In an effort to try and win more work, many construction firms and contractors simply bid on as many jobs as they can. The thought process is that if you bid enough jobs to the same customers, you’ll eventually get your share. But that isn’t always true.
And what you may not realize is you might be spending loads of time and racking up overhead costs bidding on jobs that are not very profitable or that you had little chance of winning from the start.
So here are 5 critical components of a strategy that will help you win more bids for profitable jobs.
1. Track Your Bid-Hit Ratio
Ask any owner, estimator, or project manager what their bid-hit ratio is and you may be surprised to find that many of them have no idea. Yet, understanding your bid-hit ratio is such a critical component of measuring the success of your bidding process.
The bid-hit ratio can be thought of as the rate at which you successfully bid on projects. For example a 4:1 bid-hit ratio would mean that for every 4 jobs you bid, you’re winning 1 project on average.
What’s a good ratio? That will depend on many different factors like the size of your company, the industry you’re in, and the type of projects you bid on. But the point is that tracking and measuring your bid-hit ratio is important to success. Otherwise, you’re just flying blind.
2. Focus on What You Do Best
Related to tip #1 above, if you follow your bid-hit ratios over time, you might start to see patterns in the types of jobs you’re winning most often so you know – from the start – which jobs to pursue and which to potentially steer clear of.
Using estimating software to track important factors like types of projects, specific locations, minimum profit margin, ideal job size, and specific competitors also bidding the job will help to improve your win rate dramatically – and avoid allocating time, resources, and overhead costs to low profit projects or jobs you don’t win very often.
3. Know Your Job Costs
An important part of delivering a reliable, confident bid is having a good handle on your true job costs. Stiff competition means you have to nail the price of your bid so your firm not only wins the work, but also maintains a nice profit margin.
You know the estimator has done his/her job when the final job costs equal (or are really close to) the project estimate and budget. And to get the information needed to achieve this balance, you need modern job cost accounting software that tracks everything from labor and materials to overhead and profitability.
4. Think Beyond Price and “Typical” Bids
Naturally, price is always a really important factor. And of course most proposals will include things like terms, scope of work, inclusions, payment provisions, etc.
But if you look beyond these “typical” items, you might be surprised at other little extras that can make your bid compellingly different. Every project has unique requirements that, for the customer, can hold as much (or more) importance as the price.
For example if you were bidding on a home remodel, including provisions for things like flexible scheduling, keeping the house clean, reducing noise levels, and minimizing disruption to the occupants can make a huge difference.
The key is to meet with the decision maker, ask about important factors other than price, customize your bid accordingly, then describe specifically what qualifies your firm for the job, making sure to emphasize those little extra difference makers.
5. Use Technology to Improve Speed and Accuracy
Using the right technology provides the tools you need to build bids quickly and accurately while minimizing overhead costs. In fact, many of our construction clients discover they’re at least 10 times more productive and efficient using electronic takeoff compared to their old paper-based methods. That can be really important when you’re looking to improve your bidding process without increasing staff.
With the right estimating software, you can improve speed and accuracy through:
- Precise takeoff directly from electronic plans
- Improved analysis by activity, phase, or other project breakdown
- Standardization of estimating practices
- Built-in error detection
Conclusion
Winning more work requires more than just blindly increasing the number of bids you send out. A smarter bidding strategy combined with the right technology will help you win more and better projects – projects that fit both your company’s strengths and profit goals.
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