How to win bids that result in profitable jobs
Three areas for improvements
Does this sound like you? “We are having a hard time winning bids that result in profitable jobs. We can win short-term business by low-balling it, but we cannot survive this way.”
Here’s a great discussion of the issue from Sage CRE.
ERRORS, LOSS OF PROFIT: The cost data that our estimators use is inconsistent and sometimes out of date. Too high and we miss the opportunity. Too low and we leave money on the table and run the risk of being awarded the job with no chance for profitability.
INCONSISTENCY: Our estimators take great pride in their work and like to do things their own way. Unfortunately, when everyone is using different tools and methods for estimating, it makes final review and the ability to reuse historical estimates for new projects we’re bidding difficult-not to mention risky.
REPUTATION: Relationship building is key in the construction industry. If we continually low ball bids to get work in the door and rely on expensive change orders to make jobs profitable, we run the risk of tarnishing our reputation and jeopardize future opportunities. We recognize the shortcomings of doing estimating using a generic spreadsheet. We’re required to double check all our work and run the risk of making errors that would give us a bad reputation.
Adopting a construction-specific estimating tool will streamline/automate the entire estimating process and also help build historical information that can be used again and again in future estimates.
Estimating databases come in a variety of flavors depending upon the user’s specific needs and trade. Select from a shell to build your own or choose from a number of “out-of-the-box,” databases requiring a minimal amount of refinement.
Integration of Sage Estimating with Sage Accounting (specifically Job Cost) in either Sage 300 CRE or Sage 100 Contractor helps eliminate the need for duplicate data entry and helps track job profitability at all stages of the project. By having all of your estimators using the same tool and collectively building a database of costs and information that you can access for future estimates, your estimates will be accurate and ensure the projects you bid on will be profitable.