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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 New Jersey 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 New Jersey 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 New Jersey Construction Bidding?
New Jersey does not issue a single statewide “general contractor” license for all construction. Instead, requirements depend on the type of work:
- Home improvement work on existing residential property generally requires registration as a Home Improvement Contractor with the New Jersey Division of Consumer Affairs, including at least $500,000 in commercial general liability insurance and use of the HIC registration number in contracts and advertising.
- New home construction requires registration under the New Home Warranty Program administered by the Department of Community Affairs.
- Many municipalities add their own licensing/registration rules. There is no broad “handyman” exemption—if you perform covered residential work for compensation, assume registration, permits, and code compliance are required.
Solar installations. New Jersey does not maintain a separate statewide “solar contractor” license. Solar PV systems must comply with the Uniform Construction Code; electrical components must be installed by or under the supervision of a New Jersey-licensed electrical contractor, with required local construction/electrical permits and inspections.
Core trades. Electrical, plumbing, and HVACR contractors are licensed at the state level by their respective boards. Local jurisdictions may impose additional journeyman/permit-holder or business registration requirements.
Doing business with the State of New Jersey. Vendors register in NJSTART, the State’s e-procurement portal, to receive notices, maintain profiles and NIGP commodity codes, and respond electronically to many State solicitations. Contractors typically must obtain a New Jersey Business Registration Certificate and, for prevailing wage public works, Public Works Contractor Registration with the NJ Department of Labor and Workforce Development before award or as specified in the solicitation.
Highway and bridge lettings. The New Jersey Department of Transportation (NJDOT) advertises highway and bridge projects and conducts electronic bidding (including Bid Express/AASHTOWare Project Bids where designated). Prime contractors must be prequalified with NJDOT in appropriate work classes and dollar limits before bidding on qualifying projects.
Bid security. New Jersey public works solicitations commonly require a bid guarantee equal to 10% of the bid (capped at $20,000) plus a consent of surety, in accordance with State and Local Public Contracts Law. Exact requirements are set in the bid documents and must be checked for each project.
Performance and payment bonds. Under New Jersey’s Little Miller Act (N.J.S.A. 2A:44-143), performance and payment bonds are required for public contracts exceeding $200,000, though some state agencies and local units with Qualified Purchasing Agents (QPAs) have lower advertisement thresholds (currently $53,000 as of July 2025).
Other public-works particulars. New Jersey public-works laws and many bid forms require listing of key subcontractors, verification that primes and subs hold Business Registration and Public Works Contractor Registration, and award to the lowest responsible bidder consistent with State and local procurement statutes. Certain State building projects also require Division of Property Management & Construction (DPMC) prequalification and compliance with agency-specific bonding and classification rules.
Important 2026 Update: Under the revised Contractors’ Business Registration Act (CBRA), New Jersey home improvement contractors are now required to secure a compliance surety bond (ranging from $10,000 to $50,000 based on contract volume) to maintain their registration. This is a new requirement as of 2025, designed to increase financial security for consumers.
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 New Jersey Construction Bidding Process
- State-level credentials and business registration.
New Jersey does not issue a single universal “general contractor” license. Requirements depend on work type. Home improvement contractors working on existing residential property must register with the NJ Division of Consumer Affairs as Home Improvement Contractors and maintain at least $500,000 in commercial general liability insurance (higher for certain categories under recent updates). New home builders must register under the New Home Warranty Program administered by the Department of Community Affairs. Core trades (electrical, plumbing, HVACR) are individually licensed at the state level; unlicensed practice is prohibited. Solar installations do not require a separate “solar” license; PV work must be performed under the Uniform Construction Code by or under a licensed electrical contractor with required local permits. Business entities (domestic and foreign) contracting in New Jersey generally must register with the Division of Revenue & Enterprise Services and obtain a Business Registration Certificate, and contractors on public works must hold Public Works Contractor Registration where prevailing wage applies.
- Building codes and plan review. New Jersey uses a statewide Uniform Construction Code (UCC) (N.J.A.C. 5:23), adopted and enforced by the Department of Community Affairs and local construction offices. The UCC incorporates model codes (IBC/IRC and related I-codes, NEC, etc.) and New Jersey-specific amendments; the same framework applies to State building projects, with DCA or authorized agencies as enforcing authority. Energy provisions are implemented through the UCC’s adopted energy subcodes (IECC-based) and enforced at the local level through permitting and inspections.
