Surety Bond Professionals is a family-owned and operated bonding agency with over 75 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs.
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 Arizona 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 Arizona 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?
- Bid Solicitation: This is when the project owner or general contractor invites contractors to submit bids.
- Bid Submission: Contractors prepare and submit their bids with all necessary details, such as pricing, scope of work, and deadlines.
- 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.
- Contract Formation: Once the project owner chooses a bid, they will set up a contract with the winning contractor.
- 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 Arizona Construction Bidding?
In Arizona, contractors bidding on public construction projects must meet specific licensing and bonding requirements to ensure compliance with state laws and regulations. Contractors are required to hold an active license issued by the Arizona Registrar of Contractors (ROC), which classifies licenses based on the type and scope of work being performed.
Additionally, for most public projects, state or federal, contractors must provide a bid bond, which guarantees that they will honor the terms of their bid if selected. Once a contract is awarded, performance and payment bonds are typically required to protect the project owner and ensure that subcontractors, suppliers, and workers are paid in full. These bonding requirements align with Arizona’s competitive bidding statutes, which aim to promote fairness and accountability in the procurement process for taxpayer-funded projects.
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 price 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 Arizona Construction Bidding Process
- In Arizona, most construction work requires a valid contractor license issued through the Arizona Registrar of Contractors (ROC). Contractors must hold an active license before offering, bidding on, or performing construction services. Specific trades—such as electrical, plumbing, or HVAC—may require additional specialized licenses. Local municipalities, such as Phoenix, Tucson, or Mesa, may impose further permitting or registration requirements, so contractors should verify local regulations before starting a project.
- Construction in Arizona must comply with applicable building codes, often based on the International Building Code (IBC) and International Residential Code (IRC). Many jurisdictions modify these codes to address Arizona’s unique conditions, such as extreme heat, arid environments, and soil stability. While there is no single statewide energy code, local jurisdictions or state agencies may adopt energy-efficiency standards, particularly for residential and commercial structures, to encourage sustainability and reduce energy consumption.
- Projects near sensitive environments such as wetlands, waterways, or floodplains in Arizona may fall under the jurisdiction of the Arizona Department of Environmental Quality (ADEQ). Depending on the project’s scope and its potential impact on ecosystems or water quality, additional permits, studies, or inspections may be required. Federal agencies, including the U.S. Army Corps of Engineers, may also have authority over certain activities that affect navigable waters or protected wetlands, necessitating compliance with federal regulations.
- Under Arizona law, employers with one or more employees are generally required to provide workers’ compensation insurance, subject to specific exemptions. While Arizona does not mandate general liability insurance for all contractors, carrying such coverage is strongly recommended and is often required by project owners or lenders. Adequate insurance coverage helps mitigate financial risks from accidents, property damage, or other liabilities and is frequently a prerequisite for obtaining contracts.
- Arizona’s public contracting is primarily governed by the Arizona Procurement Code (ARS Title 41, Chapter 23) and related statutes, which set forth competitive bidding requirements for public projects exceeding certain monetary thresholds. This process ensures transparency and cost-effectiveness in awarding taxpayer-funded contracts. To bid on state or publicly funded projects, contractors must meet qualification standards, follow prescribed bidding procedures, and fulfill bonding requirements such as bid, performance, and payment bonds. Typically, contracts are awarded to the lowest responsible and responsive bidder, though factors like experience, qualifications, and adherence to project specifications may also influence the final selection.
Arizona Bid Network
In Arizona, contractors and suppliers seeking bidding opportunities can explore the Arizona Procurement Portal (APP) and other state-managed platforms. These official systems provide a comprehensive list of public procurement solicitations, including bid advertisements, Requests for Proposals (RFPs), Requests for Qualifications (RFQs), and Requests for Information (RFIs), as well as information on recent awards and bid results. They operate primarily in a government-to-business (G2B) and business-to-business (B2B) capacity, aligning with the Arizona Procurement Code (ARS Title 41, Chapter 23) and other relevant statutes that mandate competitive bidding.
Prospective bidders can use these portals to stay informed about projects from state agencies, municipalities, school districts, and other public entities seeking qualified vendors. Each solicitation typically includes detailed project descriptions, submission requirements, and legal guidelines, ensuring transparency, fairness, and compliance with Arizona’s public procurement regulations. As these platforms focus exclusively on G2B and B2B interactions, they do not support business-to-consumer or consumer-to-consumer transactions.
Succeed in the Arizona Construction Bidding Process
To succeed in the Arizona 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.
Call Us Today
Our surety bond professionals will help you grow your revenue by maximizing your surety capacity. Call us today!
