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How to write a construction bid, step by step

A bid is a price plus a promise about what that price covers. Most bids that lose money don’t lose it on the math. They lose it on a missing cost, a vague scope line or a change nobody wrote down. Here is the order to build one in, with a free guide for each step.

Step 1. Walk the job and write the scope first

Before any numbers, write down what you will do, in plain words, room by room or phase by phase. Note what you saw that could change the price: access, old work behind walls, grade, utilities, who supplies what. If you can’t describe a line of work, you can’t price it.

Step 2. Do the takeoff and price direct costs

Count exact quantities of material from the plans or the site, then add a material waste factor by material and round up to what you can buy. Price your crew’s hours at a burdened labor rate, not the bare wage. Add equipment, dumpsters, permits and subcontractor quotes, with your markup on subs.

Step 3. Add contingency for the risky lines

Put contingency where the unknowns actually are (demo, hidden conditions, long-lead materials) instead of padding every line the same.

Step 4. Add overhead and profit the right way

Use your real overhead rate from last year’s numbers, then add profit. Remember that markup on cost is not the same as margin on price: a 20% markup is only a 16.7% margin. The markup to margin chart and the free bid markup calculator do the conversion for you.

Step 5. Write exclusions and clarifications

List what the price does not include and what it assumes: hidden conditions, permits, finish selections, cleanup, how long the price holds. The bid exclusions checklist has the common ones.

Step 6. Set the payment schedule and change order terms

Tie each payment to a milestone the owner can see, using a progress payment schedule, and say in the bid that extra work goes on a written change order before it starts.

Step 7. Send it, then follow up

Send a clean proposal with the scope, price, exclusions and schedule on one document, then follow up on a plan instead of waiting. The bid follow-up emails cover what to send and when.

Bid mistakes that cost the most

1. Pricing before the scope is written, so the number covers a job nobody defined.
2. Bare wages instead of burdened labor. Taxes, insurance and unbillable hours come out of profit.
3. Confusing markup with margin, so the profit you planned is not the profit you get.
4. No exclusions, so every surprise becomes your cost.
5. Verbal changes. If it isn’t on a signed change order, it is hard to get paid for.

General education with example numbers only, not legal, tax or accounting advice. Contract, licensing, deposit and lien rules vary by state; check yours.

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