This is a simple overview of the competitive bid process.

JUST THE FACTS

What is competitive bidding

The Specifics on the Competitive Bid Process

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What is the purpose of competitive bidding?

Competitive bidding is a process of issuing a public bid with the intent that companies will put together their best proposal and compete for a specific project. By law, this process is required for every government agency that issues a bid. Competitive bidding creates a transparent environment that is open and fair. Competitive bidding allows equality of opportunity and the ability to demonstrate that the outcomes represent the best value.

What are the costs and benefits of competitive bidding?

Competitive bidding between firms drives lower prices, higher quality and increased innovation. Open and competitive bidding processes ensure Alabamians get the highest value for their tax dollars, allowing governments to reduce costs and improve the quality of goods and services procured.

What is the purpose of bidding?

Bidding is used to determine the cost or value of something. Bidding can be performed by a person under influence of a product or service based on the context of the situation. In the context of auctions, stock exchange, or real estate,  the bid price determines what a  business or individual is willing to pay.

Why is bidding important?

Competitive bidding helps the buyers get the best price and contract terms for their proposals. It allows them to get the most qualified sellers of products and services while keeping costs low. They also get to work with sellers with a history of achievements and that are qualified to deliver specialized services.

Why is bidding important in construction?

Arguably, the bid selection is the most important part of the entire construction bidding process. From here, the owner scrutinizes the packages and awards the bid to the contractor and subcontractors who offer the best value. In many cases, the decision will heavily rely on the lowest price.

How do bidding contracts work?

You fill out the bid contract and all other required documents including how much you would charge for the project. It is then turned in to the requesting company in a sealed envelope. All bids have a deadline that cannot be crossed. Once the deadline date and time is up, no other bids will be accepted.

Why do contractors bid?

The bid covers the total cost of building the structure, including any money for subcontractors who work under the general contractor. The bid also incorporates the general contractor’s costs, overhead, and profit.

What should be included in a construction bid?

1. The Basics. At the top of the document, all of the contact information for both the construction company and the potential customer should be listed. …
2. Project Scope. …
3. Existing Conditions. …
4. Cost. …
5. Terms of Payment. …
6. Relevant Documentation. …
7. Work Schedule. …
8. Formal Bid & Signatures.

Why is it important to bid only from a full set of contract documents?

It is important to bid from a full set of contract documents because it gives authenticity to the project.

What is public bidding process?

Competitive bidding is a process of issuing a public bid with the intent that companies will put together their best proposal and compete for a specific project. By law, this process is required for every government agency that issues a bid. Competitive bidding creates a transparent environment that is open and fair. Competitive bidding allows equality of opportunity and the ability to demonstrate that the outcomes represent the best value.

Many times General Contractors must be pre-qualified.

What is prequalifying in?

Prequalification is simply a way of gathering and assessing information about interested contractors and subcontractors to determine that contractor’s capacity to complete the job, by considering experience and identifying signs of safety and financial risk. Contractor prequalification is an information gathering and assessment process that determines a contractor’s capability, capacity, resources, management processes, and performance.

What is the purpose of prequalification?

A process of evaluating and determining whether potential bidders have the skill, judgment, integrity, sufficient financial resources, and ability necessary to the faithful performance of a contract for construction or repair work.

What is prequalification process?

Prequalification is a process associated with open competitive bidding wherein the borrower (or owner) assesses the suitability of applicants to carry out a specific contract before inviting them to submit bids. Generally, all applicants that meet the minimum prequalification criteria are invited to bid.