How to Bid a Job as a Subcontractor (Bidding Process)

In some cases, the contractor’s qualifications matter more than bidding the lowest dollar amount.

Review all project-related qualifications, like your company’s capacity and relevant experience. You don’t want to waste time on construction jobs you didn’t have a chance to win in the first place.

Tip: Bid selectively. The best approach is to only bid on a construction project that matches your company’s strengths, skills, and experience.

Equipped with complete knowledge about the job, you’ll be able to estimate costs accurately and turn in a solid profit.

Review the bid documents to know the exact results your potential client wants. A site walkthrough will also help you discover problem areas that need particular attention. Additionally, you’ll know if the site conditions demand specialized equipment.

Be ready to ask for clarifications to show the general contractor you’re meticulous with your bidding process.

Don’t be afraid to walk away from a bid if you’re certain that it’s a mismatch. Ultimately, you want to win a project where you can provide impressive results without compromising profits.

Tip: Wear appropriate construction project manager attire when visiting the job site. A rugged, business-casual outfit will give you a professional vibe for the walkthrough.

An inaccurate estimate leads to underbidding, which means losing profits.

Ensure an accurate bid by estimating the cost of all materials and tools, whether you’re preparing and excavating a site or building the structural components for walls and roofs.

Remember to avoid guesswork throughout your estimation process. Call suppliers and compare local prices for a precise estimate.

Tip: Add 10% to 15% of material costs to your estimate for additional expenses like minor mistakes and waste.

Labor costs generally account for 20% to 40% of a construction project’s overall budget.

Calculate costs liberally to avoid underestimating a project and losing profit. You may want to consider overtime just in case your team doesn’t finish the project on schedule.

Factor in all additional costs in running your business, including worker’s compensation, payroll, paid time off, taxes, and training costs. Other overhead costs include marketing, rent, utilities, and transportation.

Add overhead costs to your total bid. For example, add $40 per day if you incur $800 each month for overhead costs and you operate 20 days a month.

If you find material and labor cost estimation overwhelming, you can use construction bid estimation software to speed up your bid process and improve accuracy. Use the software’s construction cost database or create your database to reflect price fluctuations.

Tip: Get help from an experienced contractor if you’re unfamiliar with a project’s scope. Having another pair of eyes proof your calculations will help ensure accurate takeoffs.

When determining the ideal markup, you need to balance the profitability of your business and your chance of winning the bid. Understand your profit margins, necessary markups, and ways to run a more profitable business.

Markup percentages vary depending on the type of subcontractor work and project scope. Some subcontractors add a higher markup for complex jobs, whereas others use a lower percentage for easier tasks.

A basic markup guideline is to add 17.65% on costs for a 15% profit and a 25% markup for a 20% profit. A 30% profit would require a 42.85% markup.

Tip: Research the average markups of other subcontractors in your area to get an idea of competitive figures.