Bid Evaluation Steps
When it comes to publicly funded projects, federal, state, and local procurement laws often require that the projects be competitively bid. The bid evaluation process is crucial in determining the lowest responsive and responsible bidder who will be selected to build the project. However, there are some jurisdictions that allow contractors for publicly funded projects to be selected through a value-based selection (VBS) process.
Value-Based Selection (VBS)
In a VBS process, a public client considers other, more subjective criteria in addition to the bid amount when selecting a contractor. These criteria may include schedule, quality, and contractor personnel. For VBS to be successful, an objective way of evaluating subjective criteria needs to be established.
Multiple Prime Contractors
In some jurisdictions, clients for publicly funded projects are required to solicit bids from multiple prime contractors. The management of the multiple prime contractors may be assigned to one of the prime contractors or to a construction manager-adviser (CMa). Contractors may also be allowed to submit bids for more than one major category of work. Combined bids for several trades that are lower than the aggregate bid total for those trades can be awarded a combined contract.
Private Sector Bidding Process
The bidding process for privately funded projects is different from that of public sector projects in a number of ways:
- Prospective contractors may be prequalified or preselected based on client-defined criteria.
- “Invitation only” bids may be solicited.
- Enforcement of bidding rules and deadlines may be more flexible.
- Clients are not required to award the contract to the lowest responsive and responsible bidder but may weigh other criteria in the selection.
- The bids received can remain private and not be made public.
- The client may reject any of the bids for any reason.
If the bids exceed the project budget, private sector clients may negotiate with any of the bidders to arrive at a final bid amount. This is not possible for public sector clients.
Bid Evaluation: Qualifications of Prospective Bidders
When it comes to private sector clients, they may use a number of criteria to prequalify contractors, including:
- Financial responsibility and capacity
- Ability to provide the required bond security during the bid process.
- Ability to secure performance and payment bonds required by the contract.
- Payment of taxes and other obligations to public authorities
- Ability to secure insurance required by the contract.
- Demonstration that current workload allows the project to be properly staffed.
- Previous experience with projects of similar scope
- Special training, licensing, or certification
- Experience of personnel
- Specialized equipment, construction processes, or techniques
- History of claims and disputes
It is important for fairness and objectivity to guide private sector clients when soliciting and evaluating bids, to ensure that reputable contractors prepare bids for their projects.
Distributing Project Information
To ensure a fair bidding process and bid evaluation fair, all project information must be readily available to all prospective bidders. This includes complete written and graphic documents, as well as any supplemental information, addenda, or additional instructions. It is important that this information is distributed equally and at the same time to all bidders.
Methods of Distribution There are several common ways to distribute project information to all bidders, including:
- Providing documents and information at the client’s or architect’s office
- Sending documents directly to known bidders through invitation or prequalification
- Making documents available for purchase at a printing company, builders exchange, or similar distribution point
- Allowing bidders to acquire electronic versions of documents through project websites
Cost of Printing
The cost of printing sets of bid documents may be paid for by the client or the architect as a reimbursable expense. The owner-architect agreement often outlines how to handle this cost. Some clients may choose to charge bidders for the cost of printing, which is common when bidding is open to all contractors, but usually not for invited or prequalified bidders.
Electronic Dissemination
Disseminating bid documents electronically has several potential advantages, including cost savings, quicker information sharing, and a more environmentally sustainable process. This method also allows for easy compilation of lists of bidders.
Information Control Plan Regardless of the bidding process used, an information control plan should be established by the client and architect to guide the bidding process. This plan should include:
- Consistency with disclosure or privacy policies
- A clear definition of the document distribution process
- A quality control process to ensure all bidders receive the appropriate information
- Timely and fair distribution of supplemental information
- Maintaining integrity in the secure exchange of project information
- Documenting and distributing responses to oral inquiries in a timely and fair manner to all bidders.
During the bidding period for a construction project, contractors may have questions about the project, the documents, or the bidding requirements. These questions are typically submitted through a process called a Request for Information (RFI). The procurement documents should outline the procedures for contractors to submit RFIs to the owner or the architect, and these procedures should also be discussed at the pre-bid meeting. One person should be designated to receive all RFIs and ensure that they are answered and distributed to all bidders.
Substitution Requests
The procurement documents may also allow contractors to propose alternatives to specified products, suppliers, or systems. These proposals are called substitution requests. The instructions to bidders should define the information that the contractor must provide in order for a fair bid evaluation by the architect presented with a substitution request.
