Austin’s construction industry is having a bit of a moment, and anyone who has spent more than five minutes driving in this city knows it. You can’t swing your arms without hitting a construction site or newly-opened business, and generally speaking, that is a very good thing for the local economy. Hundreds of people migrate to Austin daily, and as a result, the city is under perpetual construction with new projects and openings of new businesses. New business bring jobs, and not just the owners will create with their businesses, but also for construction professionals. As the city continues its exponential growth, there is an ever-growing demand for construction firms to build schools, roads, high-rise apartments, and shopping centers to accommodate. It would seem that getting a project or two is anyone’s game, but the most projects are often awarded to large construction firms. Small, independent contracting firms, especially those owned by minorities and women, are left scrambling to pick up what’s left.
How can small firms effectively compete when they lack the resources that their larger counterparts seem to have in spades?
It turns out that while having innumerable resources can certainly tip the scales in a large firm’s favor, actually winning bids comes down to having effective bidding and estimating strategies. This is where bids are most often won (or lost), and while many independent contractors submit their bids along with everyone else, they often make mistakes that end up costing them the project.
Here are a few tips for improving your bids:
Know your worth. This goes without saying, but many small firms don’t properly assess what their services and skill sets are worth prior to submitting bids, and dramatically undervalue what they have to offer to a developer. It’s not uncommon to find an independent contractor or small firm submitting bids and hoping to at least break even on a project because they don’t know what their time and effort are actually worth. When the sawdust clears, they bid on additional projects using the same flawed strategy and base their rate on previous projects.
Don’t miss out on quality projects or more money because you don’t know how to quantify your firm’s ability to get the job done well. Identify the metrics you think you need, and if you’re unsure of what these should be, reach out to other contractors for ideas. Set aside a half-day or so to conduct staff appraisals and conduct performance evaluations, staff interviews, and skills assessments. Compare the results to your firm’s needs, and use them to accurately determine what you bring to the table for future projects.
Don’t bid too low. Many firms believe that in order to be competitive for a coveted project, they have to submit the lowest bid in the bunch. This is a colossal mistake that seldom works in the contractor’s favor. If the bid is successful, the contractor is more than likely missing out on thousands of dollars they otherwise would have had in hand if they’d evaluated the project and their time properly.
Bidding too low often signals to a developer that your firm isn’t particularly savvy about its bidding strategy. Many, many contractors employ this strategy as a means to an end, because they simply don’t know a better way, but it can cost them scores of projects that they are more than capable of completing. In a developer’s mind, receiving undervalued bids indicate two things: 1) the contractor doesn’t have the competence the developer needs, or 2) the contractor is careless and unprofessional in how they approach the process. Presenting a clear, coherent bid that adequately assesses the cost of the project, rather than low-balling it will increase your chances of winning.
Estimate, don’t “guesstimate”. It’s 2015, which means that if you’re still using an old school spreadsheet, a notebook, or just guessing at the total cost of a project, you’re far behind your competition. Programs such as Quick Bid, Clear Estimate, or Plan Swift can help you produce a coherent, effective bid that will greatly increase your chances of winning the project.
These are just a few suggestions to help contractors improve their strategies. BiGAUSTIN offers an array of workshops for independent contractors looking to improve their firms as part of its Contractor Readiness Program. We also offer a plan room with directory of current projects available for bidding. Please give us at a call at 512-928-8010 if you have any questions about the program.