Bidding and Winning Profitable Projects in Good Times and Bad
Posted: September 18, 2020 | Estimating
With so many projects being pushed, put on hold, or outright canceled due to COVID-19, many construction businesses are facing stiffer competition and a shrinking pool of projects. Whether you’re feeling the squeeze or not during these uncertain economic times, it’s always critical that you bid and win the most profitable projects.
For construction estimators, this means ensuring bid accuracy, even if it is getting harder and harder to nail down those final material prices or project timelines. Backlogs may rise and fall, but you still need to build the most accurate estimates possible. In good times and bad, you need a takeoff and estimating workflow you can rely on — from final bid to project build-out.
Educated Guesstimates Won’t Cut It
Before the first nail is hammered, estimators must make sure all quantities are counted and measured, and materials and labor accurately factored into the final bid. This job is complicated when economic conditions cause cracks in the global supply chain and foment trade tensions.
How do you prepare your best bid possible? As always,bid accuracy begins with an interpretation of structural / architectural / engineering drawings and designs, to assure that all required finishes and possible issues are addressed upfront. You never want to run into problems down the road, such as failed inspections, rework, and project penalties; even worse, structural integrity and liability issues.
Instead of using digital tools, many estimators still manually perform material takeoffs, and tend to generate educated cost “guesstimates” that slowly make their way into formal bids. In fact, nearly 65% of construction pros surveyed in the 2019 JBKnowledge ConTech report said they rely on spreadsheets as part of their workflow process.
Often it takes significant time and skill to determine the material values required, due to unique conditions and odd shapes where it’s challenging to measure correct values. It is a huge time-saver when you can count similar objects automatically and take off areas that are the same height and depth throughout a plan versus counting similar items individually by hand.
More importantly, the process of change orders and requests for alternates can slow any estimator down. When done manually, an estimator must sift through marked-up plans and prior estimates to work up a change or develop an alternate, and incorporate it into the overall project budget and bid. Even small changes create a time burden that adds to the cost of bidding on projects — and takes away from the profit margin.
Digital Tools Can Level the Playing Field
As trades become more specialized, complex, and precise, construction pros must work hard to reduce waste and increase profits. Just as your construction business may need to invest in equipment, like bulldozers and backhoes, you can look to investments into digital tools and software to also improve your bidding efforts.
With digital tools, you can take the guesswork out of takeoff and estimating to eliminate inefficiencies and redundancies. Contractors save time and money because they can more easily see the scope of work and the possible impact of design changes or change orders. With faster, more accurate estimates, you can bid more work and ensure the projects you win are profitable.
Tips for Improving Bid Accuracy
Nobody wants to lose a project by bidding too high. And if you bid too low, you’ve just won a nightmare of a project. No matter the economic climate, here are a few best practices to keep in mind when estimating:
• Use a Project Template as a Checklist. It’s easy to forget things like permits, landscaping, etc. Use a master checklist to make sure you complete the necessary steps and items. You can also take advantage of tech tools that help with your entire bidding workflow — from finding a project to bid to takeoff and building the final estimate — so all your information is in one place and you’re more likely to reduce errors.
• Use the Unit Cost Estimating Method. Unit cost estimating is twice as fast as stick estimating and just as accurate. Unit costing incorporates the following steps: Compile all the line items for that job > Assign a unit cost to each line item > Total the numbers and have them checked by a second party > Apply a markup.
• Get Help in Areas Where You Lack Expertise. If you don’t know a lot about a specific line item, you’re not going to be as thorough in your estimates. Use online templates or predefined modules, or even ask subcontractors / consultants who may have more experience in that area.
• Check Your Subcontractor Quotes. Go through the same steps in evaluating your subcontractors’ quotes as you do when looking at your own. Compare multiple subs for each scope of work to make sure you’re covering or uncovering any gaps.
• Use the Right Tech Tools. There are so many more digital tools that you can access now that weren’t available 20 years ago. Make sure you’re using a tool that can quickly measure digital plans and customize pricing.
Digital Tools Drive Accuracy
For many construction businesses, digital estimating tools are proving to be a game-changer when it comes to improving bid accuracy. For example, historical information is critical to building your next bid. When you switch to digital estimating tools, you can gather better, more detailed information, and leverage historical records from previous jobs. This means your business can more accurately compare job cost against the original estimate — so bidding errors aren’t repeated on the next job. When you catch issues, you can make sure your unit costs are accurate going forward.
Or just consider how well your business communicates when material shipments run late or trades fall behind, requiring schedules to be adjusted. Making sure the office and the field are informed at the same time is critical to any project’s success. Digital tools can help you keep everyone on the same page, so the field can adjust the sequence of work or address anything that was promised during the bidding process.
If you’re ready to take the next step, be sure to check out ConstructConnect’s integrated estimating tools now.
Conley Smith is a senior business writer with ConstructConnect. She has been writing about technology and its impact on business for more than 20 years.