Michigan 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 Michigan 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 Michigan 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 Michigan Construction Bidding?

Michigan does not issue a single, statewide general contractor license for most commercial building work. Contractors who build, remodel, or coordinate trades on one and two-family dwellings must hold a Residential Builder license. At the same time, those performing a single specialty (e.g., roofing, siding, concrete) may obtain a Maintenance & Alteration Contractor license—both administered by LARA’s Bureau of Construction Codes. Electrical, plumbing, and mechanical/HVAC contractors are licensed statewide through LARA’s respective boards and must employ a properly licensed master in charge of code compliance. Michigan law leaves the registration of purely commercial builders to local building departments, which may impose their own bonding or competency rules as part of the permit process.

Before any state contract is awarded, a firm must:

File its legal entity with LARA’s Corporations Division,
Create a profile in the SIGMA Vendor Self-Service (VSS) system, the state’s official platform for solicitations, electronic bidding, and payment processing.

For construction solicitations expected to exceed $50,000, Department of Technology, Management & Budget (DTMB) bid documents require bid security equal to 5% of the bid price. Michigan’s Little Miller Act (Public Act 213 of 1963, MCL 129.201207) obliges the successful bidder on any state, county, or municipal construction contract over $50,000 to furnish performance and labor and material payment bonds. The statute sets a 25% minimum, but DTMB standard specifications call for 100% bonds on most projects.

Michigan contractors bidding on public projects over $50,000 should be prepared to furnish three key bonds:

Bid Bonds – Provide financial assurance that the bidder will honor their proposal and sign the contract if selected.
Performance Bonds – Guarantee that the project will be completed as agreed, even if unexpected issues arise.
Payment Bonds – Ensure subcontractors, laborers, and suppliers are paid in full, reducing the risk of liens and disputes.

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 Michigan Construction Bidding Process

State-level credentials and business registration. Michigan issues Residential Builder and Maintenance & Alteration Contractor licenses for one- and two-family work through LARA’s Bureau of Construction Codes; unlicensed individuals may not pull permits on jobs valued at $600 or more. Commercial “general contractor” credentials are not regulated statewide—cities and counties decide whether to license or simply register commercial builders. Core skilled trades are overseen at the state level: electrical, plumbing, and mechanical/HVAC contractors must hold licenses issued under the Skilled Trades Regulation Act and place a state-licensed master in responsible charge of code compliance. Every firm must form or qualify its entity with LARA’s Corporations Division and obtain a Michigan sales-and-use-tax license from the Department of Treasury before collecting or remitting tax. To do business with the State, vendors create a profile in SIGMA Vendor Self-Service (VSS)—Michigan’s e-procurement and payment portal.
Building codes and plan review. The Michigan Construction Code has adopted the 2021 International Building Code statewide and the 2021 Michigan Uniform Energy Code based on the 2021 IECC. Residential work remains under the 2015 Michigan Residential Code until the new 2021 edition, filed May 1, 2025, becomes enforceable on August 29, 2025. Local governments may adopt amendments more —but not less—stringent than the state code. Shoreline counties often add wind, snow-load, and erosion provisions for Great Lakes exposure. State-funded vertical construction is administered by DTMB’s Design & Construction Division under its Capital Outlay standards.
Environmental and water-resource permits. Sites that disturb more than one acre must file a Notice of Coverage and operate under EGLE’s Construction-Stormwater “Permit-by-Rule,” which ties into the Part 91 Soil Erosion & Sedimentation Control permit and requires weekly inspections by a certified operator. Any dredge, fill, or construction in wetlands, inland lakes and streams, floodplains, Great Lakes bottomlands, critical dunes, or high-risk erosion areas triggers the EGLE/USACE Joint Permit Application (JPA), which simultaneously satisfies state law (Parts 301, 303 & 325 of PA 451 of 1994) and federal Section 404/10 review.
Insurance requirements. Under the Workers’ Disability Compensation Act, an employer must maintain workers-comp coverage if it has 3 or more employees at any time or 1 or more employees working 35 hours per week for 13 consecutive weeks. Michigan imposes no blanket statewide general-liability rule, but nearly all public owners, lenders, and local building departments require adequate GL and umbrella limits as a condition of bidding or permit issuance.
Public works bidding and prequalification. The Management & Budget Act (1984 PA 431) and DTMB policy require competitive bids for State construction purchases expected to exceed $50,000, with solicitations posted in SIGMA VSS and a typical 14- to 20-day advertising window. All road and bridge lettings are advertised by the Michigan DOT (MDOT) and bid through Bid Express; contractors must hold an annual MDOT pre-qualification in the work classifications and dollar volume they intend to bid.
Bid security and final bonds. DTMB standard documents call for bid security of 5% on construction procurements over $50,000, usually in the form of a bid bond. Michigan’s Little Miller Act (PA 213 of 1963) requires the successful bidder on any state, county, or municipal construction contract over $50,000 to furnish a performance bond and a labor-and-material (payment) bond in amounts set by the awarding agency but not less than 25% of the contract price. DTMB and MDOT customarily specify 100% bonds. MDOT specifications mirror the statute and will not execute a highway contract until 100 % performance and payment bonds are on file.

Michigan Bid Network

Contractors and suppliers pursuing public work in Michigan monitor two primary platforms:

SIGMA Vendor Self-Service (VSS). Operated by the Department of Technology, Management & Budget, SIGMA VSS is Michigan’s 24-hour vendor portal for registration, browsing current and archived solicitations, downloading bid tabs and award notices, and (when permitted) submitting electronic bids. A single dashboard lets users filter opportunities for goods, services, A/E, and non-highway construction across State agencies and many local units of government. Keeping an active SIGMA profile—with the correct NIGP commodity codes—triggers automatic email alerts whenever matching solicitations post.
Michigan Department of Transportation (MDOT) Bid Express site. All road, bridge, and maintenance lettings—including tentative schedules, addenda, bid results, and award memos—are advertised on MDOT’s Bid Letting pages and bid electronically through Bid Express. Contractors must obtain an annual MDOT construction prequalification and appear on the “eligible bidders” list before the system will accept an uploaded proposal.

Because SIGMA VSS and MDOT’s Bid Express environment are built for government-to-business (G2B) and business-to-business (B2B) transactions, they do not facilitate consumer sales. By registering in SIGMA VSS—which feeds Michigan’s statewide financial systems—and keeping company data current, vendors gain full visibility into statewide contracting and receive automatic notifications whenever new opportunities align with their profile.

Succeed in the Michigan Construction Bidding Process

To succeed in the Michigan 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.