The competitive bidding process, the most prevalent procurement method, used to control construction costs for owners. Now-a-days projects are very complex, and the best possible quote is treated as a compelling criterion for selecting a contractor. Poor management of the process may lead to the delay of project or a project over budget or both.
In traditional design-bid-build, price is considered to be the primary factor for determining who will win the project. The contract will be handed over to the contractor who will submit the lowest price.
The RFP, alias Invitation to Tender (ITT) or Request for Information (RFI), creates the cornerstone of this bidding process. For low-bid-selection, that generally connected with traditional design-build project delivery, utilizes the invitation for Bids (IFB).
Best value selection utilizes a Request for proposal (RFP), and qualifications based selection employs a Request for qualification (RFQ). RPF may be termed as a solicitation document, submitted by the owner, asking pricing and a technical solution for design and/or construction services.
After the completion of the design by design team, a number of construction companies or construction management companies are required to arrange a bid for the work, either based directly on the design, or on the basis of drawings and a bill of quantities provided by a quantity surveyor. A construction company participating in a bid always offers a quote that is lower than the actual cost of the project.
Construction bidding process starts with a set of contract documents. These contract documents include plans and specifications submitted by architects to the building contractors to generate free estimates for the cost of construction in detail. After reviewing all the plans and specifications the contractors make an estimate for the cost of the project. The estimate consists of all of the materials, labor, equipment, subcontracts, overhead, and profit required for the job. The estimates are then compiled into a sealed bid form and are submitted to the owner on a particular day and at a particular time. The sealed bids are opened and the owner will generally award a contract to the lowest responsible bidder.
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