This guide offers strategies on how to get contracts for construction, including enhancing your business profile, mastering bidding techniques, and crafting winning proposals.
Table of contents
Whether you’re a veteran contractor or new to the field, you know winning construction contracts is essential for your business success. This is true whether you work in the government, commercial, public, or residential construction sector.
However, the process is often overwhelming, with complex bidding procedures, stringent requirements, and intense competition.
In this guide, I’ll explain everything you should know about how to get contracts for construction, including finding opportunities for construction bidding, preparing your business, and bidding effectively for different construction types.
- Construction contracts can be challenging to secure due to intense competition and complex bidding processes.
- Types of contracts include government, public, commercial, and residential contracts.
- To get construction contracts, you must first build a strong business profile and find bidding opportunities through various platforms.
- Effective bidding strategies involve understanding project requirements, competitively pricing projects, and showcasing strengths.
- Post-bid success includes handling rejection professionally, addressing bonding and insurance, and embracing ongoing learning and technology.
Understanding the Construction Contract Types
To understand how to get contracts for construction, you should understand the different construction contracts. Contracts can be categorized based on the contracting offices and parties involved and the nature of the agreement.
Contracts categorized by contracting parties
Federal contracting involves legal agreements with government agencies for varied government construction projects. These contracts are comprehensive, including scope, price, terms, and compliance with specific legal requirements.
- Pros: Long-term stability, potentially significant projects.
- Cons: Highly competitive contracts, complex bidding, and extended timelines.
Public contracts are similar to government contracts but extend to public sector organizations or entities. These might include public works or services funded for public benefit.
- Pros: Stable government-funded payments, growth potential.
- Cons: Detailed bidding, stringent regulations.
Private sector companies or individuals offer these contracts. They can range from small projects for a local business to large-scale developments like office buildings, retail spaces, hotels, and industrial facilities.
- Pros: Generally fewer regulations, more-straightforward bidding.
- Cons: Less stability, variable payment terms.
These are agreements between a contractor and a client for the construction, renovation, or repair of a residential property.
- Pros: Flexibility, personal engagement.
- Cons: Risk of delayed payments, local regulatory challenges.
Contracts categorized by agreement nature
Construction contracts can also be categorized based on the nature of the agreement:
- Fixed price contracts are also called lump sum contracts. The contractor agrees to complete the entire project for a fixed price, regardless of the actual costs incurred. This provides certainty for the owner but exposes the contractor to financial risk if costs exceed the agreed-upon price.
- Cost-plus contracts: The owner agrees to reimburse the contractor for all reasonable costs incurred, plus a markup or fee for profit and overhead. This provides less financial risk for the contractor but can be expensive for the owner if costs aren’t closely monitored.
- Time and materials contracts are suitable for projects where the scope isn’t clear. They charge the client based on the time the contractor spends and the materials they use.
- Guaranteed maximum price (GMP) contracts: This is a hybrid of cost-plus and lump sum contracts. The contractor agrees to a maximum price for the project, but if actual costs come in lower, the owner shares the savings. This can provide balance between cost predictability and contractor motivation.
- Unit pricing contracts, commonly used in civil construction projects, are based on estimated quantities of items and unit prices. The contractor receives pay for a predetermined price per unit of work completed, such as cubic meter of concrete poured or square meter of tile laid. This can be suitable for projects having unknown quantities or requiring flexibility.
- Design-build contracts involve both construction and design responsibilities and are ideal for any construction company with design capabilities.
Preparing Your Business for Contract Opportunities
Securing contracts involves preparing your business to meet the demands of potential clients and ensuring you’re seen as a reliable and capable contractor. Here’s how you can prepare your business for these opportunities.
Enhance your online business presence
Understanding how to get commercial construction contracts and other contract types involves knowing how to create an effective online presence. This involves creating an informative and engaging online profile and devising a strategic marketing plan tailored to your target contract types.
A robust online profile showcases your business’s capabilities, past successes, and areas of expertise. To attract diverse construction contracts:
- Ensure your online business profile is comprehensive and current, highlighting your company’s size, capabilities, and services.
- Include construction certifications and a portfolio of past projects with client testimonials to establish credibility.
- Regularly update your profile on professional networks and industry platforms to maintain visibility and showcase your expertise effectively.
💡 Pro Tip:
Different from an online profile, your website should serve as a digital storefront, clearly displaying your projects, client feedback, and unique strengths. It should be informative, user-friendly, and reflective of your company’s values and expertise.
For government contracts
Register and build a detailed profile on SAM.gov (System for Award Management). This is crucial for federal government contracts. Ensure all details are precise and highlight any special interest categories like women-owned or veteran-owned businesses. Include a compelling capabilities statement in your business profile, highlighting who you are, what you do, and why you’re uniquely qualified to execute projects.
Marketing tactics should include content marketing that aligns with government standards, use of government-related keywords, and active participation in relevant industry events.
For public projects
Emphasize your experience in public works and infrastructure on your online platforms. Tailor your marketing to showcase your ability to handle large-scale projects funded by public entities. Participating in community events and public forums can also bolster your visibility for these types of contracts.
