Though we all aspire to be on the winning side of bids, there’s not much use in landing a project that has risks which outweigh the benefits, right? The challenge for many construction business owners is that in the scurry to bid, it can be hard to fully assess the project, including risks. Read on for pointers on shifting your approach and improving your bottom line.
Discover and Clarify
At bid time, though the spotlight is on “winning,” it’s wise not to lose sight of the ultimate goal: running a sustainable and successful construction business. Without a full understanding of each project, and the risks involved, you can end up scoring one juicy sounding contract after another while sinking your business. Indeed, according to Johnny Bradigan at Construct Connect, much more attention needs to go into assessing risks before finalizing a bid:
Discovering and taking care of risks may be the most overlooked part of preparing a bid. If you’ve found potential risks, you need to study each…. Consider how dangerous the risk is and the impact it can have on the project. If the risk doesn’t seem too likely to happen or would have a low impact on progress, it might be easy to take care of. However, a risk that could become a reality and seriously affect the job could hurt your profits. You will be a much better bidder if you can identify the risks connected to a project. It will also make you better prepared to handle a situation when something goes wrong. Starting…early means you can avoid bidding on projects that won’t make you a profit. It can help you make more accurate bids and contingency budgets, too. Project management will run smoother, and you’ll save time, money, and resources as work progresses.
Another best practice when preparing a bid is to make sure you are getting clarity around your questions and assumptions. If you cannot get the information you need, that’s a red flag, so pause and consider carefully. Bradigan also underscores the importance of taking site visits very seriously in the run up to a bid:
Most opportunities allow bidders to have a pre-bid meeting and visit the job site. These are often mandatory when submitting a bid. That’s a good thing because every job site is unique. What you don’t know about the site can cause unexpected and costly issues when construction starts. When conducting a site visit, you should do the following:
- Take measurements.
- Inspect the topography and take some soil bore samples if that hasn’t been done.
- Look at road access and traffic to the site.
- Determine how much space there is for equipment and materials.
- Find out if environmental protection is needed during construction.
Good To Do: Avoid The Low Bid Trap
Of course, competitive pricing matters, but over-reliance on being the lowest bidder is not the best path to a thriving business. At Well Built Construction Consulting, Chad Prinkey encourages getting out of the low bid trap by positioning the business to win more and better projects:
If you’re like the hundreds of typical contractors, you’re probably getting on bid lists, bidding work, following up (maybe!) and being awarded projects as the “lowest qualified bidder.” It works, right? Your ability to secure competitive pricing from vendors and subs, and your confidence in operations to efficiently run work absolutely matters. As a growing company, you’re never going to win work consistently if hiring your firm is cost prohibitive. I’ll shoot you straight, though: If your sales approach boils down to “be the lowest qualified bidder,” you might as well add “fingers crossed” as an official step in your sales process. The low bidder won’t always win the day, and if you’re only winning when you’re low, you are leaving a ton of business and profit on the table.
Bid Bonds, Surety Bonds, Performance Bonds?
In construction, surety bonds are more than mere paperwork; they’re a testament to your financial stability and commitment to completing projects. Colonial Surety Company helps construction companies of all sizes improve bidding capacity and demonstrate reliability. Our Hometown Bond Program provides local builders with credit based underwriting bonds for up to $250k—no financial statements required.
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Bonding Programs at Colonial Surety Company
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