Ask these 10 questions before submitting your construction project price or quote

Image courtesy of stockimages at FreeDigitalPhotos.net

"Construction company estimating departments are sometimes like sausage machines turning out price after price, quote after quote."

​Construction company estimating departments are sometimes like sausage machines turning out price after price, quote after quote, working on a number of project estimates at any one time. I’m amazed at how construction estimators manage to keep the different projects separate, how they isolate and review different supplier and subcontractor quotes for the different construction projects, how they manage to do this without making mistakes. Or do they? Where do estimators get their prices?

Unfortunately, contractors do make mistakes pricing construction projects. These mistakes might increase their price, probably meaning they don’t win the project. Sometimes they fail to include documents requested by the client resulting in their proposal or quotation being disqualified or going in the trash (a waste of effort). Other times they under-price an activity and they lose money when they construct the project.
​
Of course, companies can avoid some of these problems by being more selective with which construction projects they price, discarding projects which are unsuitable and concentrating on those that they really want. However, even so mistakes happen.

Ask these questions before you price a construction pr​oject

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

"Carry out a few checks and ask questions before submitting your price."

Ask these questions
It’s prudent to carry out a few checks before submitting your price. Ask yourself and your team these questions:

1. Have you included all documentation asked for in the RFP (request for price)? Customers often ask for a whole host of documents to be submitted by the contractor with their price, which could include forms the contractor is required to complete as well as other documentation such as the contractor’s insurances, process manuals, project construction schedule, estimated cash flows, safety plans, quality assurance plans and bid bonds. Failure to include one of these documents could result in your price being disqualified.
2. Will the person reviewing your proposal find the documents requested? You may have included all the documents, but it doesn’t help if the person scrutinizing your price submission can’t find them. This may lead to your price being discarded or at best the customer becoming frustrated. Include an index to your price submission which will help the client. Also clearly highlight the relevant documents requested.
3. Have you priced everything the customer requested? Do you understand the scope of construction work? Often the project scope is read at the start of the pricing exercise and then forgotten. It pays to review it from time to time to ensure you haven’t priced something that is actually the customer’s obligation or left out items you should have priced.
4. Is your price competitive? We sometimes know who our competitors are and how desperate or not they are to win the construction project. Sometimes we even know the customer’s budget or price expectations. If you believe your price isn’t competitive and you really want the construction project it may be necessary to reduce your profit margin. You could also revisit some of your calculations and quotations received from major suppliers and subcontractors. Don’t do anything stupid by cutting your price so you lose money – rather take a critical look where there are real savings possible. Conversely if you know the competition is going to be pricing high you could decide to increase your price by increasing your profit margin.
5. What are the project risks? Have you considered all of the project risks? Have you been too conservative when looking at the risks? Some contractors almost blindly price a project assuming everything will go as expected and are then surprised when things go wrong – even though they could possibly have been foreseen. Other contractors see a risk around every corner and add contingency for every eventuality. By preparing a risk schedule you will have a better understanding of your risks and the steps you should take to mitigate them. Reviewing this risk schedule before submitting your price is always good practice. How To Avoid The 10 Biggest Risks Facing Contractors
6. Will it be clear to the customer what’s included in the price? Contractors sometimes think their customers have ESP and should know what the contractor has priced and what is allowed in their price. If you have had need to assume something or you haven’t priced an item ensure that your customer knows this. If you’re pricing a new house it should be clear from the information provided with your price what the house will look like and what finishes have been included. Asking questions in the bidding process 
7. Is the math correct and have you carried all prices into the final contract price? This sounds simple yet many a contractor has gone out of business with simple math errors. We often trust in our computer spreadsheets and software, but unfortunately these often depend on the formulas we enter. Check and recheck. Sometimes customers ask contractors to include a provisional amount of money for a section of unknown work, but I’ve known contractors who left this amount out of their final price, and had to later carry the cost of this amount themselves.
8. Have you added in all the costs for our subcontractors? ​It’s important when you receive subcontractor tender prices that you include all the money they require in your price to your client. Sometimes subcontractors exclude certain items or request that the general contractor supplies cranes, scaffolding or their site hut. It’s important to ensure that you have included for all the unpriced items as well as equipment or other items the subcontractor requires supplied by the general contractor. Checking contractors' prices
9. Have you done enough to sell your company and your team to the customer? Will they want to do business with your company? Will they have faith in you to deliver their construction project? In most cases it’s not good enough to only give the customer a price. You need to tell the customer why you are the best contractor for their project. Convince them you have the best people and construction equipment to deliver their project safely, on time, with the best quality, within their budget and with a minimum of fuss to them. We have often won construction projects even though we didn’t submit the lowest price. We just convinced the customer we offered the best value and that their construction project would be safe in our hands. Steps to help you win your next construction project
10. Do you know where the price must be submitted? Will it reach there before the specified time? I’ve known many prices that arrived late and were disqualified. Some have been delivered to the wrong address. Estimators have spent literally weeks on pricing the construction project and it’s all wasted because their price isn’t even considered. 

Price your construction projects correctly

Unfortunately, some contractors end up submitting their price without checking it properly. A poor submission may end up in the wastepaper basket. Worse a price that has errors may mean the contractor wins a project with a price that’s too low which results in them losing money on the project. Your tender submission or quotation – Get it right
​
What mistakes have you made in your price submissions?

​This article was first published on the ClockShark website - Get The Industries' #1 Time-Tracking AppRunning a field service or construction business takes coordination and a great team. With ClockShark you get the industries' #1 timesheet app

To read more about the author’s books and find out where you can purchase them visit the pages on this website by clicking the links below:
'Successful Construction Project Management: The Practical Guide'
'Building a Successful Construction Company: The Practical Guide'
'Construction Book reviews'
To read more about the author visit the page 'Paul Netscher'
Want to contact Paul Netscher please enter your details on 'Contacts'
Find out how Paul Netscher can help you

Order your books from Amazon
Order your books from Amazon UK
© 2023 This article is not to be reproduced for commercial purposes without written permission from the author.