Acquisition of projects in the construction sector is generally done through the process of bidding. It requires a shrewd mind and years of experience to hone your bidding skills and prepare precise estimates to win a project. Your bid should be prepared in a way so as to win you the project as well as to get you a reasonable profit out of it. Expertise along with the right proportion of software and digital tools can facilitate the process and help you win the most coveted projects.
With the cut-throat competition out in the field, one has to be extra careful when they prepare their bids(the final price). The precision and accuracy of your estimate(contractor's internal costs) play an important role in deciding the future of the bid. Committing even the smallest error can mean the difference between submitting a winning bid and missing out on a highly desired and lucrative project.
Here is a list of 10 important tips to help you bid smartly :
1) Approach the Quality Construction Projects
Opting for the right projects to get associated with is extremely important. Don't try to jump over every other project open for bids. Be aware of what you can deliver, your prowess and what is profitable enough to keep your firm running smoothly.
Construction projects usually demand a lot of investment of time and resources. Better than getting stuck in a project and regretting it later is to take a sufficient amount of time to consider each and every aspect of the project. Spend a sufficient amount of time reading the scope and requirement of the project and do the math if it is profitable enough to work.
2) Take a Site Tour and Talk to the Authorities
Reading the site conditions properly can help clarify a lot of nuances and complications that otherwise may catch you off-guard and disturb the number-balance midway. Noting down the obstructions, accessible and inaccessible routes, availability of equipment, additional investments et cetera could further help you crunch the numbers and help you decide the worth of the project.
Meet the authorities and seek clarification relevant to the plans and site conditions. This is extremely important to hold as you might get to know about some obscure details regarding the project which you might not be able to obtain just through reading the specifications. You have to have as much detail as you can in order to create an estimate as precise as possible.
3) Analyze your Bid-hit Ratio
Keep track of your bids. A survey by contractor coach George Hedley states, "fewer than six percent of construction and design-build companies know and track their ratio". Your bid-hit ratio is simply the number of projects you must bid to win one job. There is nothing called a "right" ratio, but you would want it to be as low as possible (a 1:1 ratio would mean you win every bid you submit). If you bid lavishly on a lot of projects, on highly competitive jobs, or on mostly government work, you will tend to have higher ratios. Those that focus on selected projects and are critical about their choices generally have lower ratios.
4) Review Profitability
Once you have ascertained all the job costs(material, labour, bonding, supplies and equipment) accurately, put your profit margin on the table and see if you are getting the desired profits. If your profit margins aren’t what you expected, it could be either because of your imprecise estimate, or the productivity issues on the jobsite which is causing job costs to be higher. Regardless of whatever the reason is, you should work to resolve the issues to get your profit margins where they need to be.
5) Hold a Bid/No-bid Review
This is an intuitive process where you consider all the factors like profitability, capability, historical analysis, long-term strategy and risk assessment to come to a decision whether a project merits your investment or not. Bid/no-bid review follows a subjective approach and helps you arrive at a conclusion through a data-driven approach. Some other factors that should be considered while holding a bid/no-bid review are: the current market situation, competition, business strategy, financial condition of the firm to perform, project location, scope etc.
There are three basic bid/no-bid tools used to reach a conclusion: Bid/no-bid decision checklist, Bid/no-bid decision matrix, and Bid/no-bid decision tree. One can reach their decision by assorting the factors in any of the abovementioned forms using just one of them or all if necessary.
6) Perform Accurate Take-offs and Estimates
After the careful examination of the plans and blueprints, prepare a takeoff list of materials that you would require to complete the project. This list essentially consists of physical materials like concrete, aggregate, sand, timber, glass, electrical fixtures, plumbing accessories et cetera. Take-offs can be recorded either through the digital means or through the traditional paper blueprints. This will contribute to making a much more preciser estimate.
The estimate should reflect that you really understand the job and the numbers should not run awry. At last, be certain that your bid is devoid of grammatical and typographical errors.
7) Underline your Qualifications and Skillset
If you are an experienced contractor then you would surely hold a list of successful projects and achievements. Do let the project owners know about your accomplishments and how you have tackled critical situations at different sites. In case you are an amateur contractor but you are confident enough about the successful execution of work, brandish your skill set, your staff and equipment you possess. Be clear with your ideas and explain to them how you can make the job successful and are ready to face any challenge that may come. Bidding, apart from making precise estimates, is also a bit about persuasion. Convince the project owners that you are the one with all the skills and repertoire to execute the work.
8) Up your Game with Digital tools
The precision of your estimate, transparency in language and your connections are of utmost importance. There are multiple digital tools that bring all these elements together on a single platform and help you with the quick management of work. Apart from the storage of data, these tools tender zero errors and offer instantaneous updates relevant to the project. Software like Bidclerk, isqft, bidplanroom, Buildertrend, Procore, smartbid help you with the management of the database of construction costs, streamline the preconstruction phase and bid process effectively.
9) Understand the Market Fluctuations
Fluctuations in the costs and availability of materials are inevitable. Therefore, construction contracts usually come with a provision for fluctuations that may allow for the changes in the cost of labour, transport, taxation, materials and administrative costs. You should pre-consider each and every material's access, cost and availability during the construction phase, and prepare your estimate accordingly. Delays in the delivery of material and eventually the project would increase the project costs and may have serious political or business consequences. Effects of inflation in large-scale projects may have a significant impact whereas, in the small-scale projects, the contractor is assumed to have considered it in the estimate.
10) Communicate
Actively participate in conversations with your Project owners, subcontractors, material suppliers and legal advisors. Ratify all the data with the relevant people and make sure that you have a complete understanding of the contract. The most dangerous thing one could do to jeopardize their chances of winning a project is assuming information. Seek clarification wherever you have doubts.