As an estimator working for a small general contractor, I spent far more time getting bids from subcontractors than bidding on our work. After all, GCs are responsible for bringing on qualified subs to work on builds. Preparing complete subcontractor bid packages is a critical part of hiring subcontractors and ensuring that you have all the project’s work covered without any overlaps.
Below, we’ll walk you through how to create subcontractor bid packages and how to evaluate the bids you get back.
Key Takeaways
- Subcontractor procurement is the process of choosing subs to include in your bid to a project owner.
- Work packages divide the project’s scope of work into smaller scopes of work to be performed by subcontractors and in-house crews.
- A scope of work is prepared for each work package, identifying the work included in the package.
- A subcontractor bid package includes all the information potential subcontractors need to bid on a project, including the scope of work, construction documents, and other documents.
What the Subcontractor Procurement Process Looks Like
Most general contractors hire subcontractors to fill the labor needs on a job. Just like you have to make a competitive bid to the project owner, potential subs have to make their own bids to you. This process of creating bid packages and selecting subs is called subcontractor procurement.
The key elements of the subcontractor procurement process look like this:
- Develop the work packages for the project.
- Writing scopes of work for the work packages.
- Preparing the bid packages.
- Sending the bid packages to the prequalified subcontractors.
- Selecting the subcontractors’ bids to be used in your bid.
Work Packages 101
The first step in the subcontractor bidding process is dividing the construction project’s scope of work into work packages. Work packages function as the building blocks of your project. They’re a group of related activities that will either be bid on by subcontractors or performed by your in-house crew.
A job’s work packages should match the line items in your company’s cost codes. A work package consists of the work in one or more cost codes, and each cost code should appear in only one work package.
Choosing Work Packages
When selecting work packages, I recommend reviewing the general conditions of the contract and the Division 1 General Requirements of technical specifications first. These will outline any specific work that must be included in your subcontractor work packages. A couple of common items here include insurance, licensing requirements, and maintenance provisions.
You’ll also need to identify any special requirements that apply to a specific class of subcontractors. For example, a project’s general requirements may require the general contractor to install lines for temporary power, which you would want to include in the electrical work package.
Next, you’ll want to map the Division 2 to 49 sections of the technical specifications to your company’s cost codes. Ideally, each section listed in the project manual’s index should be mapped to only one cost code. Of course, this isn’t always possible. For example, some sections (like caulking used on the windows, trim, etc.) could be mapped to multiple cost codes. One way to identify these sections is to check the related documents paragraph of each specification section and identify any referenced sections.
Once you’re done here, double-check that the entire project’s scope of work is included only once (with nothing missing). Lastly, confirm that all the specifications have been included in a cost code and that all the required cost codes have been included in a work package.
Writing Scopes of Work
Once you’ve separated out work packages, it’s time to write matching scopes of work. The easiest way to write a scope of work is to reference the sections of the technical specifications that you want the subcontractor to bid on. For example:
“Provide all labor, materials, equipment, and supervision necessary to complete Division 26 electrical.”
This scope of work would include all subsections in Division 26, like 26 10 00 Medium-Voltage Electrical Distribution and 26 50 00 Lighting.
Along with identifying the section of the specifications, you’ll also need to include the following information in your SOW:
- Any additional inclusions or exclusions to the requirements of the reference sections of the specifications - These are often used to deal with those sections that are divided among work packages, such as caulking.
- Special requirements from the general conditions of the contract and the Division 1 General Requirements that apply to the work packages - These include bonding and licensing requirements, special certifications (such as manufacturer’s or LEED certification), and any special permits (like a road cut permit).
- Special pricing requirements - for instance, bidding lump sum or unit pricing and any pricing breakdown required to complete the owner’s bid form, such as bid amounts for alternatives.
- Equipment information - details on cranes, telehandlers, etc that will be provided by the GC for handling materials on the job site.
- Requirements for unloading, handling, and storing materials on the job site - including the availability of the storage area.
- Responsibility for cleanup - who will clean up the subcontractor’s work and dispose of their construction debris?
An Example Scope of Work
To give you a better idea of what a SOW could look like, we went ahead and wrote one. The following scope of work example includes all of the requirements we mentioned above:
Provide all labor, materials, equipment, and supervision necessary to complete Division 26 Electrical for the West Street Office building in accordance with the construction plans, project manual, and technical specifications prepared by John Doe and dated March 1, 2024.
