Let’s face it, there are many ways a contractor can get off track during the preconstruction process. For example: Not having enough allocated estimating resources, bidding the wrong types of projects, or bidding in an unfamiliar geographical location can ultimately add up to losing the project—or even worse—winning the wrong projects.
One of the biggest missteps you can make is when you don’t thoroughly track and compare historical invitations to bid data. This can lead to bottlenecks and costly delays. For example, working with bad/unqualified contractors or suppliers, taking on project types you continue to lose, or working with owners on projects that have failed.
Establishing Your Benchmarks
Are you already tracking historical data? If not, you need to take the first steps to start compiling this data.
For starters, you should closely monitor and compare benchmarks throughout each stage of the invitation to bid process. By continuously tracking and logging the data within your company, you will start to increase your bid-to-win ratio.
By comparing historical data, it will become easier—and clearer—how to choose and win more profitable projects.
Track and Win More Projects
We know every contractor should track their win-loss ratio. Where do you begin to find the data to even begin monitoring from within a software or spreadsheet?
You can start by taking a closer look at the information that can be identified during the preconstruction phase. Then, you can use this data as a tool for future bidding practices and to help you win more projects.
• Owners – It’s important to track the owner on past projects to determine if you have won more projects with them or lost more projects with them. You will obviously not want to prioritize bids on a project from an owner that has continuously not awarded you a project. Also, if previous projects have failed under that owner, it’s probably not the best idea to work with them again.
• Type of Project – Tracking the type of project that your company usually wins or loses the bid to is also important. If you win more commercial or federal projects, then continue to prioritize bids on those specific types.
• Contractors/Suppliers – Keep a list of your top, qualified contractors and suppliers that have responded to your requests in a timely manner, submitted the best proposals, and have continuously helped you win more projects.
• Bidding Board – How do you organize your bidding opportunities? Can you, and your team, quickly access this information to determine resources to bid more?
• Project Location – When you track the location of a project, you’ll be able to forecast which areas may have less competition, more qualified contractors to work on the project, etc.
• Team Members – Another item you can track is the team member that worked on the bid. You might have certain estimators that are great at putting together the best bid packages that owners want to select and award you on.
Becoming More Selective in Bidding
Armed with this data, you can begin to focus on landing work in the right market, business segment, or geographic area. Many firms will spend time and money chasing work they could end up regretting. They fail to narrow their focus by job size, geographic region, or work type.
Here is another simple formula to help you determine the best projects for your business:
• Review and calculate percentage of profits from all jobs in the last year
• Sort the jobs by the most profitable at the top and the least profitable at the bottom
• Only take leads for work based on the top three most profitable projects
In addition, winning specialized work will lead to stronger profit margins. For example, a concrete contractor could specialize in decorative concrete. By serving a segment, they can charge more for expertise and quality. Other contractors focus on second-story additions, kitchens, and bathrooms, or develop an in-depth knowledge of how older homes in a neighborhood are constructed.
When choosing to bid with a narrower focus, you will begin to see a more positive impact on the bottom-line. Post-COVID, you could also consider specializing in warehousing and storage facilities.
Software to the Rescue
Compiling historical data manually in spreadsheets or roughing out numbers on your calculator is a great first step. However, integrated construction software can provide a comprehensive database where you can find historical pricing on cost items, including materials, equipment, and labor.
Having a single, go-to source of the truth will provide the data at your fingertips so you can better prepare for future bids and jobs. With one location, you can find all the accurate estimating information you need to win more profitable projects.