How to improve bid accuracy and win more commercial construction bids

By Jim Lamzela

Special to Ontario Construction News

Your success as a construction business depends on bid accuracy. Accurate bidding requires you to estimate precisely how much a building will cost to construct in terms of labor and material and have exact indirect and overhead costs. Having this knowledge enables you to formulate a bid that is competitive in lowest bid tenders without pricing your proposal so low that you lose money and eventually put you out of business.

Seven steps that you can take to improve your bid accuracy

  1. Accurate bidding starts with pinpointing your direct and indirect costs and determining your profit. If you want to bid on bonded jobs, bid bonds guarantee the accuracy of your bid, and the surety company will want to see your track record. It all starts with being painstakingly accurate in your construction estimates.
  2. Mistakes in quantity can negatively impact project costs and misunderstanding the scope of work can lead to missed or overestimated work. The level of detail in construction plans and specifications has a big bearing on your ability to be accurate. You may even need to check the site yourself to understand better what prep work is needed.
  3. Research actual costs in your local area and on your own current and past projects. Realize that costs for materials and labor will fluctuate seasonally and with supply. Use of a checklist can be extremely helpful to ensure you don’t overlook any costs. Be sure to include utilities, storage and specialty services. Here’s a Construction Bid Sheet Template and a Cost Breakdown from Smartsheet.

(image of spreadsheets)

Download Construction Bid Sheet Template

  1. Account for project risks if possible. For example, if bad weather could delay certain work, factor in the possibility of needing rented equipment longer than anticipated.
  2. If using subcontractors, do not simply accept them or use a cost plus contract. Ask for detailed quotes and evaluate them and seek revisions if you see inaccuracies.
  3. Your bid will also need to account for indirect costs such as costs for construction not attributable solely to one project. These might include project management, contractor supervision, tools and equipment, insurance, depreciation, etc.
  4. Factor in overhead or general and administrative expenses such as office rent, marketing costs, legal and accounting expenses.

Nine steps to take to win more construction bids

  1. Start tracking your winning percentage. This is also called your win rate or your capture ratio. Fewer than six percent of construction and design-build companies know and track their ratio.
  2. Look for trends in what type of projects you are most likely to win and focus on bidding more of those projects. Using a service like DataBid ensures you’ll always be aware when when of these projects hits the streets.
  3. Put more effort into your estimates. Fully understand the plans and specifications. Be painstakingly honest in your measurements and quantity takeoffs.
  4. Promote your business with a marketing effort that is focused on your strengths and past accomplishments and reach out to low bidders at the appropriate time.
  5. Bid on projects where you have a track record of winning.
  6. Make sure to follow all bidding instructions carefully and exactly.
  7. Add a personal touch by meeting one-on-one with the decision maker to fully understand what they are looking for and reflect that in your bid.
  8. When making your bid, go beyond what is required and illustrate your outstanding service, quality and expertise. Include any testimonials, awards that you have won, training certificates and pictures.
  9. Look for an edge or an advantage you may have to exploit making the bid most competitive. Sometimes you may also need to work outside of your area. A lot of times the competition is too great in your own backyard. Go where your competitors won’t go.

Jim Lamzela is DataBid.com’s president.

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