90% of the work on a job is done by the subcontractors – including all the administrative and office work, yet most of this work is not billable and must be absorbed by the profit. Most of this non billable effort takes place in the pre-construction phase which requires a tremendous amount of detail and effort.
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For instance, an average subcontractor puts together 100 detailed bids monthly and wins only 2-3% of of this work! Sometimes they bid on every project sent by a particular GC but they are never awarded the job.
The question subcontractors should we asking themselves is “How do I focus my bidding on the General Contractors that matter the most?”.
How to pick General Contractors that matters the most?
1. ROI – Return of Investment
ROI is a crucial factor while deciding which part of the work matters the most.
As we all know, ROI is basically the ratio between your profit and investments.
In order to increase your company’s ROI, you need to figure out your biggest players who bring the largest portions of your profit.
2. The 80/20 Rule
A.k.a. the Pareto Principle is a successful method to understand the significant customers and of course their needs. The 80/20 Rule simply means the 80% of output comes from the 20% of the input.
For example,
- 20% of the sales reps generate 80% of total sales.
- 20% of customers account for 80% of total profits.
- 20% of the most reported software bugs cause 80% of software crashes.*
You will most likely gain 80% of your profit from 20% of the General Contractors you are bidding. This should guide where you focus most of your time and effort.
3. Tracking Your Data
The 80/20 Rule is not the only way to understand what brings more value to your business.
Data Tracking is also crucial.
- Track your win rates by GC – If you are consistently bidding to the jobs of a particular GC and get no traction, you might want to rethink those efforts. Stop wasting time on freeloading GCs who may use you as a comparison estimating service only.
- Track your win rates by Sector – Repeat business and referrals will reduce the risk of surprises during the construction which will prevent profit loses i.e. maybe aim your focus on a certain sector such as hospitals or schools
- Track your engagements with your customers – Keep track of your GC interactions outside of a particular project and the level of responsiveness. **
We, at Gamyte, give you the right tools that help guide your bidding strategy including a dashboard with a host of statistics including win rates by different variables such as GC and Sector.
You can also keep track of the communication you had with your clients in the same platform.
Formulating a bidding strategy has never been this easy!
Click Here to schedule a demo!
* https://www.forbes.com/sites/kevinkruse/2016/03/07/80-20-rule/?sh=1614a9c43814
** https://solutions.borderstates.com/how-to-win-construction-bid-contracts/
