10 more tips for pricing construction projects

In my previous article 10 tips to successfully pricing your next construction project I discussed how some contractors take the shotgun approach to pricing and quoting construction projects. Literally submitting hundreds of prices in the hope that they will win a few projects. This leads to overwork of the estimators, and in some cases owners or project managers involved in pricing projects. It results in wasted effort, but more seriously it could lead to mistakes and winning projects with a price below what it’s going to cost the contractor to build the project. Unfortunately the shotgun approach could also mean that the contractor misses out on good projects which the contractor could have won if they had put more effort into their quotation and price submission.
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In this article I’ll discuss another 10 more tips to successfully pricing and winning projects.
#pricingconstructionprojects #constructionbids #constructiontenders

More tips for pricing construction projects

 1.   Understand the quality requirements. Are they standard, and can you deliver the requirements?
 2.   Price the project from first principles. This means:

• Understanding and using the local rates for materials, labour, and equipment.
• Knowing the productivity of workers.
• Learning from previous project costs.

 3. Develop an accurate project schedule. 10 reasons why a construction schedule/program is useful.

• The schedule must take account of the project restraints.
• It should allow for the normal weather conditions.
• The schedule must make efficient use of the available resources.
• The schedule must be achievable. You don’t want to commit to a construction schedule which can’t be met. If you can’t meet the client’s milestone dates maybe you should walk away from the project, or offer an alternative completion date that you can meet. Tell the client why you can’t meet their completion dates. It’s pointless winning a project when you can’t meet the dates, it’s bad for your company’s reputation, and it’s going to cost money.

 4.  Finalise the overhead costs (preliminaries). Those are the costs to manage the project, including the provision of insurances, security, surety bonds, temporary facilities, etc.
 5.   Check the project cashflow. Even a profitable construction project can destroy a company if the contractor can’t manage the cashflow. Negative cash flow – the death for many construction companies. So does your company have the finance available to pay for things while waiting for payment from the client. Most construction projects are cashflow negative until the end of the project. Larger construction projects usually require more cash, as do projects which require expensive materials, and projects that require a large amount of work in a short time frame.
 6.   Check:

• All arithmetic.
• No costs have been overlooked.
• No costs have been overlooked.
• Everything requested has been priced.
• All the required documentation has been included.

 7.   Decide on the final mark-up (profit), How much profit? This could depend on:

• The project risks.
• How desperate your company needs the project.
• Your competitors.
• Company policy and overheads. However this should not dictate unreasonable profits which could cause you to lose a project that the company is desperate to win.

 8.  Check that any qualifications or assumptions you’ve made are clearly noted, as well as any exclusions from your price. 
 9.   Prepare your price submission so that it looks professional.

• Check it has all the required documentation in an orderly arrangement so that it is easy for the client to find the pertinent documents they’re looking for.
• Ensure the submission doesn’t contain documents irrelevant to the project, or include documents which are obviously ‘cut and pasted’ from other price submissions.

 10.  Sell your company’s abilities. Why should the client select your company as the contractor? Demonstrates that your company clearly understands the project requirements and can deliver on these. This could include:

• A portfolio of similar construction projects the company has completed.
• Staff and equipment you propose to put on the project.
• Method statements.
• Company and project safety information.
• Statement of how you will deal with particular concerns the client has raised.
• A statement of why you company can successfully deliver the construction project with minimal risk and fuss.

​Finally make sure your price is delivered to the required person on time. 

The next stage of the project price submission process

​But even when the project price is submitted it doesn’t mean the process is completed.

1. Ensure there’s a record of all calculations and pricing documentation that’s filed where it can readily be found.
2. Client’s will often ask questions and negotiate with the contractors with the best prices. It’s possible to lose a winning bid with poor answers or a weak negotiating strategy. Post bid communications - the difference between winning and losing a bid.
3. If you are called for a meeting to discuss your price submission make sure your team is prepared and have all the documentation easily at hand. Construction project bid negotiations – Don’t make a mistake.

Winning the right construction projects at the right price

In our 2 articles on pricing construction projects we discussed how important it is to have good market intelligence – what construction projects are coming out to price, and what your competitors or other contractors are up to. It’s important to understand all aspects of the construction project – the client, the contract document, and the project site conditions. Then develop an accurate price – based on an accurate construction schedule and the local market conditions, using the best construction methods suited to the project and the available resources. Finally submit a professional quotation that includes all the documentation requested, and importantly which sells your company’s abilities and why you are the right contractor for the construction project.
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Pick the right construction project to price, a construction project you want and one you can win from your competitors, then put all effort into winning the project. Finally don’t lose the project or make a stupid mistake in the negotiation phase.

​#constructionprojects #contractors #constructionmanagement

Other useful articles
​What do you do when your construction project is LOSING money?
Financial checks and controls on construction projects

Do you want to learn how to manage construction projects successfully

​Paul Netscher has written several easy to read books for owners, contractors, construction managers, construction supervisors and foremen. They cover all aspects of construction management and are filled with tips and insights.
Visit to read more.
The books are available in paper and ebook from most online stores including Amazon.