Provide flashing meeting the requirements of 07 60 00 Flashing and Sheet Metal for all electrical penetrations through the roof. The flashing will be installed by others.
Provide separate pricing for the wiring for the temporary power as specified in 01 51 00 Temporary Utilities of the general requirements.
Subcontractors are responsible for unloading and storing all materials delivered to the site, including any unloading equipment required.
Storage space on the site is limited. The electrical subcontractor will be allowed space for one storage trailer and will be responsible for its security.
Subcontractors will be responsible for cleaning up after their work each day. The GC will provide a dumpster to dispose of construction waste from the job site.
What to Include In Your Bid Package
Once each scope of work has been written, you can start preparing your bid packages. Other than the SOW, most of the items included in bid packages will be the same for a specific job.
The first thing all bid packages should include is an invitation to bid. The invitation to bid requests subcontractors to submit their construction bids on a specific work package. A great invitation to bid will give subs all the information they need to bid on a project, which can include:
- General project information, including the project name, location, owner, and architect.
- The bid due date and time.
- A brief description of the project, including any unique requirements.
- The scope of work for the work package.
- Contact information (email and phone number) for the person handling the bid.
- How to get answers to their questions.
- How to access the bid documents, including addendums.
- Requirements for the bid submission, including how and where to submit the bid and the use of bidding software.
- Statements requiring the bid to comply with the accompanying bid documents. For example, “Subcontractors must comply with the safety requirements set forth in the accompanying safety plan.”
- Any additional information that will be helpful in the bid submission.
While this may seem like a lot, most of these items will be consistent across jobs. To help you save time, you can create a plug-and-play bid package template.
Other Bid Documents to Include
Along with the invitation to bid, your bid package should also include the following documents (or links to them):
- The construction drawings, project manual (including the technical specifications), and addendums for the job.
- A copy of your GC-subcontractor agreement. This outlines expectations for potential subcontractors and helps set the tone of the relationship. This agreement should address several issues not often included in the invitation to bid, such as payment terms, termination provisions, dispute resolution, confidentiality, and other standard clauses.
- A preliminary schedule so potential subcontractors can determine their work’s anticipated start and completion dates.
- A copy of your company’s safety plan that outlines the safety requirements (including any safety training) selected subcontractors must comply with while working on the job.
🔎 Dive Deeper: How to Establish a Standard Construction Bidding Process
Choosing the Right Subcontractor
Once your bid packages are ready, you can start sending them out to the prequalified subcontractors you’ve vetted for past performance. But procurement doesn’t stop here. Once sent out, you’ll need to get each subcontractor’s commitment to bid on the project.
🔎 Dive Deeper: The Key to Choosing the Right Subcontractors
Even once you secure their commitment, your job isn’t quite over yet. Throughout this process, you’ll need to keep an open line of communication. Subcontractors need to receive and acknowledge addendums to the construction documents promptly. They also need to be able to ask questions and get clarifications on your bid package and the project’s construction documents.
Once you’ve secured all the bids, you can start the selection process. As you review each bid, carefully compare it to your original bid package to make sure everything is included as intended on your bid package and the project’s construction documents.
A Note on Exclusions
Bids often include exclusions, which may or may not be a concern for you. In general, many subcontractors have standard exclusions that don’t affect their bids. For example, steel subcontractors often exclude bolts not through their steel. You wouldn’t expect them to provide bolts for the mechanical equipment, so this particular exclusion wouldn’t be an issue.
Other exclusions might highlight items from your scope of work that aren’t included in the bid. When this happens, money needs to be added for those excluded items, which is known as bid leveling.
Bid Management Software
Bid management software can automate the preparation and distribution of the bid package and the receipt and processing of the sub bids. Some construction management software, like Procore, include modules for creating a bid package and distributing bid information to your subcontractors. Bid management software often allows new bid packages to be created from existing bid packages, making it quick and easy to prepare a new bid package. However, you must exercise care and make all the needed changes so that the bid packages have the correct project information. This software makes it easy to add bidders to the distribution list, notify bidders of new addenda, and stay in touch with your subcontractors.
Final Thoughts
Getting the right subcontractors on your team can make the difference between winning and losing work - all the more reason to make sure your bid package process is as thorough as possible. By following this standardized process, you can focus more time and effort on delivering quality work and winning more contracts.
Want to make sure you’re getting the best subcontractor bids possible? Check out this guide to subcontractor bid management.