Profit goals
You have to understand the profit objective to bid with efficacy.
The costs for the above-given categories will be different for different categories. Otherwise, it is completely worthless in a construction bidding software for contractors.
Project Estimate – The Old Style
General contractors depend on manual methods such as paper copy files and/or electronic spreadsheets like Microsoft Excel. As a matter of fact, they depend on spreadsheets. These spreadsheets can be mastered easily. It provides a manner to report and produce a building cost estimate and/or expense designs. These spreadsheets don’t guarantee the accuracy or add to better performance. Moreover, data entry is tiresome and prone to errors. Mistakes can happen while using the formulas. Also, information sharing and collaboration are restricted.
Construction bidding software for General contractors – Do they really need it?
Worldwide, businesses are using the computers and software running on them including the general contractors, specialty contractors, engineers, and designers. The best general contractor construction estimating and tender software provides a high level of transparency, collaboration and reuse of information to drive the reduction in the procurement cycles. The estimation process is 6 to 10 times faster, minimizes total job times and there is a reduction in modification orders and prevents legal disputes. A lot of construction estimators have failed for the need of using the tools efficiently.
It is not important to have expensive or complicated software. A few basic features are sufficient:
Takeoff tool
It helps in taking measurements from a paper or a digital plan.
Integrated Cost Databases
It can make use of the commercially available data including RS Means and your own data for cost estimating.
Calculation for Estimation
It is generated in worksheets by the applications to bring the estimates and requirements to different levels of detail. This relates to the traditional “abstracting” and “squaring out” activities of the cost estimators.
These functions help in speeding up a major part of the estimator’s work. Software just doesn’t help in bidding, the best general contractor construction estimating and tender software helps in performing other things too. These include:
Online collaboration
adjustments, approvals, and comments can all be done digitally. It averts the need to find the specific project files.
Other applications
For instance, take data directly from an engineer’s CAD files or from an architect in case of construction cost bidding software for architects to prepare the estimates. Then send the information directly for procurement or integration with the company’s accounting system.
Types of Construction Bidding Software for Contractors
These are vital applications required to cost and quote tasks for bid. There are two types available. One is open source software application and the other is commercial software.
Takeoff Software Applications
These can be termed as sophisticated, visual quantity and estimating take-off (QTO) tools. The software enables measurement from electronic or paper plans and sends these to your spreadsheet calculator. The takeoff software programs allow expense estimating plan in the construction field. The professional utilizes the handbook, blueprints or digital to start taking off the quantities of the parts required from the construction plans to be able to create a part of the estimate.
Some examples include the quantity of wiring needed for electrical jobs or the number of lights needed in a building. The estimators execute manual takeoffs from the field sketches. Some of the estimators perform on-screen take-offs with construction bidding software for architects and some use digitizers and electronic devices to take measurements from the hard copies of the drawings and the blueprints. When you can see the takeoffs on the screen, measurement and calculations can be held automatically increasing speed, accuracy, and efficiency.
Expense Database Software
Built-in Expense databases
It provides reference expense data which might be your own or comes out of the business source such as RS Means. A cost database is the computerized database of cost estimating information. Usually, it is used with construction bidding software for general contractors to support the formation of cost estimates. It can be called as an electronic referral of expense data. A cost database involves the electronic equivalent of an expense referral book, expense book, a tool used by the estimators for many years. Cost books can be internal records at an agency or a specific company. It could be released commercially in the open market.
Construction Spreadsheet Software and Templates
Building estimating worksheets is the place where the real work takes place. It is supported by computations and other such features. These spreadsheets comprise of the apt solutions needed to track the cost quotes, variances, real expenses, payments, and balances due. These worksheets can be utilized as checklists for making budgets to ensure the essential products on the list are presented in the first budget plan. A checklist ensures items getting into the detailed price quote.
A lot of general contractors are in favor of spreadsheets over complex construction bidding software for small contractors. This is primarily due to the formulas turning more complex and recurrent errors. These mistakes can be either cell reference mistakes or general formula mistakes resulting in cost overruns.
Is all-in-one software the best choice?
A general contractor can either have all the three types of software applications individually or buy software application suites with all the above. You may not need them all but there is no harm in it. However, a lot of contractors continue using spreadsheets for ease, simplicity, and familiarity. For instance, you would like to keep using Excel and wish for a system that can work well with it such as buttons and icons to Excel to allow you to embed and also take measurements from the screen and get them straight into the spreadsheets. Yet, having a full suite construction bidding software will help in doing so much more.
Need For a Qualified Human Cost Estimator
Only a well-qualified estimator can make the best use of the best general contractor construction estimating and tender software. They can take advantage of the power and speed of the cost estimating application to its optimum. Simultaneously, they can use their knowledge to improve or approve the results.
Who Is Better – Humans or Construction Bidding Software For General Contractor?
The article makes it clear that both human beings and bidding software complement each other when it comes to bidding in construction. Though the characteristics of good estimators are not present in the software, the artificial intelligence of the latter can pave way for brand new software abilities in the future. An added advantage of construction bidding software for the general contractor is high levels of speed and accuracy in resource calculations and it is way beyond the abilities of any human being.
