Owners and government agencies have historically awarded almost every job to the low bidder. However, in the past two decades, owners have been moving away from low bids and begun awarding more projects to the general contractor that provides the best value. This focus on value allows savvy GCs to increase their bid-hit ratio by focusing on the value they bring to the project rather than just the price. To succeed at this, GCs must persuasively convey the value they bring to the project when responding to requests for proposals.
Key Takeaways
- When responding to an invitation for bid, you must focus on getting the lowest price.
- Responding to requests for proposals that consider more than the price in the selection process allows the well-qualified GC to improve their bid-hit ratio.
- When preparing proposals, you should emphasize that you are the best GC for the job by persuasively identifying the benefits the owners will receive by hiring your company.
Invitation for Bid vs. Request for Proposal
Invitation for bid (IFB) and request for proposal (RFP) are often used interchangeably in the construction industry. However, there is a subtle difference between these procurement processes.
Invitation for Bid
An invitation for bid invites qualified contractors to provide pricing to build a proposed construction project. It includes the information they need to bid, like where to get copies of the bid documents and the due date. Project owners use bids when the project scope is well-defined, and they are interested in getting the lowest price.
Suppose your company was looking for a new truck. If you approached several dealers and asked them to give you a price on a Ford 150 crew cab with a specified list of options and accepted the lowest price, you would be asking for bids.
The owners can begin the bidding process once the project has been designed and the construction documents (construction plans and project manual) are complete. The construction bidding process starts with the owners issuing the invitation to bid and advertising the bidding opportunity and ends at the date and time the bids are due.
During the bidding process, most of the GC’s effort is used to perform a cost estimation for the entire project, focusing on getting the lowest price possible. Once the bids are submitted, the owners determine if the construction bids are responsive and typically award the construction contract to the lowest responsive bidder.
Request for Proposals
On the other hand, request for proposals considers more than just the price when awarding the contracts and requires a more complex submission from the offers (the GCs). RFPs are used for design-build projects and projects where the GC also acts as a construction manager (CM/GC), providing input into the design during the preconstruction phase. RFPs are also used on negotiated and other projects where more than the price is considered when selecting the GC.
An RFP is less restrictive than an IFB. Returning to the truck example. If you explained to the dealers your needs for a new truck and asked them what they would recommend, you would be asking for a proposal. The offers for the dealers would differ because they could recommend different brands with different options. You would need to select the offer that provides you with the best value. The amount of flexibility varies with the proposal.
Proposals often use a two-stage procurement process because the GC’s qualifications are critical to the project, and it is more expensive to prepare a proposal.
During the first stage of the RFP process, the GCs respond to a request for qualifications (RFQ). The owner then evaluates the RFQs based on the contractor’s qualifications, including relevant experience on similar projects, and selects a few GCs to proceed to the second stage. The selected contractors are often referred to as the shortlist.
The shortlisted contractors then respond to the construction RFP. These proposals may include the GC’s approach to the completion of the project, the project details, the proposed design, the proposed project management team, the project schedule, the quality control plan, and the safety plan. The owners evaluate the proposals based on the evaluation criteria established in the RFP document and award the contract to the GC that provides the best value.
There are several reasons why you should consider responding to RFPs:
- The use of proposals by private owners and government agencies has increased. Responding to proposals allows you access to more projects.
- Owners using proposals are willing to pay more for construction companies that provide better value to their stakeholders. Responding to proposals allows you to increase your profit markup and focus on more than just getting the lowest cost.
- There is less competition once you have been shortlisted. Responding to proposals can increase your bid-hit ratio.
Responding to an IFB
Before we dive into responding to RFPs, let’s run through how you would respond to an IFB. With an IFB, submitting the lowest responsive bid is the key to winning the work. You must focus on getting the lowest price possible without making any mistakes. Before submitting a bid, you should review the bid documents carefully and submit a request for information (RFI) if you have questions or if information is missing.
