7 Tips For Winning More Contract Bids In Construction
We've talked briefly recently about the best resources for contract bidding in both the United States and Canada, as well as different steps you can take to grow your business in the construction industry. However, how you actually win more contract bids and projects is another challenge entirely.
Contract bidding is much like the process of trying to find a job if you're unemployed. Governments or private companies put out a request for proposal (RFP) and project seekers look around on websites designed for project bids. Then, the contractors and companies interested in the project create a pitch or document about their qualifications and areas of specialty and get selected to be interviewed by the general contractor or construction managers. Finally, if they impress them with their knowledge and expertise, they get hired.
However, if you're submitting a bid for every project that's available, not customizing your pitches for the projects you do want to acquire and are too laid back in your approach, you're probably doing the bare minimum and need to change your strategy.
As such, there are a few methods and tactics you should be using in your bid process that can take your contract bid to the next level. These techniques are:
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Track Your Bid-Hit Ratio
Here are each of these methods in more detail:
Don't Bid on Everything
Contrary to popular belief, bidding on every project probably won't result in more wins. While it can be a numbers game, your goal shouldn't be to bid on projects just for the sake of saying you bid on a high volume of projects. You should be bidding on your niche and specialization, and use the work you've done in the past to emphasize your skills in that area.
This approach helps you craft pitches and proposals that you're best suited for, which will lead to more wins. Ideally, you would want a high bid-hit ratio, which we will get into further, but that relies on the quality of the bid over the quantity. Crafting bids for contracts that fit your niche will also highlight the jobs you've done in the past and show how your experience and expertise will be relevant in helping move the project along. This is important because proving you've done well on past jobs while emphasizing that you were able to stay on schedule and on or below budget puts you in a really good position to win more bids.
And finally, by proving that you're able to do small jobs well, you can work your way up to larger jobs, but this all starts with quality bids.
Understand Your Finances
One of the primary focuses of your bid should be making sure that your budget estimate and forecasting are as accurate as possible. That means making sure that the estimate is fair and accounting for all, or at least the significant majority, of the costs.
According to some reports, about 40% of companies don't track their costs and budget. One of the biggest mistakes you can make with your bid is not accounting for costs like heavy equipment, transportation, or any of the more obvious and large costs on a job site. General contractors and construction management firms will most likely see this as a red flag as it's a key detail to ignore. Even if you leave out the fact that the cost of heavy equipment, labor, and materials are all rising would be a big mistake as it shows you're not paying attention to current trends or are underselling the budget. If this information is left out, they might think that you lack due diligence in research or haven't done similar projects which isn't a great look.
On the other hand, you don't want to overestimate the budget either. Factoring in an abundance of materials and costs isn't a very lean or cost-effective approach. Inflating costs can look sleazy and come across as you not working effectively or productively on past jobs. That's why when creating your budget and costs for a bid it might be worth investing in the support of an industry estimator or a second pair of eyes who can help point out any glaring inaccuracies.
Understanding how timelines, the scope of work, materials, labor costs, equipment, and administration costs all factor into a contract bid will help you in the long run.
Take A Salesperson's Approach
When writing a contract bid, you shouldn't always be taking a contractor-first approach. You should be taking a sales-first approach. Of course, you want to sound informed and prove that you know what you're doing on a job site, but you also need to explain why they should choose you over any other contractor. Writing a pitch that is full of just numbers and facts isn't going to cut it. You need to leave them thinking "if I don't hire this company, we're not going to hit deadlines."
Leaving that kind of impression takes not only the facts and numbers, it also highlights your experience and professionalism while translating it to how it will affect the GC or owner on their specific job site. How have you communicated on past projects? What did you do to keep your team and projects on schedule and how will you bring that to the table on this new contract? Do you have a good reputation from your past projects? What's your health and safety record like? Do you have the exact experience that they're looking for? These are all questions that you want to answer throughout your pitch. And don't downplay your efforts with too much humility. Be honest and authentic, but tell them exactly why they should hire you over the next bid.
For example, if you believe your experience means that the price it takes to hire you will be a bit more but it will also mean that you'll make fewer mistakes than a cheaper option, reflect that in your pitch. Project delays almost always mean that the costs will go up. Suppose you can reflect in your notes and documents that being on schedule at a higher upfront cost will actually save money than hiring a contractor with less experience or a worse reputation. In that case, that will go a long way in proving that you're right for the job.
Do Your Homework
Don't go into any contract bid blindly. Most, if not all, websites show who the company is that's hiring for the project. Once you have that information, it's a quick Google or LinkedIn search to find the decision-makers for the company. Identify them, reach out in some method, and try to build trust. This will help get your foot in the door and at least gain some recognition with them before submitting your pitch.
