Should contractors price every construction project?

"Many contractors submit bids for literally every project that crosses their desk."

​Many contractors submit bids for literally every project that crosses their desk. This often means the estimating team works long hours, and bids are poorly put together with errors, poor presentation and little thought into ways to make the bid more attractive to the client. In addition contractors may end up winning the wrong project.

"Contractors should focus on bidding for the right project, and then put all thought and effort into submitting a winning bid."

​Contractors should focus on bidding for the right construction project, and then put all thought and effort into submitting a winning bid.

What is the right construction project?

So what is the right construction project?

There are many factors to consider which include:

• The client – some clients don’t pay well or are difficult to work for. Contractors should put their good clients first.

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• The size of the project – some construction projects may be too big, while others may be too small for the company (the contractor may not be able to obtain the bonds or sureties for a large construction project, they may not have the resources or they might not have cash reserves to service the cash flow).

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• The project location – the further away or more remote the construction project, the more effort and time it takes to manage.

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• The proximity to other projects – if the contractor is working on other construction projects near-by there may be possibilities of sharing resources.

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• The resources required for the project – the contractor may have staff available, but not qualified or experienced for the particular construction project.

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• Payment conditions – can the contractor sustain the cash flow for the project (some construction projects hold large retention amounts or have lengthy payment terms).

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• The project construction schedule – can the contractor complete the work in the time specified.

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• The bid or tender procedures – The contractor should target construction projects where the client negotiates with the contractor or where they request a select number of contractors to price the work. Open tenders, where any contractor can bid or price the project may result in dozens of contractors submitting a price which makes the pricing very competitive and difficult to win the project.

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• The current market conditions – if there is a general shortage of work the contractor may not have a choice on what to bid for.

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• The project’s risks – Does the contractor understand the risks and can they take mitigating action to prevent the risk happening, or sustain the risk event should it eventuate.

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• The complexity of the project – complex construction projects have higher risks, and usually take more management time.

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• Can the contractor make money on the project?

"Sometimes the contractor should decline pricing a construction project."

Many companies have been destroyed because they won the wrong construction project at the wrong price.

Sometimes the contractor should decline pricing a construction project.

"What I personally liked about this book were the case studies; they were great." Reader review on Amazon

Do you want to learn more about pricing construction projects? Information in this article is contained in 'Building a Successful Construction Company: The Practical Guide' by Paul Netscher

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​Paul Netscher has written several easy to read books for owners, contractors, construction managers, construction supervisors and foremen. They cover all aspects of construction management and are filled with tips and insights.
Visit to read more.
The books are available in paper and ebook from most online stores including Amazon.
© 2022 This article is not to be reproduced for commercial purposes without written permission from the author.