It may seem easy to bid a plumbing job, but there are several factors that need to be taken into consideration. You must ensure that you are familiar with plumbing industry standards before you submit a proposal for any job, let alone ensure you can meet your costs and make a profit.
Plumbing Job Bid Process Explained
When someone decides they need to hire a plumbing company to complete a large scale job, they want to get the best service at the best price.
Unlike smaller residential jobs, they can’t just call up a local plumber to handle the work. Large scale jobs require a substantial investment of time and money.
Those hiring need to get quotes from multiple vendors in order to get the best price for their plumbing work.
The first step of the bidding process is bid solicitation. This is when the business, property, or entity requests bids from plumbing companies for a particular job.
These bids are requested on bid management platforms or from government-registered contractors. Details included in a bid request include:
- Job description
- Total budget
- Insurance requirements
One the job is posted, plumbing companies can begin submitting competitive bids. The goal is to present a bid that provides the requested service within the necessary timeframe for a competitive price.
When submitting bids, plumbing companies should include a breakdown of their expenses, including:
- Materials and supplies
- Profit margin
After reviewing all bids, the hiring entity will award the contract to the company with the best bid.
While some entities like governments will select bids solely on price, others may consider the importance of other factors like safety record and company experience.
Once a bid is selected, the two parties will begin negotiating a contract.
Even though most of the job details were spelled out in the bid solicitation, additional things like pay schedule, contingency plans, and administrative details need to be worked out into a contract.
How To Estimate Costs For a Plumbing Job Bid
As a plumbing contractor or company, you’ll need to understand how to calculate your costs before submitting a bid.
Since price is usually the most important factor, getting the cost as low as possible is crucial. That being said, underestimating your costs can result in issues down the road such as going over budget, doing subpar work, and losing a job due to unsatisfactory performance.
By breaking down your potential costs into categories, you can form an accurate bid that employers will understand.
Labor costs are often the highest cost of a plumbing bid. Large scale plumbing jobs often require dozens of plumbers to work over thousands of square feet of plumbing.
You should be aware of the number of crew members you need to perform a job. The more people you need to perform the work, the higher your overall price. If specialty plumbers are required, the cost of labor will increase.
Plus, it can be expensive recruiting plumbers for your job.
When bidding a plumbing job, check out how much plumbers make on average so you accurately bid your payroll costs. To save money of labor, consider utilizing sub-contractors to reduce overall payroll costs.
Materials and supplies
The cost of materials and supplies is calculated by the plumbing superintendent. Once the bid requirements are stated, companies can determine how many parts they need to install and how much material is needed.
Materials and supplies include piping, fixtures, appliances, tools, and other items needed to complete a plumbing job.
The amount and cost of materials increases with larger projects, so clearly itemizing your materials costs will make your bid more competitive.
After calculating the direct cost of the project, you should consider your overhead costs, otherwise known as indirect costs.
These expenses are indirectly related to a plumbing job, but are still required to operate. These expenses include insurance, bonding, administrative costs, travel expenses, meals, contingency, and other non-plumbing costs.
To calculate your overhead costs, consider a flat percentage that can apply to your direct costs. Calculate this by dividing your annual overhead costs by your direct costs. For example:
- Direct costs (labor, materials) – $500,000
- Overhead costs (insurance, administration, etc.) – $150,000
- Overhead rate: $150,000 / $500,000 = 30%
- Total costs: $500,000 + $150,000 = $650,000
In this case, a company should calculate their direct costs by the 30% overhead cost rate to determine their overhead cost in their bid.
Your profit margin is the amount you make after deducting the total cost of the project from your revenue. The average construction industry profit margin is 6%, so consider using a similar rate in your plumbing job bid.
To calculate your profit, you will need to multiply your total costs by the desired profit margin rate.
- Direct & overhead costs = $650,000
- Profit margin = 6%
- Profit: $650,000 * 6% = $39,000
Types of Plumbing Jobs To Bid
The types of jobs you plan to work on will factor into how you determine pricing. Types of plumbing jobs you could bid on include:
- Commercial plumbing jobs
- New construction plumbing jobs
- Government plumbing jobs
These jobs vary greatly in terms of scale, scope, cost, and employees required, so bidding on these jobs will require different steps to get the right price.
How to Bid Commercial Plumbing Jobs
Commercial plumbing jobs will be requested through bid management platforms for office buildings, hotels, apartments, and other commercial settings. These types of jobs are straightforward to understand and normally consist of repairs, expansions, and installations.
How to Bid New Construction Plumbing Jobs
Plumbing jobs for new construction projects are similar to commercial jobs in their scale. The main difference is that new construction plumbing jobs will coincide with builders, electricians, and others as they all contribute to a new building.
Bidding on a construction job also requires a more exhaustive calculation of material costs, as well as higher contingencies for work delays.
How to Bid on Government Plumbing Jobs
The difference with government plumbing jobs is the bid process. Governments require plumbing companies to be registered in a vendor portal to submit bids so that governments can verify insurance, licensing, and permits.
The steps to bid on government plumbing jobs will differ between states and localities, so check with your local government about their bidding process.
How to Find Plumbing Jobs to Bid On
Once you’re ready to submit bids on plumbing jobs, you’ll need to know where to look. There are many ways to find plumbing jobs to bid on, including free and paid options. Here are the best ways to find plumbing jobs to bid on:
- Government websites
State, county, and local government in the United States utilize their websites to list biddable plumbing jobs. Just check your local government’s website for bid requests and there will be a list of jobs to consider.
PlanHub is a bid management platform that lists plumbing jobs all over the country. They also provide bid software to make managing your bids simple.
ConstructionBidSource is a construction project website listing biddable plumbing jobs. They offer paid memberships to make the bidding process simpler.
GovernmentBids lists government projects from all over the country. Their website lets you view and submit bids on plumbing jobs specifically with government entities.