When price is the only consideration, the owner pays the contractor to barely meet the project scope of work and the contract terms. There is no value placed on the quality of the GC and what they bring to the project.
Nonresponsive bids are often disqualified for most public projects and some private projects. You do not want to spend a lot of time pricing a project just to have your bid discarded because it was nonresponsive. For a bid to be responsive, it must:
- be submitted at the right place.
- be submitted before the bid due date and time.
- be completely filled out.
- be accompanied by all required documents (such as bid bonds and certifications).
- comply with all the bid instructions.
GCs often prepare the bid documents several days before the bid date, so they are not in a rush to fill them out just before it is due. However, some information (like pricing) can’t be included until just before submitting the bid. We recommend marking the blanks that still need to be filled out so you don’t inadvertently leave an item blank.
How to Write an RFI to Clarify Bid Documents
A request for information (RFI) is used to ask for clarifications or additional information about the bid or proposal documents. You should follow the instructions in the bid documents when submitting an RFI and include the following in the RFI:
- A unique RFI number that is used to track the requests.
- The project information (name, location, contract number, etc.).
- The contact information for the sender and receiver.
- The requested information. This should include any background information needed for the recipient to understand the issue and reference the portions of the construction documents related to the issue.
- Any supporting documentation (such as screenshots) that will help the recipient understand the issue.
- The urgency of the response, including the deadline for response and any cost and schedule implications of not meeting the deadline.
🔎 Dive deeper: Check out our guide to writing an RFI.
The RFP Process Starts With an RFQ
Before you get to the RFP, a request for qualifications (RFQ) asks potential GCs to provide information about their qualifications to construct a specific project. RFQs commonly focus on the following three areas.
Firm’s Qualifications
The owners want to know that your company meets the minimum requirements for the job, including that you have sufficient financial resources, bonding capacity, insurance, licenses, manufacturing certification, etc. They also want to know that your company can provide the construction management required by the job, is committed to safely meeting the quality standards, and will be a collaborative team member.
Key Personnel
The owners are hiring more than a GC to construct the project; they are hiring the employees who will be working on the project. They want to know that the team members you will use on the project have the skills to complete it successfully. This includes the superintendent and other field managers, your key subcontractors and suppliers, and, for design-build projects, the design personnel. You will often be required to submit resumes showing educational and work experience for key personnel.
Project Experience
In addition to your firm’s general qualifications, the owners want to know that your company has experience constructing projects of similar size, complexity, and nature as the proposed project. Often, the owners will ask for references from the owners you work for.
When responding to an RFQ, your aim is to demonstrate that you are the most qualified contractor for the job or at least close enough to be shortlisted for the project — your goal is to get to the proposal round. Don’t respond to an RFQ with a standard qualification package but instead, respond with one tailored to how your company’s unique strengths make you the best contractor to construct this project. Put the same care into preparing an RFQ as you would a bid.
Responding to an RFP
RFPs require that the shortlisted GCs provide several supporting documents describing how they propose to complete the project. Common documents include:
- Approach to the project, which describes how the GC plans to complete the project, including the proposed resources.
- Schedule showing milestones, turnover dates, and how the work will be scheduled around the owner’s ongoing operations.
- Quality management plan describing how the GC will meet the project’s quality standards.
- Safety management plan describing how the GC will provide a safe work environment and protect the public from construction-related risks.
- Communication plan describing how the GC will communicate with the owner, the construction team, and the public.
- Risk management plan that identifies the key project risks, how they will be monitored, and the proposed mitigation measures.
- Sustainability plan describing the GC’s commitment to the project’s sustainability requirements.
- Cost and schedule of values for the project.
When responding to an RFP, spend as much effort on the supporting documents as on the price. Here are some keys to preparing these documents:
Understand the Evaluation Criteria
Start preparing your proposal by reviewing the evaluation criteria and the weight of each criterion. You want to focus your time and effort on preparing responses to the requirements with the highest weights. You need to address all the criteria, but you don’t want to spend half of your time responding to the one worth 1% of your score.
