Running a construction business is hard work. Before you can even get on the jobsite to start making money, you and your estimating put in a ton of time and effort into qualifying leads, estimating projects, and putting together bid proposals. And, after all that work, there’s no guarantee that you’ll win that job.
What does it take to deliver better bids? Here are a few tips on how to bid smarter by going after the right opportunities to win more work.
Find Quality Construction Leads
You shouldn’t bid on every opportunity that comes your way. You also can’t sit around and expect project leads to come to you. Market your business to owners and general contractors (GCs) you want to work with by showcasing your experience and expertise in your trade.
Reach out to your network to find out about upcoming opportunities. Take the time to get prequalified with GCs you want to work with, so you can receive more invitations to bid (ITBs). Make sure they know what trades you can perform and the types of projects you are interested in bidding on.
Take a proactive approach by utilizing as many tools as possible to ensure you are receiving quality leads. Word of mouth, bid boards, local contractors associations, and your subs and suppliers are all great sources for learning about upcoming bidding opportunities. Consider investing in a leads service with a searchable database, updated project details, and plans and specifications attached so you can focus in on finding the right opportunities for your business.
Understand Your Bid-Hit Ratio
Are you keeping track of your bid-hit ratio? If not, you need to start. Your bid-hit ratio is the number of projects you must bid to win one job. Understanding your bid-hit can help you how many projects you need to be bidding to keep your pipeline full and weed out the opportunities that don’t have a high probability of winning.
To really make your bid-hit ratio work for you to maximize your bidding efforts you need to do an in-depth analysis. Sort the projects you’ve bid and group specific categories. Consider things like public versus private work, building type, scope of work, geographic location, contract size, and the general contractor or owner of the project.
By categorizing and analyzing your bid-hit ratio, you get better insight into which types of projects to go after. For example, let’s say your overall bid-hit ratio is 7:1. After performing your analysis you discover that your bid-hit ratio for medium-sized private office projects is 4:1 and your ratio for large, public school projects is 10:1.
Obviously, you have a better bid-hit ratio on the private office projects, so you should focus more effort on those opportunities and less time bidding on school projects.
Now that you know the types of projects that you have the best opportunity of winning, it’s time to look at profitability on those projects. Make sure you are recording accurate job costs for materials, labor, and equipment. Compare your actual costs to your estimates and ask the following questions:
- Were your estimates for labor and materials accurate?
- Did you include all the job costs in your estimate including bonding, supplies, and equipment?
- Did you factor in your profit and overhead mark-up correctly?
- Was your contingency budget adequate?
If your profit margins on projects aren’t what you expected there are two possible reasons. Either your estimates are too low, or you are having productivity issues on the jobsite which is causing job costs to be higher. Regardless of which is the cause, you should work to resolve the issues to get your profit margins where they need to be.
By combining the data from your bid-hit ratios and your profit margin analysis you can hone in on the projects that you have the best chance of winning and make the most money on.
Conduct a Bid/No-Bid Review
Now that you’re getting quality leads and you know the types of projects to pursue, it’s time to start bidding, right? Not so fast, before you start investing your time into putting together a bid proposal you need to conduct a thorough bid/no-bid review of each opportunity.
The first thing to do is gather all the project documents, plans, and specifications and familiarize yourself with them. You want to make money, so crunch some quick numbers to determine whether you can make a reasonable profit on the project.
Next, determine whether you can perform the work if you win. Make sure you have the manpower and equipment available to start the job on time and complete it on schedule. Does your company have the experience and expertise to handle the size and the scope of the project? It’s no good to anyone if you bid and win a job you can’t complete.
Perform a risk assessment to determine if there are any red flags that might cause problems if you win the project like unknown site conditions, safety concerns, accelerated timelines, and incomplete or inaccurate bidding documents.
Other factors to consider in your review should include project location, duration, competition, and client. Decide which criteria are most important to your company when selecting projects to bid and apply it to all projects you are considering bidding on so you can spend less time going after bad projects.
Perform Accurate Takeoffs & Estimates
It’s the 21st century, you shouldn’t be performing takeoffs by hand anymore. It’s a tedious, time-consuming process that is prone to mistakes. Your estimators’ time can be better spent focusing on other aspects of their jobs than sifting through reams of paper plans with their colored pens and pencils trying to ensure accurate takeoffs.
There are a number of great digital takeoff tools on the market that easy to use and will save your estimators a ton of time. Find one that has the tools you need to easily upload plans and perform quick and accurate takeoffs to improve your estimates.
Do you conduct a post mortem to review bids, win or lose, after they’ve been awarded? If you keep losing bids and aren’t sure why it’s probably worthwhile to do a little investigating. Review your takeoffs and estimates to ensure they were accurately prepared. Speak with the owner or GC and ask why you didn’t win.
Was your price too high? Did the winning company have better experience or performance history? Did you forget to submit something in your proposal? Understanding why you lost, or hopefully won, a bid is important to be able to make adjustments on future bids and win more work.
Ready to bid smarter? ConstructConnect’s end-to-end solution allows contractors to find the best projects to bid, review project plans and specs, and seamlessly transition to performing quick and accurate takeoffs. Get started with your free demo today.