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What is a Construction Bid?

Mary McMahon
Updated May 16, 2024
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A construction bid is a proposal from a construction company which outlines its qualifications to perform a job and provides information about how much money will be required to complete the job and how long the job will take. Many construction projects start with a construction bid in which the project organizer attempts to find the best construction company for the job, providing an opportunity for various companies to bid for the job. The company with the best bid will be awarded the contract for the project.

Construction bids can take a number of forms. Sometimes the bid is for an entire project, as in the case of a general contractor which submits a bid to construct a housing development. In other cases, the bid is from a subcontractor who will take care of part of a project, such as a stonemason who bids on a contract to build garden walls in the housing development example.

When a project is opened for bidding, contractors can get basic information about the project specifications, including architectural drawings, site information, and so forth, from the administrators of the project. Using this information, contractors can construct a bid based on their experience and beliefs about cost and time frame. Bidding may be sealed, which means that all bids are submitted blind and reviewed together, or it may be more open in nature. Sealed bidding is designed to discourage corruption and favoritism, and to prevent contractors from underbidding each other.

Estimates in a construction bid can vary widely. A contractor who actively lies in a bid can be liable for legal penalties, but contractors can also underbid in good faith, underestimating rising materials prices, for example, or failing to anticipate problems which could delay the time frame of the job. This is why the construction bid for the lowest amount of money and the smallest possible time frame does not necessarily win the contract, as the person evaluating the bids may believe that another contractor has a more realistic image of the project, or more experience.

Specific formatting rules must be followed to submit a construction bid in many regions of the world, and information about how the bid should be formatted and submitted is usually available when organizations put out requests for construction bids. Busy construction companies may have a specialist on staff who focuses on writing bids, maintaining community contacts, and keeping up on potential projects of interest.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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