How to Develop Construction Bid Evaluation Criteria

How to Develop Construction Bid Evaluation Criteria

The contractors you choose can (quite literally) make or break your projects. That's why it's extremely important to develop clear, objective construction bid evaluation criteria to help you select the best fit for your needs.  

In this guide, we'll walk you through the key things you need to know about construction bid evaluation, including common evaluation methods, the criteria to use when going through bids, and how to conduct thorough bid reviews. 

Table of contents:

The Importance of Effective Bid Evaluation 

Conducted at the early stages of project planning, bid evaluation sets the foundation for project success by ensuring the right contractors are selected. It’s also essential for ensuring there is proper coverage on the project, without gaps in the scope or double coverage.  

Done right, bid evaluation enables you to mitigate risks, control construction costs, and secure high-quality work. On the flip side, poor evaluation can lead to risks and issues like: 

  • Cost overruns - Choosing the wrong partners can result in unforeseen expenses, change orders, and project scope creep that blow budgets. For example, underestimating material costs or labor requirements often forces contractors to submit multiple change orders. 
  • Delays - Inadequate contractor vetting can lead to scheduling conflicts or mismanagement, causing significant project timeline disruptions. 
  • Quality issues - Contractors who cut corners or lack the necessary expertise may deliver substandard work. At best, such problems lead to rework. At worst? The project could grapple with safety hazards and structural concerns. 
  • Compliance failures - Contractors unfamiliar with regulations or safety standards can expose your project to legal liabilities, fines, and reputational damage. 

Common Bid Evaluation Techniques 

The bid analysis process involves evaluating bids and selecting a contractor that aligns with project needs, budgets, and objectives. Here are some of the bid evaluation techniques commonly used by construction owners and general contractors

  • Price-based selection - This is a method often required for government projects, and it's where bids are awarded to the lowest cost proposal. For instance, a municipality might select the lowest bidder for road construction to stay within budget. 
  • Weighted evaluation - Decision-makers assign a "weight" to the bid evaluation criteria. Such factors can include cost, safety record, experience, etc. For example: A project team may assign 40% weight to cost, 30% to experience, 20% to safety record, and 10% to proposed timeline. From there, each bid is scored based on these criteria, and the scores are multiplied by their respective weights to calculate an overall weighted score for each contractor.  
  • Qualification-based selection - This method prioritizes specific factors over others. For instance, decision-makers could emphasize qualifications, certifications, or safety records over all other factors, such as cost. Commonly used for projects requiring specialized expertise or high safety standards, it helps ensure the contractor has the necessary skills and experience to deliver the owner's desired results.  

Key Criteria to Consider When Crafting Your Construction Bid Evaluation Checklist 

What exactly should you evaluate during the bid evaluation process? While your bid evaluation checklist may vary from one project to the next, focusing on these essential factors will put the right contractors on your radar. 

Price 

Price is a key consideration, but it shouldn't stand alone. Evaluate whether the bid aligns with your budget without compromising quality.  

Unless it's mandated, you want to avoid defaulting to the lowest bidder. Instead, focus on finding the best value for your investment. Be sure to factor in long-term costs like maintenance or potential rework

Experience and Qualifications 

Does the contractor have relevant experience in similar projects? Look for qualifications that demonstrate expertise in your specific project type or industry. A proven track record reduces risks and ensures a smoother construction process from start to finish.  

For instance, if you're building a healthcare facility, prioritize contractors who have completed similar projects, as they'll be familiar with specific requirements like systems for sterile environments or compliance with medical construction codes. 

Safety Record 

Safety should never be overlooked. A strong safety record demonstrates the contractor's commitment to worker well-being and regulatory compliance. When analyzing bids, make it a point to evaluate each contractor's safety training programs, accident history, and protocol. 

Let their track record speak for itself—contractors with comprehensive safety measures and low incident rates not only protect workers but also help you avoid delays, liabilities, and reputational damage. 

Project Schedule and Timeline 

Time is money in construction. When evaluating a bid, review the contractor's proposed timeline to ensure it aligns with your project deadlines. Look for realistic schedules backed by detailed planning to avoid costly delays and interruptions.  

Let's say you're working on a retail space renovation with a tight grand opening date. A well-prepared contractor might include a phased timeline showing specific milestones, along with buffers for potential delays. This level of detail demonstrates their preparedness and reliability. 

Quality Assurance and Control 

One of the best ways to evaluate quality is to determine how a contractor meets the necessary construction standards throughout the project. This could include reviewing their quality assurance programs, materials sourcing, and inspection routines. Be sure to ask for documentation of their processes and examples of past projects where they successfully maintained high standards. 

For instance, a contractor might use third-party inspections at critical milestones to verify structural integrity and ensure compliance with building codes. 

Financial Stability 

A contractor's financial health directly impacts their ability to complete your project. The last thing you want is for a construction company to run into financial trouble while working on your build.  

So, pay close attention to their financials when evaluating a contractor's bid. Assess their credit history, bonding capacity, and financial statements to ensure they have the resources to deliver on their commitments without delays or disruptions. 

Sustainability 

Sustainability is becoming increasingly important in construction, with regulators, consumers, and industry leaders placing greater emphasis on environmental responsibility. 

With that in mind, look for contractors who prioritize eco-friendly practices, energy-efficient materials, and waste reduction. Choosing someone with a green approach can also align your project with broader environmental goals and industry trends. 

Conducting Thorough Bid Reviews 

A comprehensive bid review involves several key steps: checking for accuracy and completeness, conducting an initial screening to eliminate unqualified bids, performing a detailed analysis of costs, and conducting reference checks to verify past performance. Bid review teams can also run into challenges like unclear proposals or bid discrepancies. To resolve these issues, establish clear evaluation criteria upfront and keep communication lines open with bidders. That way, everyone stays on the same page.   

Final Words 

Effective bid evaluation is one of the first steps you should take to reduce project risks. With that, having well-defined bid evaluation criteria helps make the selection process much easier. When you have clear bid evaluation checklist, you're able to thoroughly review bid proposals and make sure the contractor you consider meets your standards. 

When evaluating proposals, it's always best to keep in mind that you're not just choosing a contractor—you're laying the groundwork for a high-quality bid.  

Want to learn more about how you can level up your bid management workflows? With BuildingConnected Pro, you can manage the bidding process and find qualified subcontractors on the most up-to-date network of construction professionals.

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Emily Edelstone

Emily, a seasoned Technical Solutions Executive at Autodesk, brings a wealth of experience garnered over a decade within the construction industry. Emily has a strong background in estimating, planning, and managing complex and large-scale projects. She has worked with some of the leading companies in the sector, where she contributed to the delivery of high-quality and innovative solutions for clients across various markets. Leveraging her extensive knowledge base, she excels in guiding stakeholders in the construction sector towards optimal technology solutions, spanning the entire project lifecycle. Renowned as a trusted advisor within the industry, Emily is dedicated to assisting all in overcoming their most significant challenges. Her commitment lies in enhancing operational efficiency, minimizing rework, and optimizing cost savings for her clients. Actively engaged in both national and local industry events, Emily demonstrates a strong commitment to staying on top of industry trends. Additionally, her involvement extends to community service where she sits on the technology committee for San Diego ABC. Emily also has been working to educate others on technology through @designbuildladies on all social media platforms.
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