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How to Get Construction Bids
Finding construction contracts with government agencies and departments can be challenging even for experienced vendors, but with some careful planning and a little practice, construction businesses of all sizes can find lucrative contracts to bid on.
Tips & Strategies
Below are some tips, strategies and tactics that vendors can use to identify, research and get construction contracts in the public sector.
- Register your construction business with SAM. By registering your business with the System for Award Management (SAM), you become eligible to work with public sector agencies. In order to complete your SAM registration, you will need to have your DUNS business number, which can be obtained from Dun & Bradstreet. Make sure that you are precise about the kinds of construction work you do, because the description of your business in your SAM registration is what many potential customers will use to decide if you could be right for the job.
- Research the government entities in your area. Find out which local, state and federal agencies or departments are soliciting for products and services in your region. Visit their websites and take a look at some of the contracts awarded by their respective procurement departments in the past. This can give you an idea of what the agencies are buying, for how much, and from whom.
- Use a professional bid service. Bid services provide businesses with valuable information about public sector contract opportunities in their area. By signing up with a bid service, you can receive notifications about all relevant construction bids, saving you the time of researching bids on your own.
- Look up previous contract awards. You can find out a lot of valuable information by researching closed contract details published by the agency you want to contract with. Winning bidders, bid amounts, contract information and agency contacts can all be identified in closed contract information.
Types of Construction Contracts
There are several different types of construction contracts available to vendors. They are unit price contracts, lump sum contracts, cost-plus contracts, incentive contracts and percentage of construction contracts.
Unit price contracts are written to reflect the expected amount of individual construction items a project will require, multiplied by the unit price of each of those items. Unit price contracts are typically only used when both vendors and buyers have a good idea of how many “items” a construction job will need, and which brand or make of the items will be used.
Lump sum contracts are very straightforward, whereby the construction vendor and the buyer agree that a certain service will be performed, or a specific product will be produced, for a set price. These types of fixed-price contracts should only be undertaken when both buyer and vendor have an accurate estimation of the total costs of a project.
Cost plus contracts are a type of contract that are very favorable for the vendor, because the buyer agrees to pay all of the costs a vendor will incur to complete a project, as well as the vendor’s total profit, before work begins. In this way vendors can estimate their total anticipated costs, add an acceptable profit margin, and ask the buyer to agree to the total.
Incentive contracts are so-called because vendor payment for these types of contracts is based on whether or not the vendor meets an agreed-upon metric of success. These metrics might include quality of work completed, timeliness of a project, total budget expenditures, or other factors.
Percentage of construction agreements are a relatively rare type of contract that pays out a profit to a vendor based on a pre-determined percentage of whatever the total cost of a project turns out to be.