The proposed substitution information should include:
- A substitution request form, provided in the procurement documents, must be completed by the bidder making the substitution request.
- The bidder must provide documentation that demonstrates compliance with the performance criteria and design intent of the contract documents, including:
- A statement indicating why the specified product, fabrication, or installation cannot be provided.
- Coordination information, including a list of all changes to other portions of the work that will be necessary to accommodate the proposed substitution.
- A list of all modifications needed to other parts of the work, including construction performed by the owner and separate contractors.
- Detailed comparison between the significant qualities of the proposed substitution and those of the work specified, including an annotated copy of all applicable specification sections. Significant qualities may include attributes such as performance, weight, size, durability, visual effect, sustainable design characteristics, warranties, and other specific features and requirements indicated.
- Product data, including drawings and descriptions of products and of fabrication and installation procedures.
- Samples of the proposed product, where applicable or requested. Certificates and qualification data, where applicable or requested.
- Effects on the contractor’s construction schedule.
- A letter from the manufacturer stating the lack of availability or delays in delivery that will not allow the specified product or method of construction to be provided within the contract time.
- The contractor’s certification that the proposed substitution complies with the requirements in the contract documents, except as indicated in the substitution request: that it is compatible with related materials and that it is appropriate for applications indicated.
- The contractor’s waiver of rights to additional payment of time that may become necessary because of failure of the proposed substitution to produce indicated results.
All responses to a substitution request, whether acceptance or rejection, must be distributed to all bidders and issued in an addendum to the bid documents, making it part of the contract documents.
Addenda To Make Bid Evaluation Complete
Responses to RFIs and substitution requests, as well as construction document revisions generated by the owner/architect team, must be included in addenda and considered part of the contract documents. To have a responsive bid, each bidder must acknowledge receipt of all addenda. The information in the addenda that modifies the contract documents will be incorporated into the owner-contractor agreement. The instructions to bidders should stipulate a date after which no RFIs or substitution requests will be considered, giving bidders sufficient time to include addenda modifications in their bids.
It is important to note that the information provided in RFIs and substitution requests must be distributed to all bidders, and that any modifications made as a result of these requests must be included in addenda and considered part of the contract documents. This ensures that all bidders have access to the same information and are able to submit responsive bids.
Preparing and Submitting a Bid
As a contractor, submitting a bid for a construction project can be a significant investment of time and money. It is crucial to follow all requirements to avoid having the bid disqualified. In most cases, a bid is disqualified for one of two reasons: it is late or incomplete.
Instructions for Bidders
The instructions to bidders must clearly outline the exact form, time, and location for the acceptance of the bids. These rules must be strictly followed, especially for publicly funded projects. Late bids for publicly funded projects are typically disqualified and not opened. Privately funded projects do not have the legal requirement to disqualify late bids, but it is considered good practice to do so.
Bid Evaluation Form Completion
The instructions for completing the bid form must be clear and easily followed by all bidders. Each contractor must submit a clear and complete bid. The required information includes, at a minimum:
- An acknowledgment by the contractor of all bid documents used in preparing the bid
- The bid price
- The completion date for the project Additional information may be required, such as:
- Separate prices for phases and alternates
- Specific unit costs
- Proposed staffing
- Lists of subcontractors and suppliers
Subcontractors
Subcontractors are companies that perform a specialized portion of the overall work for a contractor. They follow the same pricing categories as contractors, such as construction costs, contingency, overhead, and profit. Subcontractors may also solicit bids from sub-subcontractors or suppliers. The owner/architect team provides procurement documents only to the bidding contractors unless the owner is also acting as the construction manager or contractor. The bidding contractors are responsible for providing construction documentation to bidding subcontractors to allow for complete and thorough subcontract bids.
Suppliers
Suppliers provide manufactured products or systems to subcontractors and, in some cases, the contractor. Typically, suppliers do not provide the labor required to install products or build the project; their work is limited to supplying the products.
In summary, preparing and submitting a bid as a contractor or subcontractor requires following strict instructions, providing all required information, and adhering to industry standards and good practices. Late or incomplete bids can be disqualified, so it’s important to invest the necessary time and effort to ensure the bid is complete and compliant.
