PlanGrid Construction Productivity Blog

How to Win More Construction Bids with Fewer Proposals

4 Hacks to Bid More Competitively

As of late, many contractors are putting less markup in their bids in order to be more competitive and to increase their chances of winning construction bids. Others are struggling to win bids so they are expanding their geographic boundaries or bidding on types of work that they have not successfully completed in the past.

— Tim Ayler and Alicia Radar, Construction Services Group

Win More Construction Bids with Fewer Proposals

It’s generally accepted within the construction industry that the best way to submit a construction bid is to develop the most accurate cost estimate and then deliver the lowest possible bid based upon that cost estimate. But in the competitive environment, general contractors win only 1 out of 6 bids and subcontractors only 1 out of 7 bids using this tried-and-true method. For some contractors, bid win rate is as low as 1 out of every 35. Wow. No wonder construction professionals often claim they can’t win bids in such a competitive environment, grumble that they’re tired of cutting bids to beat the competition, or worry they simply can’t make enough money to survive.

But what if you could actually start winning more construction bids by submitting fewer proposals? In an extremely competitive environment like construction, you need to do more than just submit the lowest bid. You need to go further: you need to start bidding competitively. While people often assume that a competitive bid is always the lowest bid, this isn’t always the case. The fundamental insight is this — to bid more competitively, you’ll need more than a low bid or a typical strategy, which includes accurately estimating costs and improving your speed and accuracy.

You’ll need to hack the bidding process. With this in mind, I’ve highlighted 4 key hacks to help you win construction bids quickly.

Hack #1: Be More Productive

Let’s face it, the more productive your team is, the larger your profit margin. After losing a highly competitive bidding process, many contractors will assume they lost the bid because other contractors were bidding “below cost.” But were they? The fact remains that at least 40% of companies don’t understand or track their costs, and if you’re losing more construction bids than you’re winning, you should ask yourself if you truly understand the costs of executing a project. More importantly, you should ask yourself if you could execute your projects more cost-effectively.

Many construction experts will rightly recommend that you focus on your estimating process rather than on costs. But the best way to bid more competitively is not just to track costs so you can provide more accurate estimates — it’s to improve your overall productivity. By improving your construction productivity, you’ll reduce your costs so you can bid more competitively.

As I’ve discussed in a previous post, improving your productivity doesn’t have to be a herculean task. In fact, there are many easy ways to quickly increase construction productivity, from adopting construction productivity software to improving safety training. By making even small improvements to your productivity on the job site, you can expect to experience significant cost and time savings. One expert suggests that by lowering your costs by 1%, you could “reduce the number of bids that you generate in a year by 10% and still make your volume and margin goals.” In this way, by making small improvements to your productivity, you’ll be able to win more construction bids with fewer proposals.

Further Reading:  How to Save Money in Construction: Cost-Cutting in Each Project Phase

Hack #2: Be There First

One of the easiest ways you can win more bids (and one of the most underrated hacks) is to preempt the competition. That’s right, you need to be there before your competition. It’s difficult to win a bid against 10 or 30 competitors, but what about 3? The more bids an owner or general contractor receives, the greater likelihood you’ll lose the bid. It’s hard to believe, but winning a bid doesn’t mean you have to be a math wiz. By using construction bidding marketplaces and networks to find jobs and projects before your competition becomes aware of them, you can be there first and increase the probability that you’ll win the bid. These online tools will not only help you find new jobs to bid on, but will also allow you to create a company profile that will be included in bid searches. In a perfect world, you’d never have to bid at all. Jobs would just fall into your lap. We obviously don’t live in a perfect world, but wouldn’t it be nice to have project owners chasing you rather than you chasing them?

Below are three top construction bidding marketplaces and online networking tools that will help you be there before your competition:

  1. BidClerk — BidClerk says they provide “commercial construction leads and project information,” but what they really do is provide a platform for construction professionals with business opportunities at every stage of the construction process. Some contractors reviewing the network’s efficacy have claimed to increase their bid-hit ratio to 4:1 using this tool. A key tip for getting the most value from this marketplace is to get up as early as 6 am and start making calls before other contractors.
  2. iSqFt — iSqFt is a construction networking tool that allows construction professionals to connect, communicate, and build relationships, which increase your chances of winning bids. Just imagine how much more likely you’ll be to win more work after receiving a bidding invitation. iSqFt has just merged with BidClerk, but for now you can still get benefit from using both tools.
  3. BidPlanroom — BidPlanroom is a commercial construction bid network. Among other activities, the platform allows commercial construction professionals to join a bidder’s list, post projects, and promote their company. However, unlike other networks on this list, BidPlanroom membership is free.
Further Reading:  How to Save Money in Construction: Cost-Cutting in Each Project Phase

