These 3 Simple Tips Will Help You Submit Better Bids and Win More Contracts
It seems like all of your bids are getting passed up. You bid on virtually every job you can find, and you only get a tiny fraction of positive responses. Even then, you’re often asked to cut your bids again and again in order to beat the competition. Sometimes, you wonder how your construction company is ever going to make enough money to survive.
Virtually every construction company owner has felt this way at one point or another—and often, you may feel like you’re stuck in this pattern for years on end, just hoping to break out of it someday. So what can you do to win more of those bids and bring more money into your business? How can you free yourself from this rut?
There are actually a few simple tricks that have been proven to work, and we’ve compiled some of the best tips into this guide so that you can win more of those bids and get your business on the right track.
1. Know Your Win Rate
Baseball players know their batting averages. Basketball players know their shooting percentages. As a professional contractor, you need to know what your win rate is—the number of jobs you land as compared to the number of bids you submit. This can be shown as a ratio or as a percentage. For example, if you win 1 job for every 5 proposals you submit, your ratio would be 5:1, or a 20% success rate.
Why should you know what your win rate is? The answer is simple—if you don’t know how you’re doing now, how do you know if you’re improving? Calculating your current win rate gives you a concrete number to start at and also allows you to set a firm goal of where you would like your business to be in the future.(2)
Additionally, knowing your win rate will let you know how you’re actually doing. Even if you feel like you’re landing a fair number of jobs, you may not be as successful as you should be for your particular construction industry. Once you know what your numbers are, you can compare your success to industry averages and get a more accurate measure of how you’re doing on your bids.
|Industry Averages for General Contractors|
|Industry||Typical Win Ratio||Typical Win Percentage|
|Public Works||10:1 to 6:1||10% to 17%|
|Private Bid Work||6:1 to 4:1||17% to 25%|
|Negotiated Work||4:1 to 2:1||25% to 50%|
|Design-Build||4:1 to 2:1||25% to 50%|
|Industry Averages for Subcontractors|
|Industry||Typical Win Ratio||Typical Win Percentage|
|Public Works||11:1 to 7:1||9% to 14%|
|Private Bid Work||6:1 to 4:1||17% to 25%|
|Negotiated Work||4:1 to 3:1||25% to 33%|
|Design-Build||4:1 to 3:1||25% to 33%|
Different categories of construction generally have different success rates for construction contractors or any kind, so it’s best to track your bids and wins based on the categories outlined in these tables. You may also want to break them down into other subcategories: large and small, commercial and residential, new construction and remodels, etc.
Tracking these rates can help you to pinpoint areas in which you get more wins. If you notice a strong pattern, then this can guide you in deciding what jobs to bid on in the future. For example, if you are only landing 2% of large commercial jobs that you bid on, but you’re winning 80% of small residential jobs, then you know that it is better worth your time to focus your bids on those residential customers. This can guide you to greater long-term success.(1)
When tracking your win rate, be sure to use appropriate technology. Certain CRMs may calculate your win rate for you, but if not, then ensure that you keep a digital spreadsheet of your bids and wins that you can update daily and from various locations. This will make it easy to ensure that your ratio is always accurate and up-to-date.
2. Bid on More than Just the Price
Most customers who are receiving bids on a job will pick a contractor who is in the middle of the pack on price. Now why would that be the case? Simply put, the price is only a small fraction of what really matters on a bid. A number of other factors can tip the scales in your favor, even if you aren’t the lowest bid in the batch. Outlined below are a few other factors that you need to keep in mind when creating a bid, as well as a few tips for making yourself stand out in these areas.
Experience and Qualifications
Customers don’t often want to be a contractor’s very first job. They like to know that you—and everyone working with you—is qualified and experienced, so be sure to outline your qualifications in the bid. Include copies of any licenses and certifications you may have, if you wish, in order to prove that you are the most qualified bidder. You can do this quickly and easily by keeping digital copies of your licenses and certifications in a single location in your document management software.(3)
Presentation of Bid
A bid that looks sloppy or hastily put together makes a poor impression on a potential customer. Ensure that your bids are always neatly printed and organized in a binder or folder. If the customer is accepting electronic submissions of bids, ensure that the bid is well formatted and in an easy-to-use format like a PDF. When sending a bid electronically, try to use a safe sharing platform instead of just sending the file over email; this adds an extra level of professionalism as well as an extra level of security for you and your potential client.(1)
Understanding Their Needs
Remember when you were applying for your first job? At some point, it’s likely that somebody told you to customize your résumé and cover letter to each job you applied for. You would highlight past experience that was most relevant to that particular job, and you would use key phrases and talk about key skills required in the job listing. This same concept applies to creating a bid for a construction job.
Customers want to see that you understand what they want and need, so make sure that your bid is tailored to their job, not just in the numbers that you calculate, but in the skills and past experience that you highlight. Make the effort of going out to the job site and addressing any foreseeable issues related to the site. Contact the customer and ask them what factors matter the most to them in a bid and what would make you stand out. If you can demonstrate an in-depth understanding of their needs, then your bid is going to stick out amid the others because it will be exactly what they were looking for.(1)
If possible, try to think about what you can offer that your competitors can’t. Draft up a list of extra services you may be able to offer and include these with any bids you send out. If you are offering a client more for their money, then it won’t matter if your bid price is a little higher than your competitions’.
3. Be as Accurate as Possible
When submitting a bid, you are creating a bond of trust with the potential customer. They must take you at your word and trust that the numbers and timelines you’ve presented in your bid are true and accurate. You should always respect this trust and do your absolute best to uphold it by submitting the most accurate bid possible.(3)
This means you’re going to have to put quite a bit of time into calculations, but you can cut down on the amount of time it takes by keeping accurate records of the following types of information on every job:
- Employee time cards
- Labor rates
- Equipment rates
- Material cost history
- Overhead mark-up
- Profit margins
Keeping these records as accurate as possible allows you to easily pull numbers for new bids and can make your calculations quicker, easier, and more accurate. The best way to do this is to use document management software, which makes it easy to find the information you’re looking for instantly.(1)
Though “fudging” the numbers to have a lower bid may land you an initial job, if your actual timeline and costs are vastly different from your bid, you can feel fairly certain that you won’t be getting a repeat customer, and they won’t be offering you any referrals to new customers. Since these are both vital for a thriving business, it’s extremely important that you build a bond of trust with clients from the moment you submit your bid, and make every effort to be as accurate as possible.
Becoming an expert bidder takes a little time and practice. A baseball player can’t step up to the plate and instantly improve his batting average; he spends time at the batting cages and practices for hours. Basketball players don’t just expect their shooting percentage to improve on its own; they find areas where they can improve and try new strategies until they become better.
The same concept applies for you. The tips in this guide will be a great starting point for racking up those bid wins, but it will take some practice on your part. Pay attention to what bidding strategies work best for you, and what types of construction jobs bring you the most success. If you’re willing to adapt and play to your strengths appropriately, you will start seeing an improvement in your bid win rate.
It can take time, so get started now. Get the right tools in your office—like a good CRM and DMS—to help you organize and track your jobs and bids. Taking this first step will go a long way towards making your business more successful.
Fill out the form on this page or contact eFileCabinet to learn more about a DMS that can help you to stay organized, keep your bids accurate, and win more construction projects as a result.
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