If you’re in a service-based small business, chances are that at some point you may need to enter a 
for a client shopping offers from multiple other contractors. Product providers may also need to bid on providing supplies for clients. Learning how to collect information about a job and make a bid that’s competitive and capable of turning a profit for your business is an important skill for contractors.
Because bids can be dealmakers or breakers, it is important to handle them carefully, both in the substance of the bid and how you pitch it to your clients. A bid should not only be competitive in price and exceptional in service, the presentation of the bid to the client also needs to be attractive and professional.
Government contracts
Many government clients’ bid projects are governed by laws requiring the entity granting the bid to award the project to the lowest responsible bidder.
If you’re dealing with a local government entity, some areas have bid laws that give the entity the authority to give the project to a local contractor who is not the low bidder so long as the contractor’s bid is not more than a certain amount (usually 10 percent) above the lowest bid. If you’re an out-of-towner bidding on a project, be aware of this law and use your salesmanship skills to ensure that the entity views you as superior to the local bidders. If you’re a local bidder in an area where this law is present, use it to your advantage in quoting bids for government projects.
Drafting the bid
When putting together your bid, the toughest part is breaking down the overall job into smaller components in order to determine the total amount of work that will be involved, and how much that work is worth.
Perhaps the most important thing you can do when preparing a bid is to get all the information you can from the client about what the job entails. Ask a detailed list of questions to the client so you can get a feel for the project’s entire scope. Ask questions about preferred materials, schedules, designs, etc. Ask about similar projects the client may have commissioned, and how much work and time was neccessary to complete those projects. Also, try to come to an understanding about how the client will be involved in the project and proper roles and channels of communication.
Once you’ve done your homework, you’ll need to break the project down into tasks and determine how much materials and labor will be needed for each component of the project. For example, if you’re being hired to build a website for an insurance company, break the project into parts – researching content for the site, writing content for the site, photography and art for the site, site design, beta testing and revisions. Once you’ve broken down the project into component parts, you’ll be better able to determine how much work and materials will be involved in the project, and better able to give an accurate bid.
Once you’ve broken down the project, determine how many working hours it will entail and multiply those yours by your hourly rate. For large projects, you may reduce the rate somewhat, as you may be able to realize efficiencies in a large scale project that you wouldn’t in a smaller endeavour.
Keeping your expenses in mind is also important to writing a good bid. Your bid should include language concerning who should pay for expenses that may arise, such as travel, equipment rental or outside consultation.
Once you have a good idea about how much your project should cost, you’re ready to write your bid proposal. Your bid proposal should be written professionally and packaged attractively. Be sure to carefully check and proofread your written proposal, eliminating any errors of fact or grammar that may prove embarassing if seen by the client.
You may be asked to give an oral presentation of your bid. If this situation arises, you want to dress appropriately for a business event and be confident in making your proposal. Make sure you know the project inside and out, because you may be asked questions about it from the client or clients you’re presenting the proposal to.
When drafting your written proposal, be sure to include:
- An introduction discussing your business, its competencies and the education and experience of its principals and employees. Don’t go overlong, as it is likely to bore your clients, but give them a good idea of who your firm is and what it can do for them.
- A project overview describing the full scope of the project. Give the clients an overview of the project and how it will meet their needs.
- Project objectives discussing the different tasks involved with the project and how they fit together, and also describe how the project will benefit the client when complete.
- A proposed approach to solving the client’s problem or need, including how your company will use this approach and how your company works.
- A list of your specific responsibilities with regard to the project. For example, if the client is building a large distribution center and you run an electrician’s company is bidding on the wiring work, explain what your part of the project would encompass and the limits of your responsiblity with regard to the project.
- A list of deliverables. This is basically the work product you will provide to your client. If you’re preparing a client’s taxes, this may be a completed tax return. If you’re writing papers for students, this may include a complete paper guaranteed to earn a grade of no less than B.
- Schedule. Describe when the work will be complete. You may also want to break it down and provide information concerning when each aspect of the job will be finished.
- Payment. You probably don’t want to describe the entire process of how you arrived at your fee (remember the analogy about how no one likes watching how sausage is made?), but you do need to assure your clients that the fee was arrived at after careful study of the project and the work it entails. You’ll also need to work out whether the fee is due in one lump sum at the end of the project, in installments as milestones are met or another arrangement.
- Expenses. You’ll need to outline how expenses such as travel, outside consultation, additional supplies, etc. will be paid for and who will be paying.
- Conclusion. Wrap up the proposal and re-emphasize any points that you may feel need additional attention.
By taking the time to research and write a professional, well-thought out bid proposal, you increase your chances of getting a winning bid and also reduce misestimations that could cost you money once the job is yours.