Another approach you should take is to read their RFP and make sure that you answer every question and send all the required documents that they request. One of the worst things you can do when bidding for a project is to immediately show that you don't pay enough attention to detail to even submit the bid properly. If you fail to submit the bid package properly, you're way less likely to be selected for an interview, which is why it's important to do it correctly.
Also, with a lot of these GCs and project leads, they'll have a record of what other jobs they've done recently. You can use this to your advantage. You can look at the awards that they won on those other jobs, if those projects were on budget and completed on schedule, what other contractors were involved in those contracts, and use that information to your advantage when creating your pitch. For example, if you see that you've worked successfully with other subcontractors they've hired, or are affiliated with some of their past projects through a mutual client or contractor, talk about that! Companies like to know they can rely on their subcontractors and hope that they have good relationships with each other too. Alternatively, if you know there was a mistake on one of the past projects in your niche, you can highlight your quality of work and show that that type of mistake won't take place if you're on the job.
You'll also want to show that you're educated on the task at hand and want to provide them with the best solutions. This might mean offering alternative solutions for some of the designs on materials that they are looking to use. More often than not, the engineers, architects, and city planners that work on construction designs are not construction workers, and any new solution or alternative you can provide that either keep costs down or drives efficiency up will look good on your efforts.
Bid Early On Projects
Although we've covered a lot of tips up to this point, being one of the first companies to bid can be a great technique too. Some jobs are really just looking for urgent replacements or need to start a job quickly. It's also human nature to read the first submissions and use them as the standard or reference point when reading other bids. If you submit a great bid and are the first one there, that might be all you need!
There are a few tactics that you can use in order to be one of the first submissions to a bid. The first is that a lot of websites now have alerts and notifications for new contracts. Make sure to set up these notifications on each of your preferred websites in a way that is easiest for you to access, whether that be through email or direct to phone notifications.
The second would be to create a contract bidding taskforce at your company. Leverage two or three people that you trust, who understand the business, and can do a good job of creating a bid in an efficient manner. It's also effective to create templates for your bids and have all your different documents neatly sorted on your computer so that you can quickly send them should there be an urgent bid that you'd like to win.
The third way would be to hire someone specifically for this role. Creating a task force is great, but that could just be used to reactively find projects to bid on. Hiring someone for the role means proactively searching for contracts and making them a key part of your business growth and trajectory.
Follow Up On Your Bids
One of the best and most useful tactics in winning more bids is to follow up on your bids. General contracts and governments that put out bids are often busy people and have lots of bids to sort through. By simply following up, you are standing out from the crowd since a lot of other contractors don't do this. You also push yourself back up into their inbox and messaging, which can be very helpful and strategic as well.
When following up though, you want to make sure you're using a bit of that salesperson approach. If worded the wrong way, you may seem too needy, which can make you sound desperate. The most effective approach is to follow up by talking about how you're looking to hear back because you want to plan your schedule in advance. This will make you look organized, busy, and in demand.
Track Your Bid-Hit Ratio
The last tactic to use to win more bids is to continually audit what your bid-hit ratio is. Now, you're almost always going to lose more bids than you win. That's just life, and the coming and going of rejection. For your success, a good reference point to strive for is an average bid-hit ratio of about 4-to-1 for private projects and 10-to-1 for public projects. Tracking your numbers will allow you to see where you line up in comparison to the industry standard.
If you're higher, that's great! This means that you're landing more gigs per bid than the industry average, but it doesn't exactly mean that you're actually working more or landing more projects. For example, a company that bids on 30 projects and acquires 6 achieves a 5-to-1 ratio. That said, if you bid on 8 projects and acquire 5, your rate may be higher but that doesn't exactly mean that you're bidding as effectively as possible. So, it's always important to put those numbers into context.
If you're bid-hit ratio is at a low rate while also bidding on a low number of projects, that's the worst possible outcome. At that point, it's time to audit your bids to figure out where you're going wrong. From there, you can better understand what new tactics and strategies you can use to raise that bid-hit ratio.
Closing Thoughts
Coming up with the best way to bid for a contract is challenging. It takes time and effort to figure out what the best strategy for your company is, but it's impossible if you don't start. The 7 tips above are useful for guiding you in the right direction, but none of it matters if you don't put them into practice. Hopefully, by bidding on projects that suit you more, understanding your finances, taking a sales-first approach, doing your homework, bidding early, following up, and tracking your success ratio, you will win more projects.
