Alabama Construction Bidding Process

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Alabama Construction Bidding Process

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What is the Bid Process in Construction?

The construction bidding process involves five steps: bid solicitation, bid submission, bid selection, contract formation, and project delivery. For a contractor in Alabama to achieve success in the construction bidding process, you need to plan and improve in each of these areas. 

If you’re a new contractor or are looking to secure more bids more often, follow our guide below. 

What Should a Construction Bid Include?

Successful construction bids generally contain the total cost of building the structure, including expenses for subcontractors, general contractors’ costs, overhead profit, and scope of work. A bid will also need to contain information such as company details, the date, a clear definition of the work, and a project name. Without all of these elements combined, you may not meet the necessary standards. 

How Do You Estimate a Construction Bid?

An accurate estimate is not only vital for winning a bid but it can also determine which Alabama Construction bonds you may need. A professional estimate will include: 

  • Direct costs: This includes materials, labor, and equipment expenses tied directly to construction activities.
  • Indirect costs: Consider costs that don’t involve direct construction work, like permits, utilities, security, quality control, administration, and legal fees.
  • Labor hours: Wages paid to construction teams should be factored in, including potential overtime.
  • Subcontractor expenses: Don’t forget to calculate costs associated with hiring subcontractors for specialized tasks like plumbing, electrical work, or HVAC installation.

What Are the Five Steps in the Process of Bidding?

  1. Bid Solicitation: This is when the project owner or general contractor invites contractors to submit bids.
  2. Bid Submission: Contractors prepare and submit their bids with all necessary details, such as pricing, scope of work, and deadlines.
  3. Bid Selection: The owner of the project will look over bids, including the contractor’s costs, qualifications, and the scope of work suggested. Based on this information, they will choose a bid they believe is best. 
  4. Contract Formation: Once the project owner chooses a bid, they will set up a contract with the winning contractor. 
  5. Project Delivery: At this phase, the contractor will begin work on the project and secure any further surety bonds they may need. 

What Licenses and Bonds Do You Need for Alabama Construction Bidding?

In Alabama, contractors will need a valid contractor’s license in order to bid on state or federal construction projects. 

In Alabama, a contractor generally must hold a valid license issued by the Alabama Licensing Board for General Contractors in order to bid on and perform construction work on public (state) projects valued at or above certain thresholds. Federal projects located in Alabama also typically require compliance with state licensing laws unless a specific federal exemption applies.

Most public projects will also require certain surety bonds, such as bid bonds, performance bonds, and payment bonds.

It’s imperative to work with a professional surety bond agency, like Surety Bond Professionals, that knows how to secure bonds successfully at the best rate so you can submit a competitive bid. 

Common Mistakes Made While Bidding

Even a well-prepared contractor can be rejected for a bid. Some common reasons this might happen are:

  • Incomplete documentation, such as proof of bonds and licenses.
  • Inaccurate cost estimates, where your estimate is much higher or lower than average.
  • Lack of experience – unproven track record.
  • Simple mistakes, like not following the guidelines for the bid strictly or missing paperwork.
  • Ambitious timelines, if your proposed timeline does not align with the average timelines submitted you may face rejection.

State vs. Federal Bids?

Understanding the difference between state and federal bids can help you stay compliant when you submit your bid. 

Topic State Federal
Procurement Laws and Regulations State-specific procurement laws and regulations, varying by state. Must comply with the Federal Acquisition Regulation, which is stricter and more rigorous.
Bonding Requirements Often need state licensing and bonds like bid bonds and performance bonds. Also needs bonds but is often required from a federally approved surety company.
Project Scope Projects can range from small repairs to large public works in a specific area. Contracts can be large-scale, spanning multiple states.
Set-Aside Programs Some states have set-aside programs for small businesses, minority-owned, or veteran-owned businesses, but this varies. The federal government has many set-aside programs for small businesses, veteran-owned, women-owned, and disadvantaged businesses through programs like 8(a) or HUBZone.
Competition Often limited to nearby areas, reducing competition. Open to contractors nationwide, increasing competition and opportunities.

