Types of Bidding in Construction (2025 Guide): Methods, Examples & Best Practices

Bidding is the starting point of every construction project. Before any on-site work begins, project owners select contractors through formal bidding. This decision influences the project’s cost, schedule, quality, and risk.

In this guide, we will dive into the main types of construction bidding, how each one works, where they’re used, and how automation can solve common bidding challenges. Whether you're a contractor, owner, estimator, or project manager, understanding these bidding models can help you reduce errors, win more work, and streamline your workflows.

Let’s break it down clearly and simply.

What is Construction Bidding?

Construction bidding is the process in which contractors submit proposals to build a project. Each proposal includes cost, timeline, and proof of capability. The project owner reviews the bids and selects the contractor that best meets the project’s budget and performance requirements.

Bidding serves one main purpose: To ensure the project is awarded to a qualified contractor at a fair and competitive price.

How Construction Bidding Fits into Project Delivery

Construction bidding sits between planning and construction. Once the project scope or design is ready, owners invite contractors to submit bids. After selection, the project moves into contracting and then into the construction phase.

Bidding does not define how the project will be delivered; it defines who will deliver it.

Main Types of Construction Bidding

There are several ways construction owners receive and evaluate bids. The choice depends on the project type, funding source, risk level, and the level of control the owner wants over the process.

Below are the major bidding types used today across both public and private construction sectors.

1. Open / Competitive Bidding

Open bidding is the most transparent form of bidding and is required for most public works projects.

• Any qualified contractor can submit a bid.
  
  
• The process is designed to create fair competition and public accountability.
  
  
• The lowest responsive and responsible bid often wins, provided all requirements are met.

Public agencies in the United States must follow this competitive approach to protect public funds and promote equal access. Source: U.S. Government Accountability Office 

Use case examples include highways, schools, public parks, and government buildings.

2. Selective / Closed Bidding

Selective bidding is used primarily in private construction or highly specialized environments.

• Only pre-qualified or invited contractors may submit a bid.
• The owner narrows the pool based on experience, safety record, financial strength, or past performance.
• The method saves time by filtering out unqualified bidders early.

Selective bidding is commonly used for hospitals, laboratories, industrial plants, or confidential technology centers where precision and reliability matter more than price alone.

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Read how a 48-year-old component manufacturing  company transformed its operations with Intelligent Data Processing

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3. Negotiated Tendering

In negotiated tendering, the project owner selects a single contractor without going through a competitive bidding process.

• The owner and contractor negotiate terms directly.
• The discussion includes pricing, scheduling, materials, and scope.
• The method is preferred when the project involves high complexity, urgency, or existing trust.

This method is often used for design-sensitive developments, high-security facilities, or projects where continuity or speed is critical.

4. Serial / Framework Tendering

Serial tendering is used when the same contractor is responsible for repeated or similar work over a set schedule.

• One contract covers multiple jobs over several months or years.
• Prices are agreed upon up front, creating cost predictability and administrative consistency.
• The method supports long-term, multi-site, or repetitive programs.

Examples include ongoing school district work, retail store rollouts, or public housing renovation programs.

5. Two-Stage Tendering (Preconstruction + Final Bid)

Two-stage tendering is used when owners want contractor input early but still need bidding discipline.

• In Stage One, contractors submit initial proposals with basic cost and capability information.
• In Stage Two, full design details are completed, and final pricing is submitted before award.

This model reduces the risk of disputes later and allows collaboration before construction begins. It is used on complex building projects, stadiums, and mixed-use developments.

Sealed Bids vs. Competitive Proposals (Federal Bidding)

In the federal contracting system, bidding typically falls under one of two methods:

Sealed Bids

• Contractor bids are submitted in sealed form.
• Bids are opened publicly.
• The award goes to the lowest responsible bidder who meets all technical conditions.

Competitive Proposals

• Bids are evaluated using weighted criteria.
• Price is one factor among many (e.g., past performance, schedule, technical approach).
• Allows the government to select “best value,” not just lowest price.

Source: U.S. Federal Acquisition Regulation (FAR) 

This is common in federal construction, where performance risk or technical expertise outweighs price alone.

Difference Between Bidding Types vs. Delivery Methods

Bidding is how the owner selects the contractor. Delivery is how the contractor delivers the project.
Bidding and delivery are connected, but not the same.

• Bidding decides who will build the project.
• Delivery defines how the project will be built and managed.

Knowing the difference helps teams avoid confusion when reviewing bid packages or selecting project structures.

