As contractors it may seem that we must bid a lot of projects to get a small amount of work. Some contractors experience about 30% success rate of what they bid. I feel that many times contractors do not bid smart; they bid to be bidding projects and many times do not look close enough to investigate the projects they are going after. In doing, so they spend a lot of time bidding “dead end” jobs that may not be profitable or ones that they should not tackle to begin with. Because everyone’s time is precious, you need to develop a company philosophy that determines your bidding efforts. In the process, there are many things to consider when bidding work.
Consider the General Contractor:
- Who is and are the bidding General Contractors?
- Is this a negotiated project or an open bid with many General Contractors?
- Are the General Contractors ones that I have worked with previously?
- If so, Do I like:
- Their contract
- Their payment process and timeliness of payment
- Their field and internal management staff and way they work
- If so, Do I like:
- Do the bidding General Contractors award me projects on a regular basis?
- Do the bidding General Contractors match me up with similar competition?
- Do the bidding General Contractors work with good owners?
Consider the Owner(s) of the projects:
- Who are the owners of this project?
- Can I review the contract from the owner to the General Contractor?
- If so, Will it:
- Meet my payment expectations and needs
- Meet any other items important to the successful completion and profitability of my company
- If so, Will it:
Consider the type, scope, risk, and schedule of work:
- Does this work fit our skill set?
- Can I pick up leverage multiple scopes of work to obtain a larger contract?
- Is the project complicated, which may eliminate many other in-experienced companies?
- Can I be of help to the General Contractor(s) as a problem solver on this project?
- Who am I bidding against?
- Can I obtain a good profit margin?
- How big is the project?
- What is the schedule for the project, specifically my scope of work?
- Is it indoor work or outdoor work? This may be important to companies that need indoor work during the cold winter months that work with temperature sensitive materials.
- Will I have the right equipment for the scope of work?
- Will I have to purchase new equipment to complete this scope of work?
- What is the risk of doing this project? Will it be within what we normally expect in our line of business?
- Do I have the right people available to do the work?
- Do I have to obtain training to do new scopes of work or can I utilize my current work staff?
- Do we have the right safety knowledge to complete the work in a safe environment?
Consider the time and cost to bid the work:
- How much time will it take to takeoff the quantities and to estimate the project?
- Will there be time to ask questions, get special material pricing, bonding information if needed, or methodically think through the process of executing the job to bid the most competitive yet profitable project.
- Is there time to have discussions with the General Contractor about:
- Scope issues
- Special design issues or gaps to be worked out in the installation process
- Problem solving to help the General Contractor understand tough or incomplete design issues
- Will this project have several revisions
- If so, will it:
- Take me and possible team of estimators away from bidding other “good” work?
- Will the time it takes to revise the project be worth the profit it will present?
- Is this project for one of our best General Contractors?
- If so, will it:
- What will this cost for me to bid and is the project worth that investment?
Consider the financial obligations:
- As stated earlier:
- Who is the owner and how often are they paying the General Contractor
- What does the contract stipulate payment to the General Contractor and to the subcontractors?
- How long will I have to cover the expenses of the project?
- Can I handle the payroll for this size of project?
- Can I bill for stored materials?
- Can I handle the equipment needs for this project?
- Do I need new or more equipment to complete the project?
- Can I collect my retainage early in the project?
As owners and managers of our companies we must develop a philosophy of bidding. Every company will have a different philosophy and thought process. I have listed some considerations above. However, the major goals should be that we go after work that we are very skilled to do. Bid jobs that will allow us to be profitable. Obtain projects that will fit our schedule and our risk level. Finally, bid work for contractors who will limit our financial risk by paying in a timely fashion. Hopefully this has given you more insight as to the development of you company bidding philosophy!
If you are interesting in improving in any area of your business come to our Constructus International website at www.constructus.com to be educated, inspired, mentored and trained by experts who are willing to share their experiences with you. For a small monthly fee, you can leverage the knowledge of others and help yourself develop the person and the company you truly want everyone else to see. You never know, as you grow, you may be able to help some of our other contractors. It really is fun to see others benefit from what we all share!
-Thanks for reading!
CEO- Constructus International