For commercial contracts
Create a solid online profile on professional networks like LinkedIn. This should demonstrate your industry relevance and networking capabilities. Use direct outreach programs and digital marketing strategies tailored to the commercial sector. Highlight your past successes and client testimonials that resonate with commercial audiences.
For residential contracts
Create a strong local online presence. Maintain a strong Google Business Profile to ensure you rank in local map listings, and use social media platforms to engage with the local community. Use customer testimonials on social media to build trust and credibility.
💡 Pro Tip:
Incorporating sustainability and green building practices can make your proposal stand out in the eco-conscious market. Emphasize your commitment to eco-friendly methods, such as using sustainable materials and energy-efficient construction. Highlight green certifications like LEED (Leadership in Energy and Environmental Design).
Strengthen your company’s financial health
The next step to securing contracts is ensuring your business’s financial health is solid. This includes maintaining good credit, having necessary insurance, and securing lines of credit or bonding capacity. Strong financial standing assures clients of your business’s stability and capacity to handle projects.
Build a competent team
Invest in construction training, keeping your team updated with the latest industry trends and technology using relevant training courses. A skilled and knowledgeable team is crucial for delivering quality work and meeting project requirements effectively.
🧠 Did you know?
Connecteam’s employee training software is one of the best employee/job training apps for construction teams. Create custom courses from scratch in mere minutes and incorporate multimedia and quizzes to ensure retention, and track team progress in real-time.
Comply with laws and regulations
Compliance with legal and regulatory standards is non-negotiable. You must be well-versed in local, state, and federal construction laws, which govern everything from building codes to labor laws and safety regulations.
For government contracts, particularly, you must be aware of and comply with environmental regulations, which can be more stringent than in the private sector. Staying updated with these legal and regulatory requirements is essential to avoiding costly penalties and maintaining a reputable business standing.
🧠 Did You Know?:
Connecteam helps maintain regulatory compliance by providing tools for documenting safety procedures, employee documentations and certifications, and adherence to legal guidelines.
Finding Construction Contracts, Projects, and Clients
Once your business is ready, the next step is actively seeking and securing opportunities. Here’s how you can go about it.
Lead generation services
Lead generation services are invaluable for discovering upcoming projects and potential bids. Examples of such services include Dodge Data & Analytics, ConstructionWire by BuildCentral, and HomeAdvisor. These platforms provide detailed information on upcoming construction projects and are essential for staying ahead in the bidding process.
Subscriptions give you access to many opportunities, some that aren’t widely advertised. Select a service that aligns with your business’s market segment and geographical focus.
Networking for contract opportunities
In the construction industry, who you know can be as important as what you know. Forge connections with suppliers, local government officials, contractors, architects, structural engineers, real estate developers, interior designers, and more. Some of these professionals are often involved in projects early on, providing access to new opportunities and valuable insights. Some might even recommend you for projects.
Government contracting resources
For government contracts, use resources like the Federal Business Opportunities (FedBizOpps) website (now SAM.gov), which lists all federal government contracting opportunities. State and local government websites also often have similar listings. Familiarize yourself with these resources and check them regularly for new opportunities.
Public works departments
Local public works departments are good sources of information about upcoming public projects. Regularly visiting their offices or websites can keep you informed about potential opportunities.
Social media and professional networks
Platforms like LinkedIn can be helpful in networking and finding information about upcoming projects. Following companies and key figures in the industry can provide insights into potential opportunities.
If direct contracting opportunities are scarce, consider subcontracting. Working with a larger contractor as a subcontractor can provide valuable experience and lead to more opportunities in the future.
📚 This Might Interest You:
Read our guide on how to get clients for your construction business.
Crafting Winning Bids and Proposals
Mastering bid crafting and proposal development is essential for securing contracts. While these processes share common goals, each requires a distinct approach.
The difference between bids, quotes, and proposals
Understanding the bidding and proposal process is crucial for securing construction contracts. Bids, quotes, and proposals are ways of offering your services to a potential client, but they have different purposes and scopes.
Moreover, each has its solicitation requirements—rules and regulations that govern the bidding or proposal process. They’re usually issued by the client or agency that manages the project. They specify the format, content, and delivery of the bid or proposal, plus the evaluation criteria and award process. Complying with the solicitation requirements is essential, as they ensure a fair and transparent competition and avoid any disqualification or rejection of your bid or proposal.
Let’s have a look at each below:
- A bid is a document that specifies how much you’ll charge for a project based on the project specifications and requirements. Bids are usually for projects with precise and fixed needs, such as government or public projects. You typically submit bids in response to an invitation for bid (IFB) through a sealed bid process, where the lowest bidder wins the contract.
- A quote is a document that provides an estimate of a project’s cost based on the scope and details. Quotes are usually for projects with flexible and variable needs, such as residential or commercial projects. A quote is often sent in response to a request for quotation (RFQ), where the client can compare different quotes and choose the best one.
- A proposal is a document that describes not only the cost of a project but also the project approach, methodology, and other relevant specifics. Proposals are usually for projects with complex and unique needs, such as innovative or creative projects. A proposal is often submitted in response to a request for proposal (RFP), where the client evaluates the proposals based on various criteria, such as effectiveness, experience, and value.
