Winning Construction Bids: A Pro's Guide

Learning how to win construction bids and refining those techniques is integral to achieving consistent success within the construction industry. Winning more bids not only allows you to operate in the black but scale your construction business and plan for that growth.

The Basics of Winning Construction Bids

Know the client. That research should shape your bid proposal. Bid early. That does not mean rushing your bid but rather managing your time well so that you can impress early instead of when there is much more competition. Avoid approaching bids as a numbers game. More bids equal more hits may seem like sound advice on the surface, but in practice, it will cost you money and time and result in an unsustainable rate of bids to hits.

Track Your Bid-Hit Ratio

Every project you bid on and do not get is a miss. The projects you do get are hits. A low bid-hit ratio is among the most significant threats for construction companies. For general contractors operating in the public space, 10% is considered the standard for sustainability, and that means for every 100 projects bid, your company gets the job 10 times.

You will remain profitable and grow if you bid at that level or above. If you fall below that level for an extended period, your process has fundamental issues. You may be bidding on jobs outside your niche or unrealistic projects. A prevalent mistake among learning bidders is to bid on projects they have little chance of winning because beating the odds and landing the job would be the company's big get to move forward.

Know When To Bid and When Not To

Be mindful that winning bids is as much about knowing when not to bid as is the bid process itself. The cost of making bids on projects that are a poor fit for your company or which you have a high likelihood of losing is the time and other resources you could have invested in projects that would have helped you grow. Profitability is a key consideration, and while there may be projects where you sacrifice profitability for later dividends, such as an in with a lucrative client, you should generally target a profit margin of around 6%, the average for the construction industry.

But whether you bid on projects isn’t limited to potential profit alone. Do you have the capabilities to complete this project, and is the job germane to the niche in which you establish yourself as an expert? Risk assessment is important as well. Are there risks such as accelerated timelines or additional safety hazards, and are you equipped and experienced enough to mitigate them? Historical analysis is also a potent risk assessment tool, and as you gain more experience, you will have more winning bids to which you can compare your potential bids.

Perform a Full Pre-Bid Review

There are two phases to reviewing a request for proposal. The first phase involves the initial assessment of the RFP to determine if the project is appropriate for you. This is the bid/no-bid analysis. If you choose to bid, the next phase is to review the project from the perspective of selling your company as the right choice for the job. A common pitfall is to make assumptions or presumptions. Avoid them and instead request clarification. Seeking clarification may extend beyond the hiring client to parties like the architectural firm, property owner, or management company. The onus is on you to understand the project's scope and requirements and build a bid based on that context.

Invest in Software

Having the right tools will put you ahead of the curve when learning how to win construction bids. Accuracy, thoroughness, and organization are pivotal to a competitive bid, and construction estimating software makes achieving these goals much easier and quicker. The modern software tools construction bidders use to perform all calculations, compile and organize data and complete all required documentation. You should also consider construction management software as it will ease responsibilities related to accounting, managing team workloads, and other aspects of project management and team productivity.

Create and Refine a Bid Checklist

A checklist is a powerful tool that will improve your bid-hit rate because you will bid more consistently and be less prone to omissions. If you do not yet have a checklist, establish a basic one from the ideas presented here, and you can refine your list later as you recognize oversights and mistakes. Consider a more granular approach as your list grows and matures. You can have individual lists for lead and client evaluation, specifications and requirements, competition, etc.

There Is Great Value in Presentation

How you choose to present yourself matters. A potential client wants you to instill them with confidence, and they will judge you based on superficial criteria and the meat of your bid. Another reason estimating software is so valuable is that it will give your bids a professional polish that impresses you. Be prepared for in-person meetings with any licenses and proof of insurance the client may request, and work on developing your brand. Business cards, brochures, document logos, a modern website, and even branded shirts are all simple investments that speak volumes about your professionalism.

Demonstrate Value Proposition and Return on Investment

You will win more construction bids by using proposals as opportunities to explain the value propositions you are offering. Making a cheap bid is one way to do that. But it is not the only way and not necessarily effective long term. Clients will pay for value, so you must show them what sets you apart: consistent, high-quality workmanship, hard-to-find skills, and experience that makes you particularly appropriate to the job. You may also want to demonstrate a return on investment for them and do not be afraid to show that the ROI also makes sense for you. Many clients avoid cheap bids for fear of what will happen down the line.

But Proposals Should Contain More Than Hard Numbers

When you submit a bid, you are effectively submitting a resume. A bid is often the first impression you will make, and while the hard numbers are important, they are just part of the sales pitch. You need to sell your enterprise as the ideal choice, and those attractive qualities should be present in the proposal.

Follow Up on Submitted Construction Bids

Keeping with the job application analogy, you should follow up after you have submitted a bid. Five business days is generally considered an appropriate amount of time to wait. You should have researched your competition by that point, and the follow-up is another opportunity to demonstrate to the client why you are the better choice.

If you lose the bid, you should follow up again. Not following up on lost bids is one of the most common mistakes among inexperienced contractors. The reason may be as simple as another company offering a better price. Still, your proposal did not reflect an understanding of the scope of work involved; your references undermined you; you did not explain costs clearly; the required experience was not demonstrated adequately, and so forth.

Choose a Trusted and Established Contractor

A low bid-hit ratio means there are flaws in how a construction company evaluates leads and bids. Investigating those processes will reveal the mistakes that must be rectified to learn how to win construction bids consistently. You should also review all of your hits and misses so that you can continue refining your approach and growing as a contractor.

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