Research shows that the number of bidders heavily influences the competitive landscape. Industry studies suggest that each additional bidder on a traditional design-bid-build project can reduce project costs by nearly 4%. This highlights the importance of promoting a competitive bidding environment. More bidders typically mean lower bids, as contractors refine their bids to win the work. This means that, on average, a $20 million project that attracts two additional builders would likely have cost savings of nearly $1.6 million.

Project size and timing are pivotal in attracting a diverse pool of contractors. Projects that are too large may exceed smaller contractors’ capacity or bonding authority, while small projects might not be financially attractive enough for larger contractors. Balancing project size and scope is critical to attracting diverse bidders. Bundling projects into a larger program can be valuable, but right-sizing them is essential. Owners should design programs to spread project lettings over time to avoid overwhelming the contractor pool.

The timing of project lettings significantly impacts contractor interest. Mid-to-late fall, from August to November, is often a good time to let projects. Many contractors are finishing work from the previous season and are keen to secure work for the spring. Such timing later in the year allows contractors to plan over the winter and start promptly when weather conditions improve in the spring. Knowing about upcoming projects helps firms procure materials early, creating a feasible and efficient work timeline.

Broader economic conditions shape contractors' interest and availability to bid on transportation projects. Slow periods may drive contractors to pursue work more aggressively. In contrast, a booming construction economy can have the opposite effect, reducing contractors' bandwidth to bid on new work, thus decreasing competition and increasing bid prices. To mitigate this challenge, owners can unbundle projects and strategically phase project lettings to maintain competitive bidding opportunities.

Labor shortages and material price volatility can reduce the number of contractors willing to bid on projects. When labor or materials are scarce, contractors might prioritize more lucrative or logistically simpler projects, leading to higher bid prices and fewer options for project owners.

Engaging with contractors early in project development provides valuable insights. For example, a full-service, in-house prefabrication construction team or a progressive design-build (PDB) firm can help promote cost certainty and stability due to its comprehensive approach. These professionals can track commodity prices and forecast potential issues, allowing for strategic procurement and better cost certainty.

Realistic construction schedules are vital. Overly optimistic timelines can lead to bidding on overtime measures, increasing costs and complicating project execution. Using in-house construction schedulers who understand practical project timelines can result in more accurate schedules and better net prices. Ultimately, with accurate cost estimates and sensible scheduling, owners can have confidence in a project being completed successfully. 

Project owners must right-size their projects to attract a wide range of contractors. This involves balancing bundled, smaller projects to make them more attractive, and unbundling larger projects to make them manageable for smaller contractors. The goal is to create projects within the capabilities of a broad spectrum of contractors, thus maximizing competitive bids.

To improve contractor engagement and increase the number of bids, departments of transportation and project owners should:

• Be strategic with project lettings. Plan project lettings to avoid overwhelming the contractor pool and promote steady competition. This creates better value all around.
• Optimize project scheduling. Develop realistic schedules, project sizing and timelines to attract more bidders and prevent cost overruns. Few firms can provide cost certainty in a tense economic climate.
• Leverage construction knowledge. Use in-house construction schedulers and estimators to draw accurate project planning and execution.

Together, project owners and contractors can achieve cost savings and promote project success. This benefits the public by allowing more investment in future infrastructure and project initiatives. While it can be difficult to innovate in the design-build environment when budgets and schedules are tight, being strategic and thoughtful in early project planning can foster creativity and out-of-the-box thinking, ultimately benefiting project outcomes.