“It’s impossible to compete in this tight market as there’s always too much competition.” “The only way I get any jobs is when we leave too much money on the table.” “I get tired of cutting our bids to beat the competition.” “How can we ever make enough money to survive?” Does this sound familiar? I’ve been hearing these same complaints about the construction business for over 25 years. It seems as if nothing changes as contractors continue to compete against too many low-price competitors.
Bid Like You Fish!
Before you go fishing, you need the right bait to entice fish to bite. Think of your bid as tasty bait customers will want to bite so you can land a juicy contract. When you fish, your goal is to catch either the big ones or lots of fish. So, you look for the secret or robust fishing holes where they bite. When looking for profitable projects to bid and propose on, you must seek opportunities that’ll give you the best chance to make the most money. When you finally catch a fish, reel it in, weigh it, and decide if you want to keep it. After you submit a bid and get the call to cut your bid or match a better price to get the job, it’s your choice to accept their offer as well.
When you go fishing and they aren’t biting, what do you do? You try different fishing techniques, change your bait, or move on to another fishing hole. But stubborn contractors don’t look elsewhere when they don’t win enough contracts from their customers. Most contractors wait for the same customers to call and therefore keep bidding for the same customers on the same project types over and over, using the same bait and proposal strategies as they’ve always used. Contractors often think if they bid on enough jobs, eventually they’ll get their share. This effort won’t get you consistent positive results you want. Like fishing, you must change your estimating and bidding strategies to get the big ones to bite more often. You have to use the right tackle, different techniques, and tastier bait to get the fish to think your bait is better than your competition or look for better fishing holes.
Track Your Bid-Hit-Win Ratio
Your ‘Bid-Hit-Win Ratio’ is the rate at which you successfully bid and win contracts on projects bid. Track the total number of wins versus the total number of bids. Or you can track the total dollar of bids submitted versus the total dollars won. For example, a 5 to 1 Bid-Hit-Win Ratio based on the number of bids indicates for every five jobs you bid or propose on, you’re awarded 20% of jobs bid. A 25% win rate based on dollars bid indicates you win 1 out of 4 contracts. This 25% win rate based on dollars bid versus 20% win rate based on number of bids indicates you win more larger size jobs than smaller jobs.
In a survey I conducted of over 2,500 construction general contractors and subcontractors, less than 15% know and track what their ‘Bid-Hit-Win Ratios’ are. To me, this is like going fishing and not really knowing where to fish or caring if you catch any fish! Do you know what your Bid-Hit-Win Ratio is? To determine how many jobs to bid, what type of jobs to go after, what size job you are more competitive in, and which customers give you a higher percentage of their work, you must know your Bid-Hit-Win Ratio for these different categories. Track it by types of projects, customers, job type, job size, project location, customer, city, contract type, and competition. As you study your Bid-Hit-Win Ratio trends, you’ll find certain customers give you more work than others and you’ll find you do better with certain kinds, sizes, and types of jobs.
Offer What Customers Want
Think about what you include in your typical proposal or bid: price, terms, scope of work, specification section number, inclusions, exclusions, a list of the plans and specifications, and payment provisions. These facts and figures don’t take into consideration what your customer really wants. Sure, they want a low price based on an “apples to apples” scope of work, but what else?
Things customers may value more than low price:
- Ability and experience – Understanding the plans and specifications, reputation for excessive change orders, in-house design and value engineering, and experience in similar type projects.
- Schedule – Ability to complete projects on time, flexibility, response time for punch-list work and call-backs or warranty work.
- Customer service – Trust with delicate customers, service department, flexibility, and response time.
- Solid workforce – Properly trained professional field crews, foremen who can make decisions, large enough crews, ability to make the schedule, and quality workmanship.
- Image – Maintain clean jobsite, jobsite image and uniforms.
- Financial security – Financial strength & bonding capacity, payment schedule and need for cash.
- Safety – Great safety record, documentation, EMR rating, and implementation of safety plan.
If you don’t offer anything more than your competition, you only sell price!
Every project has unique requirements which are often more important than price. Before you start working on an estimate for a customer, Always ASK – ASK – ASK the decision maker what’s important on this job. Then, custom design your bid proposal accordingly. Highlight the differentiating factors and make it clear that their priorities are the same as yours. You must be competitive, but you often get chosen because of what else you offer to your customers.
Use Your Bid as Bait!
Remember your bid is bait to go fishing for a contract. The main purpose for your bid is to get a meeting with your customers. At this meeting you can discuss the project in depth, review how you can help meet your customer’s goals, explain why you are the best choice, review pricing options, get a second chance to be the selected contractor, and get a last look. Getting a last look is your second chance to match the price of the lowest bidder, only if you want to. It is very difficult to accomplish all these actions via email or over the phone.
To get a copy of Winning Ways To Win More High Margin Customers & Contracts, email GH@HardhatBizcoach.com. Not all of these tactics will work for you. Try them and you’ll like the outcome as they improve your Bid-Hit-Win Ratio. When you’re not getting the results you want, change your tactics, try some different bait, and find a new fishing hole as you look for profitable work. By trying new ideas, you can make estimating and bidding a fun and challenging experience with a great return. Have fun fishing!
George Hedley CPBC is a certified professional construction business coach, consultant, and popular speaker. He helps contractors build better businesses, grow, profit, develop management teams, improve field production, and get their companies to work.
He is the best-selling author of “Get Your Construction Business To Always Make A Profit!” available on Amazon. Watch his educational videos on YouTube.
To get his free e-newsletter, start a personalized BIZCOACH program, download online courses, or utilize his contractor templates, visit www.HardhatBizcoach.com or email GH@HardhatBizcoach.com.
