Construction Bidding Best Practices to Help Your Margins
Since construction firms live or die by the projects that they successfully bid on, it's easy to see how a knee-jerk mentality towards bids can develop. However, the feeling that a firm must bid on all projects available at all costs can just as easily lead to a firm's downfall. Engaging in aggressive bidding wars can result in winning a contract, and being legally obligated to complete it at a price far, far, below what it's worth. Or perhaps a firm snaps up bids so quickly that they don't take time to learn all the details of a pending project, and end up struggling to complete a project that in hindsight, the firm shouldn't have taken on at all.
While the act of bidding on a contract is not legally binding in the way the contract itself is, this doesn’t mean construction project bidding shouldn’t be taken seriously. Potential clients notice (the Federal government is a good example) firms that aggressively and repeatedly bid on contracts and then back out, or have problems with the resulting contract. And not in a good way. After all, if a firm can't handle a bid, was does this mean for its handling of the actual project?
But all of this doesn't mean that a firm should be shy about bidding on project opportunities as they arise. Instead, they should make sure that they're bidding in the most effective way. And they can start by making sure that they have the most up to date construction bidding software. Such software helps firms to:
- Keep track of project budgets
- Compare budgets from different projects
- Analyze changes in costs of supplies
- Create professional looking reports based on research
All of this information can be considered when preparing for bidding on projects. This in turn will help firm managers in deciding which potential projects can be completed cost effectively, and which ones are simply money pits. A thoughtful approach to bidding impresses clients as well. They want to save money, sure, but they also don't have to worry about all the corners possibly being cut by a desperate contractor who wants to get that project over with.
As our industry begins to recover from the recession era slump, it's certainly seeing more jobs. It's also seeing more competitors for these jobs, which can result in lower profit margins. Savvy firm managers therefore, should keep their heads and invest in software to help them find and bid on the projects which can be completed quickly and profitably.