Winning Ways

Your company can work hard bidding on lots of construction projects and then rely on being the lowest-price contractor to win contracts. Or, you can use a more effective approach and decide to set yourself apart from the competition. Face it: Most construction companies are not much different from their competitors in what they offer—the minimum required by the plans and specifications, plus good service, on-time completion, and quality workmanship. When this is the case, every bidder becomes a commodity and gets selected based on low price. This is a tough way to make a profit when there are too many competitors on almost every job.

ESTIMATORS ARE NOT PRO PRICERS

One of the biggest goals of all construction estimators is to win profitable jobs. Most estimators think they’re paid to price work accurately. And therefore, the more they bid, the more jobs they’ll win. But you know this doesn’t work, especially if you bid on jobs against too many low-priced competitors. The key is to look for ways to improve your winning percentage by selecting the right projects to bid on and focus on ways to entice customers to award you more of their work against fewer competitors. 

Looking for jobs with a high barrier to entry is one way to get on shorter bid lists. The tougher it is to qualify to get on bid lists, the fewer the competitors. For example, to be selected by a utility company or a major corporation to work on one of their projects requires filling out multiple pages of forms, having a qualified training and safety program in place per their standards, and providing security and drug-testing protocols. This extra effort puts you on a short list of a few pre-qualified professional competitors. Certain branches of the government and military select contractors based on performance and price equally. To qualify to get on their approved bidder list takes extreme effort, paperwork, technical qualifications, and presentation skills. To be placed on the short list of approved contractors in some school districts for “lease-lease back” or design-build contracts requires you to present a project plan to the school board. A complete and winning presentation must include a power-point slide show of how you will operate, team highlights, aerial photos, and a convincing script. 

Companies who rely solely on being the low bid to win work are leaving many missed opportunities behind. If you figure your sales job is done when you email or deliver bids and proposals to potential customers, you are losing out on winning more high-margin contracts. Customers really don’t buy numbers on a piece of paper unless the price is significantly lower than other bidders, or there are no differentiating factors clearly evident between competitors. When prices are about the same, customers make decisions on who to hire based on what sets them apart or what they offer to do for them. 

PRESENT IN PERSON AND FOLLOW UP

You can’t just present what your company will do on a standardized bid form listing out your terms, exclusions, inclusions, and qualifications. It must be done in person by someone responsible for selling and closing the deal. If that person is you or the estimator in your company, they need to be trained in how to develop customer relationships, build trust, sell confidence, overcome price objections, negotiate, and present. They must be taught they’re in “show business,” and how the bid is presented is often more important than price. Another key to winning more work is to aggressively follow-up bids and proposals in person. Ask for the contract, tell them why they should hire your company, offer value-added options, and ask for the order again and again.

IMPROVE YOUR BID-HIT-WIN RATIO

One of my subcontractors built a relationship with me by leaving something behind when he visits our office. By making it a point to ask personal questions, he got to know me better and what I like to do in my spare time. Last week, he was at the office working with a project manager and on his way out he dropped off a bottle of Sonoma pinot noir on my desk. A note attached read: “George, I just bought a case of this new vintage, and I know you’ll enjoy it!” A few months ago, he left a “Masters” golf hat on my desk as he knew I liked to golf. These little personal gestures over the years have set his company apart. They are now our preferred subcontractor of choice. Obviously, they do good work, but the little touches have built and solidified a close, trusted relationship between us and improved his bid-hit-win ratio to over 80 percent. 

If you can create ways to improve your bid proposal success winning percentage, or bid-hit-win ratio (number of jobs bid versus number of jobs won) from 10 to 20 percent, your top-line sales volume can go up 200 percent, and you’ll boost your gross profit by 250 percent. For example:

Start by thinking about customer targets you currently go after. Now, think about new targets and customers who would be harder to get in front of and have less competitors bidding on their work. What will it take for you to get on more bid lists that are shorter and have less competition? This will take focus, dedicated effort, time, and money. You must be willing to work harder to make more money. The easy way is to wait for customers to call but that won’t deliver the higher results you want. 

about the author

George Hedley CPBC is a certified professional construction business coach and speaker. He helps contractors build better businesses, grow, profit, improve estimating and 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 at Amazon. For more, visit www.constructionbusinesscoaching.com or contact gh@hardhatbizcoach.com.