Common Delivery Methods in Construction

1. Design-Bid-Build (DBB)

• Traditional approach
• Full design is completed first
• Bidding takes place after the design is finalized

2. Design-Build (DB)

• Single contract for both design and construction
• Reduces back-and-forth between designers and contractors

3. Construction Manager at Risk (CMAR)

• Contractor is involved during design
• Commits to a Guaranteed Maximum Price (GMP) and shares risk

4. Job Order Contracting (JOC)

• One contractor handles multiple small or repeat projects
• Often used for ongoing facility or campus work

Cross-Walk: How Delivery Methods Match Bidding Types

Public vs Private Construction Bidding

Construction bidding follows different rules in the public and private sectors. The main distinctions involve transparency, competition, and flexibility.

Public Sector Bidding Rules and Compliance

Public-sector construction projects are funded by taxpayers. Because of this, they must follow strict rules designed to prevent favoritism and protect public funds.

• Open competitive bidding is required for most public construction in the United States.
  
  
• Contractors must follow specific bid formats and deadlines.
  
  
• Public agencies award contracts based on documented criteria and public transparency requirements.

Under the Miller Act, contractors bidding on federal construction projects valued over $100,000 must submit payment and performance bonds. These bonds guarantee two things:

1. The job will be completed.
2. Subcontractors and suppliers will be paid.

These requirements reduce financial and performance risks during construction.

Private Sector Bidding Rules

Private owners are not bound by the same bidding rules as federal or state agencies. They have more control over who bids and how the selection is made.

• Bidders can be pre-screened based on qualifications and reputation.
  
• Contracts may be awarded through closed bids, negotiated pricing, or design-build arrangements.
  
• The bidding process can be shorter, with fewer compliance requirements.

This flexibility simplifies administration but also allows owners to select based on more subjective factors such as past performance, quality, or collaborative history.

Now that we’ve explored the main bidding types and how they’re used in public and private sectors, let’s walk through the standard steps that every construction bid process follows.

What are the Steps in Construction Bidding?

Construction bidding follows a series of steps that allow owners to request bids, compare options, and award the work to a qualified contractor. Below is a clear breakdown of the process.

Step 1: Bid Solicitation

The project owner invites contractors to bid. This is done through one of the following documents:

• IFB (Invitation for Bid): Focuses on cost
  
• RFP (Request for Proposal): Evaluates price plus approach, and qualifications
  
• RFQ (Request for Qualifications): Screens contractor capability before pricing

These documents define the scope, requirements, deadlines, and instructions for the bid.

Step 2: Bid Preparation

Contractors review the bid documents and prepare their response. This includes:

• Estimating material, labor, and equipment costs
  
• Requesting subcontractor quotes
  
• Creating schedules and delivery plans
  
• Preparing required compliance or bond forms

The goal is to submit a complete and competitive bid.

Step 3: Bid Submission

The contractor submits the proposal by the stated deadline. Submission formats include:

• Digital platforms (common in public projects)
  
• Private portal uploads
  
• Sealed physical submissions

Late or incomplete bids are generally rejected.

According to the U.S. Federal Highway Administration, most states now accept digital bids for transportation projects.

Step 4: Bid Evaluation

The owner reviews and scores each bid. Two methods are common:

• Lowest Bid Evaluation: Focuses on cost alone
  
• Best-Value Evaluation: Considers price as well as experience, technical approach, or safety record

Public agencies often document this step with a scorecard. Federal regulations allow best-value procurement if performance is a key factor.

Step 5: Contract Award

The selected contractor is notified and awarded the job. They sign the contract and submit any required bonds or insurance documents. Non-winning firms may receive a notice of rejection or release of the bid bond.

Step 6: Project Kickoff

The owner and contractor hold a kickoff meeting. They review responsibilities, clarify scope, and finalize scheduling and communication channels. After this, work begins, and the project moves into the construction phase.

Common Challenges in Construction Bidding (And How to Fix Them)

Even well-run construction teams struggle with bidding issues that delay submission, reduce accuracy, and affect bid quality. Here are the most common challenges and their fixes:

1. Document Version Drift and Missing Pages

Problem: Bid files are shared across email and cloud apps. It’s easy for teams to work from outdated versions or lose pages.
Fix: Use centralized storage with version control and auto-compare. These tools alert teams about missing addenda or revisions before submission.

2. Incomplete Bid Packages or Line Items

Problem: Bids often arrive without alternates, unit pricing, or required clarifications. This leads to scope gaps and confusion during evaluation.
Fix: Use automated document parsing and checklists that verify every required item before a bid is finalized.

3. Manual Comparison of Multiple Vendor Submissions

Problem: Comparing bids in spreadsheets leads to manual errors and hours of repetitive work.
Fix: Use software that extracts key data from each bid and aligns it in a side-by-side comparison view for faster review.

4. Errors During Bid Preparation and Estimation

Problem: Manual takeoffs and reused templates increase risk of missing costs or outdated material pricing.
Fix: Use automated takeoff and estimating systems that pull quantities from drawings and connect to cost databases.

