Mastering the Bid Process in Construction

Bid Package Changes

• An addendum is a change to the bid package issued during the bid period and before execution of the contract.

Types of Bids

• A lump sum bid is a stipulated sum of money without any adjustment because of alternative prices or substitutions, etc., for which the bidder offers to perform the work called for in the bid documents.

Guarantee and Performance

• A surety is a promise to answer for payment of a debt or performance of an obligation if the person liable in the first instance fails to make payment or perform the obligation.
• The purpose of a bond in the construction industry is to provide a guarantee or assurance of performance or payment.

Addenda and Bid Closing

• The last opportunity for issuing an addendum should be a reasonable time before the bid closing time.
• The recommended time for closing bids is when all bids are received and the bid closing time has expired.
• Bids received after the designated bid closing time should be rejected.

Tender Calls and Pre-qualification

• A tender call that is frequently used when the project involves public funds is an open tender call.
• The purpose of pre-qualification in the bidding process is to ensure that bidders have the necessary skills, experience, and resources to perform the work.

Negotiated Contracts

• Negotiated contracts are mostly used in construction procurement when the project is complex, urgent, or has unique requirements.

Types of Bonds

• A bid bond guarantees that if the bid is accepted, the contractor will enter into a formal contract with the owner.
• The usual range for the amount of bid bonds is 5% to 10% of the bid price.
• A performance bond indemnifies the owner up to the amount of the bond in the event of default on the part of the contractor.
• A labour and material payment bond guarantees that claimants will be paid for labor and materials provided to the contractor for use on the project.

Design-Bid-Build Method

• The design-bid-build method of procurement is characterized by a clear separation between the design and construction phases.
• The design-bid-build method of procurement is not characterized by a single entity providing both design and construction services.

Surety and Construction Contracts

• The purpose of a surety in construction contracts is to provide a guarantee or assurance of performance or payment.

Bidding and Tendering in Canada

• The book "Canadian Construction Documents Committee (CCDC) 23" is recommended for a detailed explanation of the procedures and case law for bidding and tendering in Canada.

Procurement Planning

• The planning of how to procure the construction contractor should start in a project as early as possible, ideally during the project initiation phase.

Bid Errors and Withdrawals

• If a bidder notifies the architect or client of a serious mistake in their bid after the bid closing, the bidder should be allowed to withdraw their bid.
• If a bidder submits a bid and then wants to withdraw it during the period of irrevocability, the bidder is not permitted to withdraw their bid.
• If only one bid is submitted, the architect should advise the client to reject the bid and re-tender the project.

Bid Documents and Information

• Architects may need to provide bidders with information on the details of pre-awards, pre-purchased materials, and the responsibilities which the successful bidder must assume.
• Examples of documents that architects may need to provide bidders with include project schedules, site plans, and technical specifications.

Privilege Clauses and Duty of Fairness

• The purpose of a privilege clause in the bid package is to allow the owner to reject any or all bids.
• A breach of the duty of fairness to all other bidders occurs when an owner favors one bidder over others.

Distributing Bid Documents

• When determining how to distribute bid documents, architects should consider the need for confidentiality, the security of the bid process, and the potential for bid shopping.