You also need to understand how cost is included in the evaluation. If the owners place little weight on cost, you may be able to increase your profit markup. However, if the cost is worth most of your score, you must put significant effort into getting the best price possible.
Focus on the Project
One of the biggest mistakes you can make is simply repeating your qualifications from your response to the RFQ. At this point, the owners know you are qualified, or you wouldn’t be submitting a proposal. You need to focus on how your qualifications will provide specific benefits to the project and its owners. Be specific and provide concrete examples. Don’t just state that your company uses state-of-the-art scheduling software. You need to translate this into benefits for the owners, like how it will allow you to deliver the project on time or, better yet, ahead of schedule.
Additionally, you must differentiate your company from the competitors by emphasizing unique strengths that will benefit the project. When preparing a proposal, you are competing against a few competitors. You should carefully research the competition and emphasize how your company is better than them without speaking derogatorily about them.
Respond to Questions
You must make sure you answer all the questions in the RFP. But do not leave it up to the evaluators to find the answers among several pages of responses — they may miss them. Clearly identify the question you are responding to at the start of your response. It is your job to make it easy for the reviewers to give your company a great score.
Submitting the Proposal
The same rules for submitting a responsive bid apply to submitting a responsive proposal. Additionally, because you are submitting several supporting documents, you must ensure the submission is organized and complete.
Tips for Creating a Great Proposal
Selling your company to the owners is a big part of the proposal process. Writing great proposals helps improve your company’s bid-hit ratio. Here are a few keys to preparing a great proposal:
Know Your Audience
In construction, we do business with people employed by companies and so your proposal should be written to the people reviewing it. Often, the selection committee is made up of several stakeholders, like those using the facility, maintaining it, etc. Your responses should focus on how hiring your company will benefit them.
Write Persuasively
Each response should persuade the selection committee that your company is the best choice for the project. Try the following steps to write more persuasively:
- Start with a statement about your company, such as “We use a laser screed to pour the concrete.”
- Explain why this is important to the owner and identify the benefits to them. For example, “a laser screed allows us to place the slabs more accurately and ensures that they will drain properly.”
- Provide supporting evidence to substantiate your claim by citing articles, case studies, or quotes from past owners.
Make it Easy to Skim
An important part of getting a good score is making it easy for the reviewers to find the information they seek. While reading through several proposals, it is easy for the reviewers to become tired and bored and not all of them are interested in the same questions. Reviewers will appreciate it, and your score will improve if you make it easy for them to find the information they are interested in. This can be done by providing headers that lead them through the proposal and using formatting (like italics) to highlight critical information.
Make it Easy to Read
It is a lot of work for the reviewers to evaluate the proposals. One way to improve your score is to make your proposal a quick, easy read by using short sentences and paragraphs. No one likes looking at a page covered in text and figures. Be sure to leave some white space.
Edit, Edit, Edit
You should spend as much time editing the proposal as writing it. All proposals should be edited at least three separate times.
1. The proposal should be edited to ensure that it has a consistent message. You want to make sure that your key strengths are emphasized throughout the proposal, and you don’t want the response to one question to contradict another.
2. The proposal should be edited to ensure that it has a consistent voice. Often, proposals are written by several people, all with different writing styles, making them harder to read and sounding disjointed.
3. The proposal should be edited to ensure it is free of grammatical and spelling errors. This is not a time to change your responses but to clean up any minor errors.
Avoid the temptation to combine these as it makes it easier to miss needed changes.
Final Thoughts
Responding to proposals allows great GCs to focus on what they do best (building great projects) rather than getting the lowest possible price. It also rewards them for the value they provide and uses this value to improve their bid-hit ratio.
Further Reading – Construction Bidding: The Emerging Contractor’s Guide