Experience, reputation, and financial security often play big roles in the selection process.

There are different types of construction projects for bid that require different skills sets. For example:

  • Residential construction contracts – Residential construction contractors build residential dwellings, typically multi- or single-family homes. These projects are usually owned by private enterprises and look for contractors who have a robust supply chain and steady supply of skilled labor. The housing industry is cyclical and regulated by local municipalities like cities and counties.                          

  • Commercial construction contracts – Commercial construction contractors build commercial buildings, which can range from a small office building project to a skyscraper. As you can imagine, a wide variety of skillsets and specializations are needed in this area. The bidding process can be more formal, as commercial building projects may be backed by large capital investments. These projects are often driven by population and economic growth.                                    

  • Government construction contracts – Government construction contractors build projects funded with public money. Roadways, buildings, and facilities owned by government municipalities, such as cities, counties, states, and even the federal government, will be subject to a bidding process for any related construction project. The bidding and award process is strictly regulated to ensure the appropriate use of public funds.                                                                    

All of these types of construction projects are vulnerable to liability and other financial loss. That is why it is important to demonstrate your technical competence and financial stability when submitting a bid.

How Business Credit Can Help Construction Companies

External Website Opens New Window Aside from bidding on contracts, your       construction company’s business credit file is important in helping lenders, potential clients, and insurers understand the risks involved in working with your company. A strong business credit file can help you with:

  • Bonding: Securing a bond is often a required first step to submitting a bid for a construction project. Before issuing a bond, a bonding company may check your company’s business credit file to help assess the financial health of the business.       

  • Funding: Construction companies with strong business credit scores and ratings may find it easier to get short-term loans to cover expenses until invoices are paid. A line of credit or a longer-term loan can also help you strategically grow your company and meet rising demand.                                                                               

  • Insurance: Some insurance companies require their insureds to maintain specific Dun & Bradstreet scores and ratings.                                                                                       

  • Contracts: A construction company with a stellar business credit file may appear more reliable to potential partners. When building business credit, each positive payment experience your company has with a partner, supplier or vendor (in which your company pays them on time and according to the terms of your agreement) can be another step toward winning more contracts.                                                         

  • Getting better terms and conditions: If you can negotiate favorable terms and conditions for your business by leveraging your reliable payment history, you may have more funds available at lower interest rates or with additional time to repay debts.