In construction, smartly choosing what projects to bid on, using solid information to prepare every bid, and tracking results, can make all the difference between surviving and thriving. What’s your success rate? What shifts in your bidding strategy would improve your results? Read on for tips from pros.
First Things First: Strategy
Strategy comes before tactics. So, before you run after another bid, pause and clarify your strategy. For example, are you focused on growing through entering new markets, or trying to go deeper in markets you are already doing fairly well in? At Construct Connect, Daniel Behrendt and Jon Curry advise: “Define your business strategy. Make sure your bidding approach supports your biggest goals—be intentional about which projects you go after. Winning more construction jobs isn’t just about sending out a lot of bids. Measuring your performance and adjusting your strategies helps you work smarter and increase win rates.” Toward more successful bidding, Behrendt and Curry offer these specific suggestions:
- Make your work quantifiable. Track the number of bids, project values, and relationship-building activities each month.
- Use historical data and industry standards. Compare your win rates to industry averages: 10–20% for hard bids, 30–50% for negotiated jobs.
- Focus on cost control and estimating accuracy. Regularly check your pricing, labor costs, and estimating process…..Compare quotes to ensure your vendor pricing remains competitive. Even if you have trusted suppliers, it’s important to verify their rates and value. Check your labor rates…with local averages.
- Track your time to complete bids. Find the balance between working quickly and keeping your bids accurate…..Going too fast can cause errors or missed details.
Taking too long can mean missing submission deadlines, losing opportunities to competitors who submit their bids faster, or giving clients the impression that your team is less reliable or responsive…..Track each step of your bid process and look for ways to save time without losing quality.
Good To Do: Break Out of The Low-Bid Grind
For many contractors, the vicious cycle of constantly hitting bid deadlines probably means not enough time is being spent on selling and winning, and as Matt Verderamo of Well Built Construction Consulting reminds us, “At the end of the day, your goal should never be to bid; it should be to win!” Begin shifting away from the low-bid trap by asking these strategic questions:
- Are we bidding too often?
- What do we do that is better and different than our competition?
- Do we have a solid go/no-go that makes it clear what projects are in our sweet spot?
- What relationship development efforts do we have going on? Do we have anyone (or multiple people) whose responsibility is to develop relationships?
- Do we have a sales system? Or just a bidding system?
Successfully shifting to more negotiated work requires a clear picture of both your ideal client profile and your ideal project: be ever more strategic about the kinds of clients you love to work with, and those you avoid. Knowing where you can truly add value enables you to stop chasing the bad projects that distract from winning the great ones. Once you have a renewed focus on the clients and projects you want, you’re ready to win more negotiated work, following these pointers from Verderamo:
- Develop a go/no-go: If you get your ideal client and ideal project right, then you should use that information to develop a go/no-go criteria. You will be shocked by how clarifying it is to start saying “yes” to the right projects and “no” to the wrong ones.
- Create a culture of business development: Relationships matter for negotiating work, and most contractors don’t do nearly enough business development….Create a culture where BD is everyone’s job. You’d be amazed by the benefit of having everyone on your team consciously build relationships….Get everyone involved.
- Train estimating staff in basic selling principles: …Teach them how to use leverage, negotiate, run high-quality sales meetings and use the power of influence to get more projects awarded at your target number. You’d be shocked by how your hit rate changes just because the team starts to see the big picture — and focuses on winning, not bidding.
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