Hack #3: Be on the Right Bid List

Okay, I’m just going to say it. Mountain climbers climb mountains because they’re there. That may work for climbers, but it doesn’t work so well for construction professionals. Just because a job exists, doesn’t mean you should bid for it. One of the worst mistakes many contractors make when submitting construction bids is to bid on every job they find. In this sense, a highly effective bidding hack is to reduce the number of proposals you submit. While it’s tempting to assume that competitive bidding is a volume game, i. e., the more you put in, the more you’ll get out, in many cases it’s actually the opposite. By narrowing your list of bidding opportunities, you’ll be able to improve the quality of your bids and select bid opportunities with a higher probability of success.

So what is the “right” bid list? The right bid list is one that’s right for your company. But here are some points to consider the next time you bid on a project:

  • Bid on your niche. By that I mean you should figure out what you’re best at and bid only on those jobs. You can’t be good at everything, but you can be great at something. Are you better at commercial or industrial projects? Are you better at smaller or larger projects? Whatever it is, take a moment to think about what your team has been successful at in the past — those projects you completed that resulted in repeat business — and then bid only on those types of projects.
  • Stop bidding on projects you can’t win. There are some projects that you can’t win no matter how much energy and effort you put into your proposal. If the project calls for a certain specialization you lack, don’t assume that a low bid will overcompensate for that deficiency. It won’t, and you’ll only succeed in wasting your time, effort, and money on a futile endeavor. Likewise, don’t bid on projects located where you’re not a local contractor or you simply don’t have a sufficient workforce to fulfill the job requirements.
  • Don’t bid on projects you’re unlikely to win. Many factors can increase the likelihood you won’t win a bid, but one of the most obvious is how competitive the bidding process is. Are you bidding against 3 or 30 competitors? Take the time to find out and make a decision to bid only on jobs with fewer than 5 competitors. Don’t just track your bid-hit ratio. Track it by customer, project type, location, and competitors and develop benchmarks. By evaluating your track record against the entire landscape, you can start making a calculated decision to bid only when you have the greatest likelihood of success.
Further Reading:  How to Save Money in Construction: Cost-Cutting in Each Project Phase

Hack #4: Be More Valuable

Sell “price” less and “value” more. While I’m not suggesting you stop selling price altogether, I am suggesting that you start selling value when bidding on a project. When a company has an undifferentiated brand or no real competitive advantage over other companies, their product or service becomes a commodity. Nobody wins a commodity game; it’s a game where everyone has to slash their prices (and ultimately their profit margins) to win a bid. In this respect, the “winner” of a price war is the contractor who gets the job because they end up bidding so low they lose their profit margin. In contrast, when you have a differentiated brand, you can start demanding a “price premium.” A price premium is the amount or percentage your price exceeds the average price charged in the marketplace for those goods and services.

In general, a few attributes you can focus on to start selling value rather than price are expertise, quality control, customization, and responsiveness. When thinking specifically about the construction industry, your customers can, and often do, value these attributes more than price:

  • Expertise and experience — Do you and your team have the most skills and experience when it comes to the type of project you’re bidding on?
  • Quality and size of team — Do you have a highly skilled team and the right amount of resources to complete a particular project?
  • Customer service and support — Does your team provide an extra level of customer service and support?
  • Salesmanship — Do you have the ability to really “sell” the value your team brings to the table in your meetings, pitches, or bids?
  • Reputation — Are you known in the industry for excellence in a particular type of project?
  • Financial security — Is your company financially secure? Do you have better payment terms or need less cash?

By differentiating your brand via one or more of the above attributes you’ll be able to wind more construction bids even when you’re not the lowest bidder. In fact, your bids will actually be more competitive when you’re demanding a price premium. And by bidding higher, you’ll increase your profit margin and your bottom line.

Win More Construction Bids

In today’s competitive climate, construction professionals often find themselves struggling to win bids while maintaining profit margins. Many try to solve this problem by increasing their bidding volume but succeed only in wasting precious time, money, and resources. While developing a long-term bidding strategy will increase your odds of winning more bids, by using the four hacks I’ve highlighted here, you’ll be well on your way to winning more construction bids with fewer proposals.


 

Lynn Langmade

Lynn Langmade is currently the Director of Content Marketing at PlanGrid, where she develops content strategy, manages the editorial calendar, and oversees content production workflow. Lynn is also the managing editor of PlanGrid’s corporate blog and social media channels.

As an early adopter of social media, Lynn has over 45 thousand followers on social media. In 2014, Lynn was the recipient of the Marketo “Revvie” Award in the Socializer category. She has a PhD in English and over 15 years B2B high-tech marketing experience.

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