The quoting process isn’t always formal. For example, in residential projects, clients may not always request a formal quote. They might instead opt for a more informal approach, directly discussing their needs and asking for an on-the-spot estimate.
The tips and strategies for offering your services for consideration
Whether you’re submitting a bid, quote, or proposal, your goal is to offer your services for consideration and convince the client that you’re the best choice for the project. Here are some tips and strategies to help you sell your construction services:
- Understand the client’s needs and expectations, including needs and scope of work, before writing your bid or proposal. Tailor your bid or proposal to align with what the client is looking for and show how you can meet or exceed their expectations.
- Offer the best value, not just the lowest price. “Best value” means the best combination of quality, service, and price. So, highlight your value-added services, such as after-project support or maintenance services, innovative solutions to improve project outcomes or efficiency, and risk-mitigation plans.
- Highlight your strengths and qualifications, such as your unique capabilities, relevant past successes, and testimonials or references. Provide evidence and examples to support your claims and demonstrate your credibility and reliability.
- Be clear and concise. Your bid or proposal should be easy to read and understand. Use clear headings, bullet points, and concise language. Avoid jargon unless it’s industry-standard and the client would understand it. Proofread and edit your bid or proposal for clarity, accuracy, and professionalism.
Following up and negotiating
After submitting your proposal, follow up with the client to confirm receipt and offer to answer any questions. If your proposal is accepted, be prepared to enter into negotiations. This could involve discussing project timelines, costs, and specific terms and conditions of the contract.
Tips for effective negotiation
- Tailor your approach based on the client’s specific requirements and constraints.
- Be transparent and concise about your capabilities and limitations.
- Aim for a win-win situation for long-term relationship building.
- Be open to compromise, but maintain firmness on critical aspects. Be prepared to walk away if terms aren’t favorable.
After the Bid: Next Steps
Once you’ve submitted your proposal, the process doesn’t end there. Whether your bid is successful or not, the next steps can impact your future prospects and ongoing projects. Here’s what to focus on after the bid.
Handling rejection and COC applications
If you don’t secure a contract, request feedback from the client or agency to understand why your company was not chosen. This information is valuable for improving future proposals.
Moreover, sometimes the first pick may fall through, and the client or agency may reconsider you. Therefore, maintain a positive relationship with the client or agency—don’t burn bridges.
In certain government contract scenarios, if you believe your business was unfairly overlooked, consider a Certificate of Competency (COC) application. The COC process allows small businesses that have been denied contracts for reasons related to capacity or credit to appeal the decision with the Small Business Administration (SBA).
Bonding and insurance considerations
After securing a contract, you must get bonding and/or insurance. Bonds protect clients against a contractor’s failure to complete a project or adhere to specifications. And insurance, covering risks like property damage and injuries, is mandatory for safeguarding your business.
Ensuring appropriate bonding and insurance not only meets project and solicitation requirements—it also establishes your reliability for future contracting opportunities.
Project execution and client relationship
Maintaining good relationships with clients throughout projects is crucial. Communicate regularly, address issues promptly, and manage the project proactively to meet or exceed client expectations. Successful project execution can lead to repeat business and referrals.
Continuous learning and improvement
Regardless of the outcome of your bid, quote, or proposal, continuous learning and improvement are key. Stay current on industry trends, attend workshops or training, and regularly review and refine your bidding process. This ongoing development ensures your business remains competitive and ready for future opportunities.
Leveraging technology for enhanced efficiency
From project management software to advanced CAD (Computer-Aided Design) tools, technology has revolutionized construction projects and construction management.
For instance, a specialized construction app like Connecteam enhances contract management. Connecteam can help with project scheduling, budget tracking, document management, construction time tracking, employee task tracking, and more.
Moreover, technology like building information modeling (BIM) assists in the design and construction phases and maintains a transparent and collaborative environment for all parties involved.
Technology can also help you communicate more effectively and efficiently with clients. Plus, it helps you showcase your capabilities and achievements—for example, through digital portfolios.
By improving project efficiency and client experience, technology helps you gain a competitive edge in the construction industry, increasing your chances of winning more contracts and growing your business.
Winning Contracts: Final Thoughts
Understanding how to get commercial construction contracts and other contract types is crucial for business growth and success. Enhancing your online presence, finding clients and projects, and crafting winning bids and proposals can help with this.
In addition, using tools like Connecteam can streamline your operations, enhancing client satisfaction and ensuring you’ll win more contracts in the future.
Can small construction firms compete with larger ones for contracts?
Yes. They can do this by focusing on niche markets, offering specialized services, or excelling in customer service and quality. Clients may prefer the personalized service and specialized skills small businesses offer.
What’s the difference between a general contractor, a subcontractor, and a prime contractor?
- General contractor: Manages overall construction project, oversees subcontractors, and communicates with all parties.
- Subcontractor: Specializes in specific tasks like plumbing or electrical work and works for the general contractor.
Prime contractor: Has a direct contract with the client and oversees the entire project, including the work of general and subcontractors. In larger projects, “prime contractor” is often used interchangeably with “general contractor.”