8 metrics that drive revenue growth in estimating

by Sila Keskin in June 15th, 2021

Do you think you are on track achieving your business goals? You can capture the factors that affect your team's performance by setting up a good set of KPI (Key Performance Indicators).

Here is an interesting article I found about some metrics that drive revenue growth in estimating.

Overview Of Estimating Process

  1. Capturing the bids - Capture your bids in one central location so that you don't miss out.
  2. Qualification - Filter the projects which does not worth bidding
  3. Submittal - Prepare the takeoff and collect material quotations to put together a proposal
  4. Win, Loss - Keep track of win/loss rates and analyze the reasons behind win or loss

Traditional KPIs And What's Wrong With Them

Total projects bid out, Total revenue bid out, Hit ratio by number of projects, Hit ratio by revenue do not give you a logical results when it comes to analyzing how well your company is doing.

You should focus more on these questions to get a deeper understanding behind the win/loss reasons.

  • What types of projects are we winning (interior fit outs, core & shell)?
  • Do these projects match our company's core competencies?
  • Who are our core customers and what is the hit-ratio for each of them?
  • Are our core customers consistently coming back and awarding us more work each year?
  • Do we have a diverse mix of customers or are we heavily reliant on just a few?
  • How many opportunities are we declining each month that we could otherwise be bidding?
  • How does our markup % influence our win ratio?

8 KPIs For Estimating

  1. Number of qualified bids - It means the total number of the accepted & qualified bids and declined & qualified bids
  2. Current market capture - This is the ratio between the accepted bids and qualified bids. If it is low, it means you are missing out some opportunities by not bidding on some qualified projects.
  3. Portfolio of submitted bids - Some customers are core for your company. Your portfolio includes all bids you submitted. Knowing the ratio of the bids of core customers can make strategic moves to grow your business.
  4. Portfolio of qualified declined bids - Knowing the reasons behind why some of the qualified bids are declined will help understand the issues you are having in your team such as lack of capacity, unfamiliar general contractor.
  5. Hit ratio - it is main indicator of your win rate, but it needs to be supported with other KPIs.
  6. Follow up % - If this ratio is high, it means you are following up for your submitted bids which makes you build a good relationship with GC and also see the missing scope in your proposal.
  7. Estimating Velocity - This KPI mainly helps you understand if you have enough capacity on your team which can be improved with an estimating software or you may need to hire more people.
  8. Markup % - average markups for won or lost jobs are very important to understand if you have competitive margins. High markups make you lose the job as well as low markups make you lose money.

Click here to read full article on Basis Board

Published by Sila Keskin