- Environmental and water-resource permits. Construction activities may trigger New Jersey Department of Environmental Protection (NJDEP) approvals. Land disturbance meeting NJPDES thresholds (e.g., typical 1+ acre) generally requires coverage under the Construction Activity Stormwater General Permit (5G3), obtained through NJDEP’s e-permitting system and coordinated with Soil Conservation District erosion/sediment control approvals. Work in freshwater wetlands, transition areas, or coastal/tidal areas requires permits from NJDEP’s Land Use Regulation Program; New Jersey has assumed the federal Clean Water Act §404 program for most inland waters, with NJDEP permits serving as both state and federal authorization (subject to Corps jurisdiction in certain tidal/interstate waters). Development in mapped floodplains typically requires local floodplain development approval consistent with NFIP and any applicable NJDEP flood hazard rules.
- Insurance requirements. New Jersey law requires workers’ compensation coverage for virtually all employers with one or more employees (or approved self-insurance); proof is often verified on public projects. here is no universal statewide commercial general liability mandate for all contractors. However, registered home improvement contractors must maintain minimum GL coverage. Public owners and prime contracts commonly prescribe specific GL, auto, and excess/umbrella limits as part of bid and contract conditions.
- Public works bidding and prequalification. State goods and many services/construction solicitations are posted and administered via NJSTART, New Jersey’s statewide e-procurement portal; vendors must register and maintain current profiles and NIGP codes. State building projects often require Division of Property Management & Construction (DPMC) prequalification in designated trade categories and dollar limits. The New Jersey Department of Transportation (NJDOT) advertises transportation projects and conducts electronic bidding (including via Bid Express/AASHTOWare Project Bids); prime contractors must be prequalified with NJDOT before bidding on qualifying highway and bridge work.
- Bid security and final bonds. For many public construction contracts, New Jersey law requires a bid guarantee of 10% of the bid amount, not to exceed $20,000, plus a consent of surety, as set out in N.J.S.A. 40A:11-21 and related provisions; always follow the specific solicitation. Under New Jersey’s Little Miller Act (N.J.S.A. 2A:44-143 et seq.), public owners must require performance and payment bonds, generally up to 100% of the contract price, from a surety authorized to do business in New Jersey, with additional conditions for larger bond amounts.
New Jersey Bid Network
Contractors and suppliers looking for State work in New Jersey track two primary platforms:
- NJSTART (Division of Purchase and Property). NJSTART is the State of New Jersey’s e-procurement portal for vendor registration, maintaining company profiles and NIGP commodity codes, viewing and responding to online solicitations, and managing contract awards. Vendors seeking to do business with most Executive Branch agencies are expected to register in NJSTART. Registration enables electronic submission of quotes/bids where applicable and email notifications when opportunities matching selected commodity codes are posted.
- NJDOT Bid Letting via Bid Express / AASHTOWare Project. Highway, bridge, and maintenance construction lettings for the New Jersey Department of Transportation (NJDOT) are advertised on NJDOT’s Construction Services / Procurement pages, with plans, addenda, bid tabs, and award information accessible online. Bidders submit proposals electronically through Bid Express, which interfaces with AASHTOWare Project tools and supports electronic bid-bond validation. NJDOT requires prime contractors to be prequalified before bidding, based on financial capacity and experience, under its published contractor prequalification requirements.
Because NJSTART and NJDOT’s Bid Express/AASHTOWare workflows are designed for government-to-business (G2B) and business-to-business (B2B) transactions, they do not facilitate direct consumer sales. By registering in NJSTART and keeping your vendor profile and commodity codes current, you gain statewide visibility and automated alerts for matching State solicitations.
For local government opportunities, many New Jersey counties, municipalities, school districts, and other public purchasing entities either (i) participate in the State’s Cooperative Purchasing Program and use NJSTART Marketplace to buy from Statewide contracts, or (ii) maintain their own e-procurement or bid-notice portals. Vendors interested in local work should monitor NJSTART as well as the designated purchasing sites of targeted local entities.
Succeed in the New Jersey Construction Bidding Process
To succeed in the New Jersey 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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