Bidding is a skill that requires constant refinement, collaboration with stakeholders, and analyzing successful strategies while discarding the ones that don't work. However, it's difficult for contractors to devote sufficient time to perfect their bidding process due to the fast-paced nature of their business. Despite this, if you aspire to enhance your bidding process, you can benefit from our guidelines on how to secure more projects.
Taking on bad jobs can result in greater costs than a good job could ever generate. Therefore, indiscriminately winning as many projects as possible should not be the goal in bidding. Simply winning bids is not a useful Key Performance Indicator (KPI) if the jobs do not generate profits. In fact, you may win projects that only cover your overhead costs, or worse, put your business in debt. As a result, you should always prioritize profitability when assessing potential projects.
Clearly identify the type of work that you should be bidding on
Before identifying your most profitable type of work, there are two things you need to consider.
- You should ask yourself a few key questions, such as which type of project you feel most comfortable with, which work plays to your team's strengths and skills, and which tasks are considered ideal by your workforce.
- You should analyze the "Profit per Man Hour" of previous jobs to help you evaluate which projects may require more manpower than their profitability can justify. It would be helpful to work with your finance team to define your most profitable jobs by using this metric.
By discovering where your ideal jobs and your most profitable jobs intersect, you can determine which General Contractors (GCs) offer these types of jobs and start focusing on them.
Gamyte’s Smart Dashboard presents your bid data in a way that you can see your win rates instantly. You can see the most profitable job types, general contractors, locations and more.
Classify your general contractors based on their level of importance.
In order to be more effective with your time and win more profitable work, it's important to organize your GCs into tiers. This means evaluating each GC based on how quickly they pay and how much profitable work they have available for you. Based on your evaluations, you can categorize them into one of two tiers:
- A-Tier: GCs who pay quickly and have a lot of profitable work for you to bid on.
These are your most important clients, and you should give them special treatment. This includes doing second estimates and quantity checks, communicating frequently, and involving vendors in the conversation. By providing exceptional service, you can build trust and strengthen your relationship with these clients.-
- B-Tier: GCs who have fewer profitable projects and/or don't pay as quickly.
These clients are important, but not as crucial as your A-Tier clients. You should check in with them less frequently and not go above and beyond in terms of services. B-Tier clients can help fill gaps in your workload that your A-Tier clients don't cover.
By separating your GCs into A-Tier and B-Tier categories, you can focus on providing excellent service to your most valuable clients while still maintaining relationships with other clients who can provide additional work. It's important to not dilute your focus by trying to provide the same level of service to all clients, regardless of their value to your business.
Inform your A-Tier General Contractors how much work you want to do with them
Once you have identified the A-Tier GCs, you should specify the percentage of your total work that you want to do with them. For example, let's say your annual revenue goal is $40 million, and you want to do 75% of that with your three A-Tier GCs. This means you'll be spreading $30 million across four sources, at $10 million a piece. The remaining 25% of your work will likely come from hard bid projects that you find off a bid board or things that the GCs send your way that you were not previously aware of.
After you have determined how much work you want to do with your A-Tier GCs, it's time to contact them. You can approach them and say something like, "Hey, I know you do $180M. I would like to do just $10M of that. Here is the narrow segment of projects that I consider my best suited. What are you doing this year that fits in my category?" By doing this, you will find out about potential jobs in advance and be able to put together a plan of attack to win the project. The GCs will often talk to you about potential jobs way before they hit the bid board.
Once you have discussed potential projects with the GCs, you should start
- Aligning vendors and any subcontractors you want to work with on a given project. It's important to find out as much information as possible about the project upfront. See if it's a design-build or hard bid project and start strategizing from there.
- Selling your company at every position to establish an owner-to-owner connection and a VP-to-VP connection. Ensure that your financial person likes their financial person. You want the GC to be happy in every department, so start establishing these connections well in advance.
- Sending your team members out to reconvene with the GC touchpoints every month. Have them go out and get lunch, report back with their updates, and watch the whole picture of the project come together in a new and powerful way.
Assess projects and categorize them into different levels
- Determine the project type: Identify the type of construction project, such as residential, commercial, industrial, or public works. This will help you determine the specific skills, equipment, and labor needed to complete the project.
- Evaluate the location: Analyze the location of the project, including the distance from your base of operations, accessibility, local regulations, and environmental factors. Consider the impact of transportation costs and potential delays on your bid.
- Research the general contractor: Look at the track record and reputation of the general contractor or owner of the project. Check if they have a history of completing projects on time and within budget, and if they have a good payment record.
- Review the bid documents: Review the project specifications, scope of work, timeline, budget, and any other requirements outlined in the bid documents. Make sure you understand the project requirements and can meet them within the given timeline and budget.
- Analyze the competition: Determine the number and type of competitors bidding on the project. Consider the number of qualified bidders, and their experience, bonding capacity, and reputation.
- Consider the project size and profitability: Assess the size of the project and the potential for profit. Determine if the project aligns with your capacity and resources, and if it is a good fit for your business strategy.
- Determine the risk level: Consider the level of risk associated with the project, such as safety hazards, project complexity, or unforeseen changes. Evaluate your capacity to handle these risks, and assess the potential impact on your bid.
By analyzing these factors, you can make an informed decision about which construction project to bid on, and increase your chances of winning the bid while also ensuring a successful project outcome.
Would you like to learn more? Let's schedule your demo today!
