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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 Montana 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 Montana 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 Montana Construction Bidding?
Montana does not issue a single statewide “general contractor” license for most commercial building work. Instead, the Montana Department of Labor & Industry (DLI) requires Construction Contractor Registration (CR) for construction employers (it’s not a license—no exam—and is used to verify workers’ comp compliance). Independent contractors without employees typically obtain an Independent Contractor Exemption Certificate (ICEC). A “bid-only” CR is available if you’re only bidding in Montana and will be upgraded before performing work.
Solar installations. Montana does not have a separate statewide “solar contractor” license, but electrical permits are required for all solar PV systems, and commercial solar work must involve a Montana-licensed electrical contractor. Many jurisdictions also require local building/zoning permits. In practice, that means companies contracting with homeowners to install PV must use (or be) a licensed electrical contractor for the electrical work.
Core trades. Electricians and electrical contractors are licensed through the State Electrical Board; plumbing is licensed through the Board of Plumbers. Montana does not license HVAC/mechanical contractors at the state level (separate from licensed boiler operators), though local jurisdictions may impose their own business/contractor requirements.
Bid security. For MDT highway lettings, a proposal guaranty of at least 10% of the bid is required, provided by the bid bond issued by a surety authorized in Montana. More broadly, state law specifies permitted forms of bid security (cash, cashier’s check, certified check, bank draft, or bid bond) and allows agencies to waive bid security for building/construction projects under $150,000 (different rule for school districts).
Performance and payment bonds (Montana’s Public Works Contractor’s Bond Act). On most public building or construction contracts, the awarding agency must require security guaranteeing performance and payment. By statute, the bond amount is generally the full contract price (cities/towns may set a different amount by ordinance, but not less than 25% of the contract). Governmental entities may waive the bond requirement for projects under $150,000 (school districts have a much lower waiver limit).
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 Montana Construction Bidding Process
- State-level credentials and business registration. Montana does not issue a single statewide “general contractor” license. Instead, contractors with employees must hold Construction Contractor Registration (CR) through the Department of Labor & Industry (DLI); sole operators typically work under an Independent Contractor Exemption Certificate (ICEC). Core trades are licensed statewide: electricians through the State Electrical Board and plumbers through the Board of Plumbers. Montana does not have a statewide HVAC/mechanical contractor license, though mechanical work is subject to permits under the state mechanical code and any local rules; many HVAC firms operate with CR/ICEC and obtain project permits as required. For solar, commercial work requires a licensed electrical contractor and an electrical permit; there is no separate “solar installer” license. Business entities—domestic or foreign—register with the Montana Secretary of State.
- Building codes and plan review. Montana adopts and amends model codes statewide (including the 2021 IBC, IRC, IEBC, IMC, IFGC, IECC; 2020 NEC; 2021 UPC; ICC A117.1-2017). Certified local jurisdictions enforce these codes; in non-certified areas, DLI’s Building Codes Program performs plan review and permitting. Montana’s 2021 IECC (with Montana amendments) is the current energy code. Local enforcement must follow the state-adopted editions and Montana-specific amendments in ARM.
- Environmental and water-resource permits. Projects that disturb one acre or more require stormwater coverage under Montana DEQ’s MPDES Construction General Permit before land disturbance. Work in or near streams often requires a 310 Permit (for private projects through local Conservation Districts) or a SPA 124 permit (for government agencies). Activities that place fill or structures in waters or wetlands may need U.S. Army Corps of Engineers Section 404 authorization and state Section 401 water quality certification from DEQ. If the work uses the bed of a navigable river (below the low-water mark), obtain a DNRC Land-Use License/Lease/Easement. Development in mapped floodplains requires a local floodplain permit.
- Insurance requirements. Montana’s Workers’ Compensation Act generally requires every employer to carry workers’ compensation coverage (with limited statutory exemptions); ICEC holders are exempt from coverage on themselves but not on any employees. There is no universal statewide general-liability mandate for all contractors, though owners (especially public owners) commonly require liability limits in contract documents.
- Public works bidding and prequalification. State solicitations are posted and conducted through eMACS. For goods and services, formal solicitations are used at $100,000 and above (agencies use limited solicitations from $10,000 to under $100,000). The Montana Department of Transportation (MDT) runs highway lettings on set dates using AASHTOWare Project Bids/Bid Express; prequalification is not required except for certain specialty work categories.
- Bid security and final bonds. On state and local public construction bids, Montana law requires bid security of 10% of the bid (cash, cashier’s/certified check, bank instruments, or bid bond). After award, performance and payment bonds are required; public entities may waive these bonds only for projects under $150,000 (or under $7,500 for school districts). Bond security must cover at least the contract amount.
Montana Bid Network
Contractors and suppliers looking for State and local work in Montana track two main platforms:
- eMACS (State Procurement Bureau). eMACS—the electronic Montana Acquisition & Contracting System—is the State’s e-procurement portal for vendor registration, profile and commodity-code maintenance (Montana Commodity Codes), viewing/responding to online solicitations when enabled, and managing contracts and payments. Vendors register in eMACS and, after selecting applicable commodity categories, can receive email notifications when matching opportunities are posted.
- MDT Bid Letting via AASHTOWare Project Bids/Bid Express. All highway, bridge, and maintenance lettings for the Montana Department of Transportation (MDT) are advertised on MDT’s Contracting & Bidding pages. Bidders prepare proposals in AASHTOWare Project Bids and submit them electronically through Bid Express, including electronic bid-bond verification. MDT generally does not require prequalification to submit construction bids (only for certain specialty work). Letting schedules, addenda, bid tabs/abstracts, and award information are posted online.
Because eMACS and MDT’s Bid Express workflows are designed for government-to-business (G2B) and business-to-business (B2B) transactions, they do not facilitate direct consumer sales. By registering in eMACS (the State’s integrated procurement system) and keeping company and commodity data current, vendors gain broad visibility into statewide contracting and can receive automatic alerts when new opportunities align with their profile.
Succeed in the Montana Construction Bidding Process
To succeed in the Montana 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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