The Art of Bidding
Construction business is growing competitive, day by day and every contractor in this industry is vying to fetch maximum no. of bids. But before we get into detail, let’s understand – What bidding is all about? A construction bid is a process, wherein you (as a constructor) provide your potential customer a cost-effective proposal to build or manage the building of a structure. Bidding being an integral part of the business, it is important to have a thorough knowledge of the ‘art of bidding’.
BIDDING AND PROJECT CONCEPT
Whenever you have a client that approaches you with an idea or a concept for their upcoming project ask yourself a basic question- “Does the concept match the price?” This should be the first parameter to judge if that bid is profitable or not. Jump into a project if you are sure you can make some profit out of it. In such cases, you can also go for a smarter approach. You can choose to provide your client with a fairer picture of their idea and how is it possible to execute it and how much is it going to cost. Use your experience and skill to your advantage and propose a plan which is comparatively cheaper to the one they suggested without changing the whole idea of your client. This way you have a brighter chance of winning a bid.
FINDING THE RIGHT OPPORTUNITY
Understand that every client is an opportunity. It might sound harsh, but it’s the truth! One must have a mind that thinks for the business. It’s essential to look for the right opportunity and the right project that fetches the right profit. Most of the times contractors and estimators rush into clients and bid for projects thinking it’s better to take one instead of rejecting it. Such a decision is non-profitable for any and every type of company. If you are a small team with limited resources or a premium one with 100 employees to feed. In any case, it doesn’t get your company enough money for respective reasons. Thus, it is always smarter to choose your projects rightly and bid for the right one.
But this might leave you with a question- “Should I bid more or less?”
The answer to this is – Bid more but bid right. As a company, a team or a freelancer you must know your ‘Bid-Hit Ratio’. For example, your overall bid-hit ratio is 8:1, however, after a complete analysis you discover that your bid-hit ratio for medium-sized private office projects is 4:1 and your ratio for large, public school projects is 10:1. The math is simple, and after you know this ratio, you will know the exact number of bids you must attempt.
ARE YOU REALLY PROFITABLE?
By now you are familiar with pre-bidding aspects, but what after you have won the bid? Most estimators fail to understand the reason behind their loss. To find out you must answer the underwritten question,
- Have you checked if your methods are making the money you wanted?
- Are you recording accurate job costs for materials, labor, and equipment?
- Are you clear with the scope of the project?
- Are your takeoffs accurate?
Related Read: The Importance of Accurate Quantity Take-offs
These questions need to be answered to check if you are in profit or not. As an estimator, it is mandatory to understand that estimating and pricing is entirely relatable and subjective. You need to make regular checks on your process of work to find out the loopholes that are stopping you from making profits.
Preparing and winning a bid in the construction business is no easy task. A competitive bid or proposal requires a lot of time and attention to detail. While there’s no room for making mistakes, an under-prepared bid can lead to submitting a lot of overpriced, uncompetitive bids. Hence, to be the master of this business, you must be the master of the Art of Bidding.