Why Do Contractors Lose Bids and What Can You Do About It?

Imagine this: Your team has just finished reviewing the specs for a massive hospital expansion. They’ve poured over the blueprints, double-checked the material lists, and even had a late-night strategy session to ensure every detail was perfect. You’re confident. This is it. This is the project that will take your firm to the next level.

The bid is submitted, and the waiting begins. Days turn into weeks, then two. Radio silence. You have lost another bid.

You call a meeting, trying to dissect what went wrong. Your lead estimator, clearly frustrated, explains that the team was working against tight deadlines. Supplier quotes arrived later than expected, forcing them to rely on preliminary numbers. 

You realize the value engineering ideas, the ones that could have saved the client money and set your bid apart, never made it into the final submission. They were buried under the pile of manual calculations and last-minute scrambles.

You learn later that a competitor, a firm you know lacks your team's expertise, won the bid. 

Their price was slightly lower, but more importantly, their proposal was structured. Their cost breakdown was transparent, precise data backed their takeoffs, and they included alternative material recommendations that reduced costs without compromising quality. They also demonstrated a clear grasp of the hospital’s unique infrastructure needs, addressing potential construction challenges with proactive solutions.

Your team had the expertise, but gaps in the bidding process—rushed estimates, insufficient time to add value engineering proposals, and last-minute supplier quotes—cost you the project. 

All those hours were wasted because you ended up spending almost 50% of the bid cycle on just doing takeoffs manually. That hospital expansion, the project that could have changed everything, slipped through your fingers. 

If you’re a contractor, you’ve probably been in similar situations before. It’s never a certainty when you submit a bid for a construction project. But most contractors don’t know the reasons they lose out on bids. That’s why we’ve compiled this blog with the top reasons why you’re losing out on bids and what to do about it. Read on to find out more! 

Reasons Why Contractors Lose Bids

1. Bidding on the Wrong Projects

Before committing time to a bid, conduct a thorough bid/no-bid evaluation. Start by gathering all project documents, plans, and specifications, and carefully review them to fully understand the requirements. Determine whether the project offers a reasonable profit margin, and assess if your workforce and equipment can meet the project’s deadlines. Consider whether the project's size and scope align with your company’s capabilities.

It’s also important to watch for potential red flags that could create challenges if you win the bid. These might include unknown site conditions, safety risks, or incomplete bidding documents. Additionally, take into account factors such as the project’s location, duration, and competition.

Conducting a detailed bid/no-bid review will help you make informed decisions and focus on opportunities that are the best fit for your business.

2. Incomplete Bid Forms and Missing Documents

You’ve crafted a solid bid with competitive pricing and a strong proposal, only to have it rejected for missing paperwork. It’s a common and frustrating mistake that can easily be avoided.

Many bids get thrown out because contractors fail to include required documents such as:

• Bid bonds
• Acknowledgments of addenda
• Prequalification paperwork
• Proof of compliance with project requirements

Even worse, some bids are rejected simply because they were submitted past the deadline or not properly signed. These oversights don’t just waste time, they could cost you thousands of dollars in lost opportunities.

How to avoid this:

• Use a bid checklist to ensure every required document is included before submission.
• Double-check deadlines and set reminders to avoid last-minute rushes.
• Have a second set of eyes review the bid before submission to catch any errors or missing paperwork.

3.  Inaccurate Takeoffs

One of the biggest reasons contractors lose money on projects is inaccurate takeoffs. If your measurements are off, so are your estimates. Common takeoff mistakes include:

• Misreading the plans or missing details in the specifications
• Ignoring scaling instructions and manually measuring incorrectly
• Overlooking addenda or late-stage plan updates

How to avoid this:

Using AI takeoff software significantly improves accuracy by automating measurements and calculations, reducing human errors and missed details. These advanced tools perform the entire takeoff for you, freeing up time for you to review it and prepare estimates. 

For instance, with Beam AI, you can easily set up your takeoffs in just 4 steps. This AI-based takeoff software completely automates the process and delivers the outcome within 1-3 days, depending on the complexity of the project. All you have to do is:

• Upload site plan in PDF format
• Define the scope of work and hit submit
• AI takes quantities off plans
• An expert estimator reviews and delivers your takeoff in 1-3 days

4. Skipping the Site Visit

It’s easy to assume that the site conditions match what’s shown in the plans, but plans don’t always tell the full story. Limited accessibility, unexpected obstacles, or difficult terrain can significantly impact costs for labor, transportation, and equipment.

Let’s say a job is in a congested downtown area with tight delivery restrictions. If you didn’t visit the site beforehand, you might not realize that material deliveries are restricted to specific hours, requiring additional labor costs for night-time or early-morning work. These factors can eat into your profit if not accounted for.

How to avoid this:

• Always visit the site before submitting your bid to assess real-world conditions.
• Attend pre-bid meetings; these often include site walks and allow you to ask important questions.
• If a pre-bid meeting is mandatory, make sure you attend, or you may be disqualified from bidding.

5. Failing to Seek Clarification

Many contractors make the mistake of assuming they understand all project requirements, even when details are unclear. Misinterpreting contract terms, material specifications, or compliance requirements can lead to costly mistakes down the road.

For example, you might assume that material substitutions are allowed, only to find out after winning the bid that specific brands are required, forcing you to use more expensive materials.

How to avoid this:

• Review all project specifications carefully and make a note of anything unclear..
• Reach out to GCs and suppliers well before the bid deadline to discuss project requirements, feasibility, and any potential challenges. Early engagement with suppliers helps secure competitive pricing and ensures material availability.

6. Bidding at the wrong price

Pricing a construction bid can be tricky: go too high, and you risk being seen as overpriced; go too low, and clients might question whether you can actually deliver. That’s why it’s important to correctly price your jobs. 

Here’s how you can do that:

Stay on Top of Market Rates
Construction material prices fluctuate all the time, so it’s crucial to research current rates before bidding. Look for vendors offering quality materials at competitive prices to keep your costs in check and maximize your profit margins.

Engage with GCs and Suppliers
A well-priced bid requires more than just estimating material and labor costs, it involves clear communication with general contractors (GCs) and suppliers. Understanding what they expect to be included in the scope can prevent costly misunderstandings. Raising tender queries is essential to clarify any ambiguities and ensure your bid meets project expectations. Additionally, conducting a thorough risk assessment helps you factor in potential challenges like site conditions, weather delays, and supply chain disruptions.

Justify special pricing with concrete data

If your company offers something unique, such as superior materials, specialized expertise, or a track record of faster project completion, justify any price increases with data.

Evaluate Project Complexity and Risks
No two construction projects are the same. Site conditions, regulatory requirements, and unforeseen delays can all impact your costs and timelines. Make sure your pricing reflects these potential challenges so you’re not caught off guard later.

Wrapping up

Losing bids can be frustrating, especially when you have the ability to execute the project but fall short due to gaps in the bidding process. Many contractors lose bids because they either pursue the wrong projects, submit incomplete documentation, rely on inaccurate takeoffs, or fail to seek necessary clarifications. Staying on top of market rates, engaging early with GCs and suppliers, and conducting thorough risk assessments are all key to submitting competitive and profitable bids.

And a major challenge for contractors is the time-consuming nature of manual takeoffs, which can lead to rushed estimates and missed opportunities. By automating 30–50% of preconstruction workflows, contractors can increase bid volume, improve accuracy, and eliminate last-minute chaos. This is where Beam AI comes in. With AI-based automated takeoffs, Beam AI helps you streamline your estimating process, ensuring precise takeoffs faster. Ready to win more projects with confidence? Experience Beam AI today and take your bidding strategy to the next level!