Evaluating Bids for Construction Projects
Evaluating bids for construction projects is a critical step in ensuring a successful outcome. The process includes opening bids, tabulating and evaluating the bids, and awarding the contract to the chosen contractor. It is crucial that the bid evaluation is done objectively and fairly to ensure that the best contractor for the project is selected. The evaluation process starts with opening the bids, making sure that all the required information is provided and that the bids are properly completed. The bid administrator will then tabulate the pricing information for comparison and scrutinize the line items and attachments for errors. The process of awarding the contract for construction follows and it is important that the architect is involved in the development of the owner-contractor agreement to ensure consistency with the provisions of the contract documents and general conditions. The successful contractor will then have to submit proof of compliance with builder’s risk, workers compensation, and related insurance requirements before the agreement is executed and they are authorized to proceed with the construction of the project.
Bid Evaluation: Opening the Bids
As bids are received, it is important that they are stamped with the date and time of receipt (using clocks synchronized with national time standards). Any bid received after the stipulated time of bid should be returned to the bid-der unopened. After the time stipulated for their receipt, all qualified bid envelopes are opened. For publicly funded projects, the bid opening is often required to be in a forum open to the public, including the bidders. The bid forms should be quickly reviewed to determine that all required information is provided. Any incomplete bid forms are disqualified as nonresponsive. All properly completed bid forms are often read aloud. Final evaluation by the owner and architect may take days or weeks following the opening, depending on their complexity.
Tabulation and Evaluation of the Bids
Once the responsive and responsible bids have been opened and read, the bid evaluation administrator (owner, construction management consultant, or architect) will tabulate all the pricing information for a comparison of pricing information. The bid tabulation form should identify each bidder’s name, address, and phone number; the contract being bid; the form of bid security provided; the base bid; unit prices; and alternates. For complex bids, all line items and attachments must be carefully scrutinized to see that there are no errors. Determination of the low bidder may require detailed evaluation of alternate pricing, proposals, and attachments. Systematic evaluation will foster accuracy and reduce the likelihood of challenge by unsuccessful bidders.
If the bid amount of one bid is significantly lower than the others, this may be an indication of errors in the low bid. For a publicly funded project, the owner must have strong justification that the bid is erroneous before rejecting it. Even then, there is a risk of a legal challenge from the unsuccessful bidders. The owner of a privately is not required to accept the low bid, and may choose to reject a significantly lower bid rather than risk having to deal with the consequences of a contractor who cannot meet the bid commitment.
Awarding the Contract
Following the evaluation of the bids or the conclusion of negotiations, the owner will award a contract to a contractor. The owner-contractor agreement can be one of the standard AIA contractors, modified to meet the conditions of the project, or a custom contract prepared by the owners’ legal counsel may be used. It is important that the architect be involved in the development of the owner-contractor agreement to ensure it is consistent with the provisions of the contract documents, general conditions, and the owner-architect agreement. Clauses and conditions that prevent the architect from performing its contracted duties must be brought to the owner’s attention.
Before executing the agreement with the owner, the successful bidder or negotiated contractor will have to submit proof of compliance with builder’s risk, Workers compensation and related insurance requirements, a performance and payment bot required),and evidence of compliance with licensing laws and incorporation in state of the project. For publicly funded projects, evidence of compliance with equal employment opportunity laws in the project’s jurisdiction is often needed.
Upon completion of these negotiations, an agreement is executed, and the contractor is given the authorization to proceed with construction of the project.
Summary of a Fair and Impartial Bid Evaluation
In conclusion, the process of assessing bids is a crucial step in the construction project and it is essential that it is conducted in a fair and impartial manner to ensure that the best contractor is selected for the project. Throughout this blog post, we have discussed various aspects of the bidding process, including different delivery methods, procurement documents, and construction process categorization. We have also considered the benefits and risks associated with bidding or negotiation and why owners may choose one process over the other.
To summarize, the key takeaways from this blog post are:
- The delivery method chosen can greatly affect the bidding process and the procurement documents required
- Understanding the different methods for categorizing and describing construction processes is important in the bidding negotiation process
- Bidding and negotiation both have their own set of benefits and risks and owners must consider these when choosing a process
- Assessing bids is a critical step in the construction process and must be conducted in a fair and impartial manner
Furthermore, we have also reviewed the procedures for evaluating bids, for negotiating with potential contractors, and for selecting the contractor to build the project. Overall, it is clear that the process of assessing bids is a multi-faceted, complex task that requires careful consideration of all factors in order to select the best contractor for the job. It is important for owners to have a good understanding of the process and to take the time to evaluate all bids in a fair and impartial manner. This will help to ensure that the project is completed on time, within budget, and to the desired level of quality.
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