While capital projects and construction projects can range from a simple painting job to an entire roof replacement, a real estate owner’s goal is always to increase the value of an asset or to make sure tenants are happy with their space. One of an owner’s best tools for making this happen is the ubiquitous bid form.
Bid forms play a pivotal role within the overall cost estimating and construction bidding process. In conjunction with the request for proposal (RFP), site walkthrough and requests for information (RFIs), bid forms communicate the goals of the project, outline the specific work that needs to be executed, generate pricing intelligence and help project managers select a vendor and finalize costs.
Because bid forms drive so much value in the bid management process, it’s important to optimize them. Creating a standard template for your organization will ensure that best practices are used across all of your projects. Here are the steps to designing a base template that can be customized for each project and replicated across your portfolio.
Real estate owners use bid forms to specify the way bidders should break down prices, including all baseline items and various alternates. Since these specifications will determine the construction requirements for the job, including labor and materials, it’s crucial that everyone is dead clear on what each line item entails.
Architects typically use the Construction Specifications Institute’s MasterFormat®, commonly referred to as CSI codes, to clarify the scope of each job, and many owners follow suit to be consistent. CSI codes are the most widely used standard for commercial and institutional building projects in the U.S. and Canada. In 2004, CSI updated the manual to include up to 50 divisions to organize each work section.
Using a standard, well-defined categorization system like CSI codes helps project managers communicate with multiple stakeholders efficiently and with a high degree of clarity, increasing the likelihood that timelines and budgets are met. Since the CSI format is so widely used, you can typically drop the numerical code and just use the description, but be sure to clarify with the bidders that the line items are based on the MasterFormat guide.
Whenever you construct bid forms, you should be as detailed as possible while remembering that they need to be manageable for bidders to thoroughly complete. They don’t get paid unless they win the job, so it’s important to be respectful of their time and efforts.
Consider including the following sections to get the most accurate pricing possible from your vendors.
The first section of your bid template should specify administrative requirements, procedural requirements, temporary facilities and controls, performance requirements and life cycle activities. This section is important in that it governs the execution of the work specified in the rest of the bid form.
Without this section, bidders would repeat requirements throughout the bid form. You should ask all bidders to follow the CSI principle of stating information only once and in the right place to decrease the probability of conflicts and omissions.
The Existing Conditions section captures site assessments and investigations, demolition of structures, and the remediation of contaminated soil, buildings, and groundwater. This is a challenging division to fill out since it requires bidders to perform inspections during the design phase and become familiar with any site features that may impose challenges later in the project.
Since it isn’t always clear if a building has a history of contamination, owners typically hold a 5% contingency to cover remediation services in the event that contamination is present.
A common misconception is that construction markup is profit. Markup is a general term that applies to the overhead and profit that contractors charge above their direct cost. This can include subcontractor bonding, general conditions, fees, and insurance.
A good rule of thumb is to know which line items to break down in order to get a true understanding of cost. Start with the high-value items such as General Conditions where costs range from 6-8% of the cost of all trade work plus any subcontractor bonding. This area can be broken down further to show costs for staffing, site office, and other administrative details.
This section of the bid form is typically reserved for bidders to list additional items they believe are required to complete the project such as alternates for specific line items, hourly rates for additional services, unit prices, and exclusions.
The benefit of including these line items in the bidding process gives owners the ability to consider secondary options or discuss additional costs that may have not surfaced in the primary sections. This section can also be used to lock in unit prices or include a standard list of exclusions that would otherwise have existed in a separate document.
Bidding requirements, building rules and regulations, insurance requirements, schedules, and an approved vendor list can all be included in this section. It’s prudent to add these items in the bid form even if it duplicates information found in other project documents. This way, owners can ensure all parties remain in compliance with contract requirements.
Although the American Institute of Architects (AIA) and Engineers Joint Contract Documents Committee (EJCDC) require contractors to study contract documents prior to bidding, this section provides another opportunity to highlight areas of possible conflict, error, ambiguity or discrepancy between owners and contractors.
This section allows bidders an opportunity to provide written comments about their bid. This is one of the few places on the bid form that allows free-form text and bidders use it to clear up any assumptions or exceptions they have made about the project.
Comments can save time when reviewing bids as special instructions are often communicated by bidders on how to interpret information or where specific attachments can be found.
Bidders may have supporting documents they feel need to be attached to the bid form. This section allows them to list these documents to ensure they are not missed. Similar to the comments section, it provides free rein to the bidder to include as much or as little information as necessary.
This section is where bidders typically include details about the expected project start and end date. It is always a great practice to get this in writing to ensure there are no misunderstandings and to hold bidders accountable to that time frame.
In a dynamic industry such as commercial real estate, it’s impossible to create a complete list of line items to cover each and every construction project. The above list relies on past experiences and best practices to define a structure that serves as a foundation.
Taking the time to standardize your own bid form as much as possible will ensure that construction requirements are accurately captured and leveling efforts are reduced once all bids are submitted. This leads to better decision making to find a contractor that best meets your needs.
Once you’ve designed your template, make it easy for project managers across your portfolio to access it when they’re assembling the bid documentation by keeping it in your centralized file storage cloud. Since your project team will often include your architect and engineer, make sure the file can also be shared with people outside your company.
By equipping your organization with a construction bid form template that’s based on a standard, well-defined language, your team will be better able to accomplish a number of things:
• Refining cost estimates with more specific line items
• Reducing change orders that arise from miscommunication
• Getting to project completion faster since the project scope is clearer
• Enabling costs to be compared—apples-to-apples—across projects
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Christine Carzo is a marketer at Procore Technologies with 10 years of experience in the B2B, technology, owner, and construction industries.