5 Top Reasons Why Your Construction Bidding Process Is Failing
It’s never a sure thing when you submit a bid for a construction project. In fact, most would consider winning one out of every five projects you bid for to be a pretty decent ratio.
If you could improve your success rate for the construction bidding process, you could add a lot to your profit margin for the year. Not only because you’ll win more jobs, but also because there will be less wasted effort—i.e., time spent on bid proposals that don’t get accepted.
The construction bidding process may be the most important part of a construction manager’s job—even a 10% higher success rate in winning bids can represent a huge jump in profits. But construction managers typically don’t know what mistakes they’re making in the bid proposal process.
Upgrading your construction software to an option with better bid proposal tools is one potential answer, but you also need to fix your internal processes and adopt some best practices.
By avoiding these five common mistakes, construction managers will be able to significantly increase their successful bid rate.
1. You rushed the bid
Some experts say that filing incomplete forms and documents or producing bad estimates are your main downfall in the construction bidding process, but these are just symptoms of a larger problem: underestimating how much time you need to file a proper bid.
Here are four key ways rushing the bid could sink you:
Math errors: You could have a Ph.D. in mathematics, but if you have not allotted enough time to produce a solid bid, you’re going to make mistakes. Forgetting to move that decimal over can make your estimate wildly incorrect, making you look unprofessional in the eyes of the client.
Incomplete forms and documents: The details matter when you’re trying to impress a client, and if you haven’t dotted every I and crossed every T, your client will notice. If they have to come back to you asking for information you neglected to include on a required form, it can only hurt your chances.
Inaccurate estimates: Estimates are incredibly difficult to get right, and they require extensive research. Bidders who don’t do their homework and submit bad estimates may initially win the bid, but will see their reputations get crushed by a disastrous project with out-of-control costs.
Not having the equipment, materials, and labor you need to do the job: A good estimate is dependent on you having all the tools you need to do the project—if you’re lacking a critical piece of equipment or don’t have electricians lined up, you’re asking for trouble.
Here’s the solution: It’s also easy to take way too much time to submit a bid, so the key is to get the amount of time spent right. Around three to four days should be enough time if you are organized, involve key members of your team, and fully devote large blocks of time to the task of preparing the bid.
2. You didn’t visit the site
A picture is worth a thousand words, and a site visit is worth a million. Everything can look good on paper, but nothing beats actually standing with your feet in the dirt where you expect to break ground. Maybe there’s a soil issue that you’ve seen cause problems on past projects, or perhaps you’ll notice access problems that could make it difficult to move heavy equipment around the site.
Here’s the solution: Set aside time to pay a quick visit and check for a few major drivers of potential problems for a construction project:
Access: Can your workers easily access the site? What about your heavy equipment?
**Safety hazards:** Are there any dangers at the site, such as a deep ravine workers could fall into, or existing structures with asbestos?
Money pits: Are there major issues that could blow up your budget or delay the project, such as issues with the soil?
3. Your communication is poor
No matter how clear the request for proposals is, you’re going to have some questions. And when that happens, you need to just ask the client rather than guess.
Getting clarification can mean the difference between getting the job and losing out to a competitor—not just because it means you’ll submit a great bid that the client will like, but also because it helps you built a rapport with the client that could be the deciding factor when down-selecting to one bidder.
Here’s the solution: When you reach out to a potential client during the construction bidding process, remember that they are looking for a few key things from you:
Credibility: Do your homework before you ever pick up that phone. By having solid answers to your client’s questions, they’ll get the feeling that you’ll stay on top of the project if you get the award.
Listening skills: Once you’ve established your credibility, resist the urge to keep talking. This is about listening and then reflecting the words of your potential client back to them so they know you understand.
Consistency: Your client should not be passed around to a bunch of different people in your organization. Make yourself the main point of contact in order to build that relationship.
Transparency: Spell out everything in your contracts and let the client into your firm’s inner workings. Describe the work to be done in great detail, such as what materials you’ll be using and what labor will be needed. Include good financial estimates as well as caveats on what might make them shift as the project gets underway. They need to know that you’re a stable, experienced company that can handle the project.
4. You didn’t beat your competitors to the punch
While you don’t want to rush the bid, time is of the essence when that request for proposals hits the streets. On average, it takes about eight days for the first bid to come in, so you need to see if you can beat that by a few days. Your client is waiting for those bids to answer some key questions they have about the scope and feasibility of the project, and by getting in first, you set the tone and get the client thinking about you potentially for days before the next bid arrives.
Here’s the solution: This timeline can help you get ahead of your competitors:
Day 1: The client releases a request for proposals.
Your action: Immediately begin putting together your proposal and assign tasks to principal members of your team with a deadline of four days.
Day 4: The ideal time to submit your bid.
Your action: Submit your bid to the client, remembering three key elements of a successful bid: fully and accurately estimates the project’s size and value; keeps the client’s individual needs in mind; and considers the market and any key regulations.
Day 8: Your first competitor submits a bid.
Your action: You’ve already taken the best action (getting your bid in early), but now is a good time to reach out to the client and resubmit a summary or propose a sit-down.
Day 12: All bids are in.
Your action: This is another opportunity to ping the client and keep your proposal fresh in their minds.
Day 20: On average, the contract is awarded at this point.
Your action: Hopefully, your next action is to start executing the proposal.
5. Your value proposition is weak
You need to set yourself apart from the competition. Clients are going to wade through a lot of bids from your competitors, and if you don’t stand out, your client may not even notice your bid. And if that happens, they’ll probably just opt for anyone who can beat you on price.
Have you worked on LEED-certified projects? Do you have highly-skilled workers? Did you recently invest in some of the latest equipment? Do you have experience doing exactly the kind of work your client wants done? All of these things add value to your organization.
The things that separate you from your competitors should go on one of the very first pages of the proposal you submit to the client. They need to understand right off the bat what you bring to the table that’s going to make this project a success.
Here’s the solution: Get together with your team and brainstorm what your strengths are and how you can bring value. Explore ways to improve your selling points, like hiring an experienced electrician if you take on bids that require a lot of electrical work, for example.
Fix your bid proposal process now
If you’re making one or more of these mistakes during the bid proposal process, you’re losing out on projects and therefore money. It’s imperative you fix it now, and there are a few quick actions you can take right away to right the ship:
Call a meeting with the top members of your team to fix your bid proposal process. Come up with a plan to submit a thorough bid within four days of an RFP being released.
Schedule site visits as part of your due diligence, although try not to let them become too long: you just want a quick overview so you can spot potential issues.
Find new construction software that can improve communication with your client.