Read any of the types of construction bids on three axes
- Method: who may bid and how the winner is chosen.
- Pricing basis: how the price is structured and who carries cost risk.
- Submission: what the owner wants: a priced bid form, a proposal, qualifications, or several stages.
A state school job might be open, lump sum and a sealed bid. A hospital addition might be selective, GMP and a CMAR proposal. Naming all three tells you what work the bid needs.
Open, selective and negotiated bidding
| Method | Who can bid | How award is decided | Common on |
|---|---|---|---|
| Open competitive | Any qualified bidder who meets the advertised rules | Usually lowest responsive, responsible price | Public works |
| Selective or invited | Firms the owner or GC invites or prequalifies | Price, or price plus other factors | Private and prequalified public work |
| Negotiated | One or a few firms | Negotiated scope and price | Private work, repeat clients, CMAR |
In federal procurement, FAR 6.401 calls for sealed bids when award is based on price and price-related factors without discussions, and competitive proposals otherwise.
How a bid is priced: lump sum, unit price, cost plus and GMP
| Pricing basis | What is fixed | Who carries cost risk |
|---|---|---|
| Lump sum (stipulated sum) | Total price for defined scope | Mostly the contractor |
| Unit price | Price per unit; quantity is measured | Shared: owner carries quantity risk |
| Cost plus a fee | The fee, or fee formula | Mostly the owner |
| Guaranteed maximum price (GMP) | A ceiling on cost plus fee | Contractor above the ceiling |
See unit price vs lump sum bids for how quantity changes pay out.
Sealed bids and invitations for bids
A sealed bid is submitted on the owner’s form by a deadline and opened publicly. FAR 14.101 describes sealed bidding as competitive bids, public opening and award. Award goes to the lowest responsive and responsible bidder. What you prepare: a priced bid form, bid security, acknowledgments and required certifications. Defects in paperwork can reject the bid, so a requirement checklist matters as much as price.
Requests for proposals
An RFP asks for a proposal evaluated on price and other factors, such as approach, team and past performance. FAR 15.101 notes that the less definite the requirement and the greater the performance risk, the more technical and past performance factors may dominate. What you prepare: a technical response written to the evaluation criteria, plus a price volume. See RFP proposals.
Short on time? Bidmere can do this for you. Bid and proposal packages from $1,950, ready in 5 business days. See construction bid preparation services or get a fixed quote.
RFQs, SOQs and prequalification
A request for qualifications asks for a statement of qualifications, usually without price, to build a shortlist. Prequalification questionnaires qualify a firm to bid an owner’s work over a period. Both are judged on experience, capacity, safety and finances, and both come before any priced bid.
Design-build and CMAR
In design-build, one entity designs and builds under one contract. FAR 36.303-1 describes federal two-phase design-build: phase one evaluates technical approach and qualifications, with no price permitted; phase two requires separate technical and price proposals from a short list. In construction manager at risk, the CM joins during design, provides preconstruction services and usually commits to a GMP. See design-build and CMAR proposals.
Subcontractor proposals and bid leveling
Subcontractors bid to general contractors, usually with a scope letter listing inclusions, exclusions and price. GCs then level those quotes on one scope before carrying a number. See subcontractor proposals and the bid leveling sheet.
Alternates, allowances and unit prices inside a bid
Many bids mix pricing types inside one form. Read the bid form for each:
- Alternates: add or deduct options priced separately from the base bid. The owner picks which to accept, sometimes affecting who is low.
- Allowances: amounts the owner sets for undefined work, such as hardware or signage. You carry the stated amount; the contract says how differences are reconciled.
- Unit prices for added work: rates the owner can use for extra quantities after award.
Price each exactly as described. A blank alternate or a unit price that does not cover cost can hurt more than a high base bid.
Which kind of bid support should you request?
- Priced bid form on a sealed bid: an estimate plus a requirement checklist.
- RFP: proposal writing plus an estimate for the price volume.
- RFQ or prequalification: a qualifications package.
- Sub quote: a trade estimate plus a scope letter.
Bid packages are priced from $1,950 in 5 business days; single-trade estimates from $195 in 48 hours. Whatever the type, your company owns the final price, signs and submits.
Frequently asked questions
What are the main types of construction bids?
By method: open competitive, selective or invited, and negotiated. By pricing: lump sum, unit price, cost plus a fee, and guaranteed maximum price. Solicitations also differ in what they ask for: sealed bids, proposals, qualifications or multi-stage processes such as two-phase design-build.
What is the difference between a sealed bid and a proposal?
A sealed bid is a priced offer on the owner’s form, opened publicly and awarded on price to the lowest responsive, responsible bidder. A proposal is evaluated on price and other factors such as approach and experience, and the owner may hold discussions before award.
What is a GMP bid?
A guaranteed maximum price is a ceiling on the owner’s cost: the contractor is paid actual costs plus a fee up to the GMP, and generally absorbs costs above it. GMPs are common with construction manager at risk and some design-build contracts, often set once design is far enough along.
Which type of bid is riskiest for a contractor?
Lump sum generally carries the most cost risk for the contractor, because the price is fixed for the defined scope and quantity overruns are the contractor’s problem. A GMP shifts overrun risk above the ceiling to the contractor. Cost plus without a ceiling carries the least.
What is an invited bid?
An invited or selective bid is open only to firms the owner or general contractor chooses, often from a prequalified list. Private owners use it to limit bidders to firms they trust. Public owners use prequalification for a similar effect while keeping the process open to any firm that qualifies.
Can Bidmere prepare any type of bid?
Bidmere prepares estimates at your rates, sealed bid packages, RFP proposals, qualifications packages and subcontractor proposals. You get a fixed price within 2 business hours and pay only after you accept. Bidmere does not sign or submit bids and does not guarantee awards.