How to Automate Bid Document Review and Comparison

Bid evaluation doesn’t need to rely on manual parsing or spreadsheets. Automation can extract, verify, and compare data across multiple bid documents in minutes, not days. Here’s how key components of bidding can be automated:

- AI-Powered Document Extraction

Intelligent Document Processing (IDP) tools can pull key data such as quantities, pricing, line items, and attachments from unstructured bid documents. This reduces the time teams spend reading and re-keying information into their systems.

- Automatic Cross-Document Validation

Automated systems compare data across plans, specs, addenda, and bid forms. They flag mismatched values, missing alternates, or inconsistent scope descriptions before the bid goes out to the owner.

- Side-by-Side Bid Comparison

With automated bid leveling, data from multiple contractor submissions is aligned into a single comparison view. Evaluators can quickly compare pricing, timelines, and assumptions without spending hours building or reviewing spreadsheets.

Benefits of Using Automation for Bidding in Construction

Here are the key benefits of automating bid preparation, review, and comparison.

1. Shorter Bid Cycles

Bidding often operates on rigid timelines. Collecting quotes, parsing bid forms, and building estimates manually can delay submissions.

Automation handles repetitive document tasks such as extracting quantities, parsing spec sheets, or attaching required forms. This reduces preparation time and helps contractors submit bids faster, especially when working across multiple projects at once.

2. Fewer Manual Errors

Manual data entry is one of the biggest sources of errors in bid packages. A missed line item, a wrong unit, or an outdated spec sheet can result in rejected bids or costly rework.

Automated data extraction and validation reduce these risks. Systems can pull itemized data directly from bid forms, flag missing entries, and verify that required documents are included.

3. Faster Bid Evaluation

Owners and general contractors often receive multiple bids for the same project. Reviewing each one manually can take days or weeks, especially when every contractor formats their bid differently.

Automation tools extract pricing, schedules, scope notes, and clarifications, and align them into a single comparison view. This allows faster leveling and reduces time spent building spreadsheets or analyzing text-heavy documents.

4. Clearer Compliance Tracking

Public-sector bidding requires strict adherence to compliance rules. Missing a bond, form, or declaration can disqualify a bid.

Automation systems track required fields, version history, and submission formats. This creates a structured log of what was sent, when, and by whom, improving accountability for both contractors and owners.

5. Improved Audit Records

Construction projects often require documentation audits long after the bid is awarded. Finding old emails, file versions, or attachments can be tedious.

Automated systems create digital trails with timestamps, file IDs, and change logs. This makes it easier to retrieve past submissions, confirm intent, and respond to disputes or claims.

How Infrrd Supports Construction Bidding Workflows

Construction bidding involves large volumes of documents: specs, RFQs, bid forms, submittal sheets, alternates, and more. The challenge is that these documents are often locked in PDFs, scanned images, and mixed formats that slow down teams and increase the risk of missed scope or incomplete bids.

Infrrd helps solve this problem by automating data extraction from unstructured bid documents. Instead of manually reading, retyping, or comparing every file, teams can use Infrrd to turn bid packages into structured, searchable data.

With Infrrd, construction teams can:

• Extract line items, pricing, quantities, alternates, and scope notes from bid-related files
• Detect revised drawings or updated specifications using automatic version tracking
• Generate structured datasets for bid comparison, estimating, or leveling tools

One global manufacturer used Infrrd to decode old engineering drawings and speed up their quoting process, drastically.

Read how a 48-year-old component manufacturing  company transformed its operations with Intelligent Data Processing

FAQs About Bidding in Construction

1. What are the different types of bidding in construction?‍

The main types are open bidding, selective bidding, negotiated tendering, serial or framework tendering, and two‐stage tendering. Federal work also includes sealed bids and best‐value proposals.

2. What is the most common bidding method in public construction?‍

Open or competitive bidding is the most common method. It allows any qualified contractor to submit a bid and is required for most government‐funded projects in the U.S. to ensure fairness and transparency.

3. What is the difference between open and selective bidding?‍

Open bidding is open to all qualified contractors and is typically used in public projects. Selective bidding is limited to invited or prequalified firms and is more common in private or specialized construction.

4. Can construction bids be evaluated on more than just price?‍

Yes. Projects may use a “best‐value” approach where past performance, technical ability, schedule, and safety record are considered along with price, especially in federal or complex jobs.

5. Why is two-stage tendering used in construction?‍

Two-stage tendering allows contractors to join early in the design process. Initial pricing is submitted in stage one, and final pricing is confirmed once more details are available. This reduces scope gaps and disputes during construction.

In a Nutshell

Construction bidding remains a critical step in project planning.
By using the right method and applying the right automation tools, owners and contractors can reduce delays, improve accuracy, and complete the process with clarity and confidence.