The bidding process can be quite a competitive market. There are plenty of other contractors out there that are looking at the same jobs. What sets your company apart from the others? How are you going to get the job over your competition?
These are all good questions to ask when trying to win a bid. However, another set of important questions to ask yourself is, “Do I have a reasonable chance of acquiring this project and can I acquire this project at a reasonable margin?” explained Tim Wentz, professional engineer and an emeritus professor in the department of construction management courses at the University of Nebraska.
When preparing for a bid, it is important to remember that you’re creating a solid construction bid for both the client and your team and “knowing how to bid construction jobs can make the difference between success and bankruptcy for a construction contractor. If a contractor does not know how to bid on construction jobs, they will have no chance of turning a profit,” said Juan Rodriguez, vice president of projects at Luma Energy and an engineering/construction expert, as part of a blog series.
Like in most aspects of life, money is always a major concern. This is no different in bidding where, “It’s all about the costs. It’s mainly about the bottom line price that’s going to win the bid and in a highly competitive bidding category, you have to find ways to bring costs down,” said Joe Pagliuca, co-owner and president of DMG Mechanical Inc.
It is also important to remember that bidding on a job is not only a risk but it can also be expensive, and “You don’t want to waste time, money, and effort,” said Wentz. He also adds that an important early step on any bid involves conducting a conceptual estimate of the project. Wentz adds, “Getting a clear idea right up front is an important step as it allows you to assess whether or not you have the resources to do the job.”
When starting their bid, one of the most simple and easy steps any contractor can take is to make sure they, “Have a good background and knowledge of the work they are bidding on. You also need to get as much information as you can. This means drawings, specifications, timelines, leads for equipment, etc,” said Pagliuca.
Additionally, Wentz states that one of the first steps any contractor can take is setting up a project risk analysis. “A risk analysis should be a written process and it should be a process that you employ on every single job, and the reason is, if it’s not a written policy on each job, then it tends to be viewed as optional, and if it’s viewed as optional, it doesn’t get done.” Also, ensure you are familiar with a project’s potential team players as, “Relationships overall are critical in the bidding process. Knowing all the potential players is critical, and you need to ask yourself questions like, do you know the architect firm’s reputation? What is their attitude towards change orders?” Pagliuca also echoed this, mentioning how “Consultants specify work in different ways and some jobs have very specific requirements.”
Finding the right fit
It’s also important to realize when a job is a right fit and when it is not. Contractors shouldn’t just bid on anything and everything, as “You bid on a job because you think you can get the job and you think you can get the job at a reasonable margin and it fits with your corporate philosophy,” said Wentz.
Another key factor when preparing for a bid is understanding the job’s timeline. Pagliuca adds that, “Some builders are notorious for putting out bids early, just to get a better price, and that bid for the project may not start for two years.” Pagliuca then mentions how in the time between winning the bid and the start of the project, prices for labour and equipment may increase, which you need to account for.
Wentz also highlights how sometimes the industry’s competitiveness can get the best of contractors and that it’s important to make sound and solid business decisions. “In my opinion, most contractors are type-A personalities. We are competitive, and we enjoy the competition. We enjoy the fact that we can build and do things others can’t. So, when we see a nice job pop-up, we tend to become enamoured with the job and competition instead of asking ourselves good solid business decisions as to whether we can successfully complete that project.”
Go where they ain’t
In keeping with the theme of finding the right job, Wentz explains that contractors shouldn’t be afraid to go where their competitors aren’t. His firm has used this tactic, explaining that “There are areas where it should be easier to get the job simply because my competition wasn’t there. I used to keep track of my big competitors and see what they bid on, and I tried to avoid them because, as a smaller contractor, I wouldn’t be as competitive on certain projects.”
One of the most significant factors in any job is productivity, which also should be considered in every bid. Over the last two years, Wentz explains that there have been increased risks related to productivity, stating, “The labour shortage has increased our risk. When estimating a job, the first question in the estimating process is what productivity can I get from these plumbers, pipe fitters, etc. Typically, the people you use would all be in-house and trained in how your company works. However, the labour shortage is taking some of that away because there isn’t enough skilled labour out there.”
Another factor that has caused some productivity concerns over the last two years is the global pandemic. Pagliuca states, “COVID changed a lot of things in the industry, like timelines on equipment material and the different health and safety protocols on job sites.”
Protocols like wearing a mask or other protective garments, handwashing, and temperature checks are protocols that can become a risk to productivity, explains Wentz. “These all don’t sound like much. But when you start adding those up, and you’re going in and out of a building four or five times a day and spread out across a large team, a lot of contractors have had to take a hard look at productivity in terms of how much work can I get done in an eight-hour workday?”
Find your strength
When trying to stand out try to “Present specific ideas on how to solve problems and explain what you would do and how you will do it,” said Rodriguez.
Wentz adds that it’s best to determine what elements your company is best at and showcase them when trying to stand out. “In our industry, we have the iron triangle, and the three points are speed, quality and price. Most times, the client or owner will pick which two are most important, but it’s crucial that you establish what elements you and your firm are best at, and try to promote those as best you can.”
Lastly, and it may be the most simplest thing to remember, is “to submit your bid with confidence. Confidence that you have the ability to do the work at your number, and if you’re not, don’t submit a bid,” said Pagliuca.