6 Bidding Challenges Faced by Contractors

The days leading up to a project bid can be some of the most stressful for contractors. Finalizing numbers, cross-checking subcontractor quotes, and ensuring all scope elements are covered often happen under intense pressure—especially during peak estimating seasons. For many in the construction industry, late winter through early spring is among the busiest periods for preparing and submitting bids.

According to the U.S. Chamber of Commerce Commercial Construction Index, 91% of contractors report moderate to high levels of concern about cost fluctuations and scheduling disruptions during peak seasons. With tight timelines and labor constraints, this high-stakes environment can lead to costly miscalculations.

Outlined below are six common pain points contractors may face when bidding on projects:

1. Controlling Work Flow

Late fall and early spring are common times for projects to go out for bid, resulting in a bottleneck for contractors. While contractors want to win as many projects as possible, the reality of limited labor and equipment can lead to anxiety over overlapping start dates. When multiple projects break ground simultaneously—as often happens once frost lifts in colder climates—some contractors find themselves hoping that not all bids are successful. This fear of overextension can lead to intentionally inflated pricing, potentially reducing competitiveness.

2. Lack of Field Experience

Estimators without adequate field experience can struggle to accurately account for labor and logistics. Field knowledge is critical when estimating tasks such as site mobilization, which can sometimes cost more than the work itself. While academic knowledge provides a foundation, it often lacks the practical insight needed to avoid omissions and underpricing. According to a report by FMI Corporation, construction firms that prioritize field-experienced estimators see up to 15% greater accuracy in project forecasts.

3. Incomplete or Vague Drawings

Incomplete design documents are a common challenge. Experienced estimators can identify red flags in vague or missing details, but even the best may be forced to build in contingency costs to account for unknowns. These padded bids can price a contractor out of a project unnecessarily. The American Institute of Architects notes that as many as 70% of construction projects suffer delays or cost increases due to poorly defined plans and specifications.

4. Valuing and Managing Risk

Improperly valuing risk is a key contributor to inaccurate estimates. Contractors may underestimate the financial impact of schedule delays, change orders, or contractual liability. Especially on complex projects, the inability to conduct structured risk assessments (RA) can lead to significant cost overruns. Additionally, misunderstanding contractual risk transfer—such as indemnity clauses—can expose contractors to liabilities they didn't anticipate.

5. Unpredictable Price Fluctuation

Material pricing volatility remains a top concern for contractors. Key materials like lumber, copper, drywall, and steel have seen price swings of up to 50% in recent years. While owners often lock contractors into fixed-price (stipulated sum) contracts, suppliers typically guarantee pricing for limited durations. This misalignment increases exposure to cost overruns if prices escalate during procurement. For example, the National Association of Home Builders reported that lumber prices alone spiked over 250% at their peak during the pandemic, with ripple effects still affecting bids today.

6. Pressure to Cut Pricing

Contractors often face pressure to reduce pricing to secure a project. This can lead to reduced profit margins or the substitution of lower-cost materials and methods. Common strategies include soliciting discounts from subcontractors and material suppliers—who may, in turn, inflate initial bids in anticipation of these requests. This dynamic can distort pricing transparency and contribute to adversarial relationships among project stakeholders.