Construction Information Technology Blog

What does it cost an Owner to receive a bid?

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The cost of the bidding process for owners of construction projects is significant when you consider all the aspects of managing it. Once the project documents (Drawings and specifications) are complete there are a number of steps required before prices can actually be received and analyzed. Errors or omissions in these activities can have serious consequences including non-compliant bids, claims for delays or extras or litigation relating to the bidding process itself. Some of the key activities include:

• Preparing the bidding instructions
• Preparing the bid form
• Selecting a list of potential bidders
• Advertising the opportunity
• Issuing Invitations to Bid
• Issuing bid documents to interested bidders
  • Making adequate numbers of copies
  • Checking for completeness of the bid sets
  • Packaging bid sets
  • Staff time to organize and log sets that are picked up by bidders
  • Preparing waybills and calling couriers
  • Receiving bid set deposits if required
• Responding to questions and clarifications requested by bidders
• Issuing addenda and tracking who got them and when
• Checking time clocks for accuracy prior to closing time
• Logging bids as they are received and recording the time
• Receiving amendments that arrive via fax or other means
• Matching amendments with the correct bids
• Opening the bids
• Evaluating the bids for completeness and compliance
• Reviewing that the required bid security is compliant
• Tabulating the bid results to prepare them for analysis
• Receiving and organizing returned bid sets if required

While this list is not exhaustive it is indicative of the amount of detail that must be dealt with in order to properly manage the bidding process. The actual cost will of course vary with the size and scope of each project ... but big or small the steps to manage the process are very similar. Hard costs include items like paper copies, long distance calls/faxes, packaging and couriers. The cost of the staff time required to undertake these activities is substantial and is certainly not the highest and best use of valuable human resources. The biggest indirect cost arises after the fact from potential process based litigation or claims for delays and extras resulting from missing information.

In a previous post I discussed the digital site of record approach to managing all of these activities that offers tremendous potential to reduce or eliminate most of the costs of managing the bid process along with reducing most of the risk for problems after the fact.