Unique Aspects of the Alabama Construction Bidding Process

  1. In Alabama, most construction projects exceeding certain cost thresholds require a license from the Alabama Licensing Board for General Contractors. Currently, any commercial or industrial project of more than $50,000 and residential projects of more than $10,000 (including swimming pools) typically necessitate a state-issued general contractor license, though these amounts may be subject to change. Additionally, trades such as electrical, plumbing, and HVAC work require specialized licenses from their respective Alabama state boards. Local municipalities may impose further permitting or registration requirements, so it is crucial for contractors to verify local regulations before beginning a project.
  2. Construction projects in Alabama must comply with state-adopted codes and any local building regulations. Many jurisdictions in Alabama have adopted versions of the International Building Code (IBC) and International Residential Code (IRC), sometimes with modifications to address the state’s climatic and geographical conditions. Particular attention is paid to wind loads in coastal regions, where storms and hurricanes are more common. Moreover, while Alabama does not enforce a statewide energy code for all residential buildings, many localities voluntarily adopt energy standards that encourage efficient, sustainable building practices.
  3. Projects near wetlands, waterways, floodplains, and coastal areas in Alabama may fall under the jurisdiction of the Alabama Department of Environmental Management (ADEM). Depending on the scope and location of the work, additional permits and oversight may be required, especially where sensitive ecosystems or water quality could be affected. In some instances, federal agencies such as the U.S. Army Corps of Engineers also have authority—particularly when projects impact navigable waters or wetlands—necessitating adherence to federal regulations and permitting processes.
  4. In Alabama, most employers with five or more employees are required to provide workers’ compensation insurance. While there is no universal state mandate for general liability insurance for all contractors, having a robust general liability policy is strongly recommended and often required by project owners or lenders. Carrying appropriate insurance not only satisfies many contractual obligations but also helps mitigate financial risks associated with accidents, property damage, or other liabilities.
  5. Alabama’s public contracting is governed by the Alabama Public Works Law and other relevant statutes, which mandate competitive bidding for public projects exceeding certain dollar thresholds. This bidding process is intended to ensure transparency and cost-effectiveness for taxpayer-funded contracts. Contractors wishing to bid on public work must meet all qualification criteria, follow the specified bid submission procedures, and comply with bonding and insurance requirements. The lowest responsible and responsive bidder typically secures the contract, although final awards may also consider factors such as contractor qualifications, experience, and adherence to project specifications.

Alabama Bid Network

In Alabama, contractors and suppliers seeking bidding opportunities can explore the Alabama Business Registry and Bid System. This official platform offers a comprehensive list of current public and private procurement solicitations—including bid advertisements, Requests for Proposals (RFPs), Requests for Qualifications (RFQs), and Requests for Information (RFIs)—along with recent awards and bid results. It operates primarily in a government-to-business (G2B) and business-to-business (B2B) capacity, aligning with Alabama’s requirements for competitive bidding under the Alabama Public Works Law and relevant state statutes.

Prospective bidders can use the site to stay informed about projects from state agencies, municipalities, educational institutions, and even some private organizations looking to partner with qualified vendors. Detailed project scopes, submission requirements, and legal guidelines are typically provided within each solicitation, ensuring transparency, fairness, and compliance with Alabama’s public procurement regulations. Because the platform focuses exclusively on G2B and B2B interactions, it is not a venue for business-to-consumer or consumer-to-consumer transactions.

Succeed in the Alabama Construction Bidding Process

To succeed in the Alabama construction bidding process, you need accurate estimates and documentation as well as a solid grasp of the requirements and nuances of state vs federal bids.

However, one of the most important components of your bid is securing the right surety bonds, such as bid bonds, performance bonds, and payment bonds. When you choose a reliable surety bond agency, you can feel confident that your bond will meet all legal and regulatory requirements. At Surety Bond Professionals, we know the challenges you may face and are here to support you with all your bond needs. Contact us today for a quote.

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