Construction Bidding Tips that Maximize Growth
A smart construction bidding process can not only help you win more jobs, it can help you fund your company’s growth and success. That may seem simple — bid more, win more, make more, right? — but the relationship between bidding and growth is more complex and filled with more potential.
If you are planning substantial growth for your construction company, optimizing your bid strategy should be part of your bidding strategy. Here are five tips for construction bidding that maximizes growth.
Be Early to Bid.
The first tip is to simply get a head-start on your competition. Keep an eye on bid platforms like BidClerk and ConstructConnect.
Rushing to throw together a bid just to be FIRST is a good idea poorly executed. Before you start watching bid platforms, optimize your bid strategy and polish your bid template so when opportunity strikes you are ready to grab it. A good bid template should include categories for all things that matter on a specific job and include the correct way to allocate overhead and profit. It should follow a specific and repeatable process to produce an outcome you can rely on.
Bidding first doesn’t mean you bid on everything. We’ll talk more about that in a moment.
Do the Homework.
First, the legwork. The more information you have before submit your bid, the smarter your bid will be. Study those drawings, specs, and plans. Make sure you see any potential problem areas and account for them in your bid. If something is designed in a way it can’t be built or will be very problematic make sure you make note of it in your bid. As part of your construction bidding process, make time to identify the decision-makers. If you are new to the GC, introduce yourself and your company. People want to do business with people they know and trust; building a relationship with the GC will help your company’s growth whether you win this particular bid or not. Include for the GC a list of references, jobs completed, and pictures of what you have done. This goes a long way and the attention to detail you show in your bid will be a great indicator of what they can expect from you if awarded the job.
Show Your Value in Your Bid.
If we only gave one construction bidding tip it would be this: BE CONFIDENT!
Confidence means highlighting your company’s expertise. You want to prove to the general contractor that your team, under your leadership, is by far the best answer to their need. Showcase your history and reputation too, and any special differentiators that a GC will care about. For example, REAL MF’er and Alphapex owner Charles Covey is proud that the Texas-based waterproofing company was the first large subcontractor in the United States to train 100% of its field staff with OSHA 30 certification. That’s a huge differentiator for general contractors and he definitely highlights that on his bid.
Showing your value also means showing WHY your bid numbers are what they are. Don’t be afraid to list out in a letter or even just simple bullet points what that GC / Project Mgr. can expect from you and your team if awarded.
Bid on Performance, Not Price.
When contractors are ready to grow their business, many decide to lower their bid price in order to win more bids. Unless your profit margin is so exceptionally large that it is unreasonable, don’t sacrifice your margin for bid wins. The GC cares about the price of your bid only once they KNOW you can perform. Performance and trust are the key for the GC and a smart bid focuses on performance way more than the price.
Far more common is that your profit margin is barely enough to support the project, let alone fuel any potential growth. Cutting margin to win a project is undercutting your chances for success on the project and crushing any chance for growth. Don’t forget – it’s about growing your business not winning one job!
Your first action item for smarter bids, then, is to know what your profit margin needs to be. Next, figure out your win rate. If you win 10% of the jobs you bid at a profit margin of 20%, don’t lower your margin. Bid MORE jobs at the same margin!
The additional jobs you win should fuel your growth strategy.
This strategy relies on confidence, as we mentioned earlier. You need to confidently and clearly show WHY your costs are what they are and how your team’s special blend of skills, experience, and culture are worth your bid price.
Bid More, but Don’t Bid on Everything.
Bidding on jobs with problematic schedules, very little room for profit, or that are being handled by a GC with a reputation for late payments, can actually cripple your growth plans. Don’t take on busy work that has your team spinning its wheels. Taking too much risk for one job is not worth ruining your business or setting it back a year.
This is where the first two tips come in handy. With a solid bid template and bid strategy in place, you can use bidding platforms to see the projects first and produce solid, performance-driven bids faster than the competition.
Better Construction Bidding is Part of Your Growth Strategy
Construction bidding isn’t just about winning; it’s about what that win means for your company. When it comes to growth, that means bidding more and bidding smarter so that you can continue to perform the excellent work you’ve built your reputation on AND power the growth goals you set for your company.
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