Growing your construction business is exciting, but it can be intimidating to make the jump to larger projects than you’re used to. How do you know if now’s the time? What can you do to prepare so you know you’re ready to handle more complex work?
Use these tips to get your business ready for this big next step, and then start looking for those million-dollar jobs.
The Elements of a $1 Million Construction Bid
As far as the makeup of large-scale bids, they don’t differ significantly in structure from the smaller commercial construction proposals you’re accustomed to. You’ll need to perform your takeoff, create an estimate, and generate a proposal as usual.
But you’ll need to be sure your construction documents stay extremely organized, and you’ll want your legal I’s dotted and T’s crossed.
Construction Document Management
One thing that will surely set you off course as you scale up to more complex projects is the lack of a system for handling plans, specs, and other construction documents. If you’ve ever spent any time searching for something related to a project, that’s a sign you need to develop a system before you make the move to those bigger jobs that come with larger plan sets.
The fact that documents come digitally nowadays doesn’t make it any harder to misplace them. Now, we often spend far too many minutes searching through emails and folders instead of file cabinets and plan rooms.
Take advantage of the built-in organizational system your takeoff and estimating software should have to create standardized file naming conventions and folder structures that make sense to you and your team. Get everyone on the same page and using the system consistently before you set out to bid that first large-scale project.
The Basics of a Construction Contract and Legal Considerations
If you’re not already familiar with what to expect in a construction contract, it’s a good time to learn when you’re preparing to go after larger projects. You’ll need to agree to the terms of the general contractor’s contract after you win the bid and settle on any negotiations.
What Is Included in a Contractor Agreement?
There are multiple types of contracts, such as fixed cost, cost-plus, and time and material. Depending on your trade and the nature of the project, you might encounter any of them. Some language to watch out for in construction contracts include clauses like no-lien, damages for delay, subordination, and pay-if clauses. It’s in your best interest to truly understand all the legalese in a contract before agreeing, so you may want to consult legal counsel or even take a course in construction contracts at this stage of your company’s growth.
Developing Your Own Terms and Conditions
It may be worthwhile to create your own set of terms and conditions that you can include in each proposal you submit. These can indicate your own company policies, although you will still need to sign a contractor agreement with the GC. Consult your legal counsel to draw up boilerplate wording you can reuse for each bid.
A Word on Working with Partners
Partnering with another company on a large bid is sometimes a great way to get your foot in the door to those more complex projects. But if up to this point, you’ve operated on your own, you’ll want to put plenty of thought into how this partnership will function. Your LLC, corporation, or S-corp status places limits on your personal liability, but there are no such limits on a partnership, and you might find yourself liable for debts incurred by your partner. So, again this is a good time to bring in legal assistance to determine if this is the right step for you.
Tips for Estimates and Proposals for a Large-Scale Construction Bid
You may want to handle your preconstruction process a bit differently when you move up to bigger jobs. The essentials are the same – using your takeoff measurements as a starting point to understanding your project costs and building your estimate from there. But, especially if you’re used to marking up labor and indirect costs by intuition to meet your profit goals, now is the time to get more granular in your estimating process.