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 Texas 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 Texas 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 Texas Construction Bidding?
In Texas, contractors will need a valid contractor’s license in order to bid on state or federal construction projects. This lets the project owner know that you have the licensing requirements that adhere to state laws.
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 Texas Construction Bidding Process
- In Texas, licensing requirements for general contractors are typically managed at the local level by cities or counties. However, certain specialty contractors such as electricians, plumbers, and HVAC technicians must obtain licenses from the Texas Department of Licensing and Regulation (TDLR) or other relevant state agencies.
- Construction projects in Texas must comply with building codes adopted by local jurisdictions, which often include the International Building Code (IBC) and other relevant standards. The state has adopted the International Energy Conservation Code (IECC) to promote energy efficiency, but enforcement can vary by locality. Regional concerns such as hurricanes along the Gulf Coast, high winds, and flooding are addressed through specific building code requirements and amendments in affected areas.
- Contractors may need to obtain permits from state agencies such as the Texas Commission on Environmental Quality (TCEQ) and the Texas Parks and Wildlife Department (TPWD) for projects near wetlands, rivers, lakes, coastal areas, and other protected environmental zones. Stormwater permits and adherence to erosion and sediment control measures are commonly mandated. Federal agencies like the U.S. Army Corps of Engineers and the Environmental Protection Agency (EPA) may also have jurisdiction over certain projects, especially those impacting waterways and wetlands.
- In Texas, employers are not required by state law to carry workers’ compensation insurance. However, contractors working on public projects or for certain clients may be required to carry it. General liability insurance is not mandated by state law for all contractors but is highly recommended and often required by clients or project owners to protect against potential liabilities.
- Texas follows specific public procurement laws for public sector projects, as outlined in the Texas Government Code and other statutes to ensure transparency, fairness, and cost-effectiveness in awarding public contracts. These regulations typically require bidders to submit detailed bids, meet qualification criteria, and comply with bonding and insurance requirements.
Texas Bid Network
Visit the Electronic State Business Daily (ESBD) through the Texas SmartBuy portal at txsmartbuy.gov/esbd to view a list of current Texas bidding opportunities, recent awards, and bid results. The portal publishes procurement solicitations—including bid advertisements, Requests for Proposals (RFPs), Requests for Qualifications (RFQs), and Requests for Information (RFIs)—primarily from government agencies but also from some private organizations in Texas. It serves as a Texas government-to-business (G2B) and business-to-business (B2B) network. It is not a business-to-consumer or consumer-to-consumer site.
Succeed in the Texas Construction Bidding Process
To succeed in the Texas 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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