7 Reasons Construction Bids Fail (& How to Fix)

The tendering process in construction highly competitive and even small mistakes can cost you the contract.

The good news? Most of these errors are completely avoidable, when you know what to look for…

This article will outline the reasons why many construction bids fail and provide you with the information needed to ensure that you are maximising your chances of success.

Critical Errors in Construction Bid Preparation

Failure to prepare, is preparing to fail…

When preparing a construction bid, it’s important to spend time understanding the project scope, associated costs, and all of the provided tender documentation.  

To submit a strong and competitive bid, it’s essential to address every requirement outlined in the tender documents and ensure full compliance with the client’s expectations.

#1 Incomplete or Inaccurate Project Scope

Bidding for contracts in the construction sector can be a lengthy, tedious process, so you want to make sure that it definitely suits your company before you start.  

If you fail to understand a contract’s scope before submitting a bid, you risk being awarded a contract that isn’t suited to your company and its capabilities or preferences.  

This could ultimately lead to disputes, rejected bids, or even financial losses after contract award.

How can I avoid this?

The Invitation to Tender (ITT), along with the full set of construction tender documents, will clearly outline EVERYTHING the client is looking for as part of the construction tender process.  

These tender documents for construction often include key project details such as site conditions, material specifications, and timeline requirements. It’s important to ensure that they align with your company prior to submitting the bid. If possible, site visits are always valuable when ascertaining the suitability of a contract.

#2 Missing Information or Documents

Poorly organised bid submissions can result in disqualification, no matter how competitive your pricing is. There are several things that could get your bid disqualified, including:

• Forgetting to upload proof of certifications, insurances, or other required documents such as CVs.

• Submitting an unclear pricing document.

• Failure to mention how your company complies with the contract requirements.

How can I avoid this?

All ITTs will outline what documents need to be returned to the client, and some might even include a checklist that you can cross-check against.  

Additional documents needed – such as proof of certifications and accreditations – might be mentioned within the quality questions, so you need to make sure you are reading all documents closely.

#3 Underestimating Construction Material and Labour Costs

When completing a financial document as part of the construction tender process, many contractors will make the mistake of miscalculating material and labour costs. Often, this is due to outdated data or changes in personnel and could ultimately lead to financial losses throughout the contract term.  

Additionally, expenses such as waste disposal and permit fees are often overlooked when bidding for a contract, which can lead to unexpected costs after the contract award date.

How do I avoid this?

To make sure your financial document is completed correctly, it is a good idea to request updated quotes from your suppliers. You should definitely also consider wage variations, overtime and any required training expenses.

Getting this right is a critical part of learning how to tender for construction work successfully and profitably.

#4 Ignoring Market Fluctuations

Rapidly changing market conditions mean that throughout the contract term, there might be price variations that can result in financial losses for your company. When bidding for a construction tender, you must consider inflation, supply chain disruptions and seasonal labour shortages, to mitigate against any financial drawbacks throughout the contract lifecycle.

How do I avoid this?

You should regularly review market trends so that you can adjust your budget accordingly, to accommodate any potential price variations. When calculating your financials for the tender, you should consider project duration, market volatility, project type, supplier agreements and industry trends.

#5 Misjudging Profit Margins

When bidding for a contract, it can sometimes be tempting to offer a lower price than feasible, in order to be awarded the contract. However, this can be incredibly risky for your company, (especially if unforeseen costs arise) and can lead to you completing the contract with no profit.

How do I avoid this?

You need to consider business overheads and risk contingencies when calculating your proposed price, instead of making an attractive pricing offer just to secure the contract. A realistic, well-calculated profit margin not only protects your financial stability but also positions your company as reliable and professional.

#6 Inadequate Construction Risk Assessment Strategies

Failing to consider project risks can cause a bid to fail or even lead to financial loss post-award. Risks might include site conditions, supply chain delays, labour shortages or regulation changes.

How do I avoid this?

A thorough risk identification and mitigation plan should be made prior to submitting your bid, so that you are prepared for all potential project risks. These risks should consider all parts of your company, to ensure that you are effectively identifying all risks.

#7 Poor Client Communication During the Tendering Process in Construction

Sometimes, clients can be vague when communicating their priorities and any changes throughout the bidding period. Vague project scopes or late clarifications can sometimes mean that bidders miss important information that can ultimately lead to their bid being unsuccessful.  

For example, a client might release updated versions of tender documents and if the bidder submits the older version, they risk facing disqualification.

How do I avoid this?

Keeping up to date with all client communication is extremely important when bidding for a contract in any sector, not just the construction sector. This includes asking all clarification questions before the deadline, monitoring any emails or online updates from the client and making sure you have the correct tender documents.

Overwhelmed with Construction Tenders?

Bidding in the construction sector can be longwinded and complex, but it can be made easier with an organised, thorough approach.

While it can be done internally, professional bid writing companies like us at Bid Writing Service can significantly boost your chances of success through expert bid writing and end-to-end guidance throughout the entire bidding process.

Have a construction tender submission coming up? Why not utilise our expert construction tender writers? Contact us at michael.baron@bidwritingservice.com or lauren.moorhouse@bidwritingservice.com to discuss your needs, or, fill out the form below!