should you submit a bid with a price less than the project will cost you?

Many construction companies are desperate to find work so they’re willing to accept any project, at any price. I’ve been in a similar situation before. However the risk of accepting a project at any price is that the company wins the project, works hard on it for several weeks, or months, only to lose money. How much better would it have been for everyone to sit at home, neither making money nor losing it? By not working on the project maybe the company would have had time to look for other more suitable projects? Maybe, by taking on the project the company didn’t have resources available to undertake a more suitable project when it presented itself?

The risk of taking on the wrong project not only impacts directly on the profitability of that project, but it impacts on other projects and the company as a whole. When a project is in trouble management spends more time on it than they normally would, trying to rectify and solve the problems. This time could be better spent on maximising profits on other more successful projects. In fact, the absence of management on the other projects sometimes results in them also turning bad.

Working on a project should not be about being employed. The only reasons you want to be doing a project is so the company can make money, or occasionally so it can win further work which will make money. Frequently I see contractors win projects just because they’re desperate for work, or, sometimes contractors take on large and prestigious projects, believing it will enhance their standing with the public and their shareholders. Unfortunately, many of these projects end up costing the company large amounts of money.