Last week I discussed the importance of ensuring your price was correct. Read; ‘Don’t make a mistake when you price your next construction project’.
In this article I’ll discuss how you can make your bids/tenders/quotations more successful, so you can win more work.
Ensure your price isn’t disqualified
Often prices/tenders end up in the client’s rubbish bin because they’re disqualified. All that hard work and your price didn’t even make the starting line. Reasons for this may be:
1. The tender arrived late which could be because it was submitted late or it went to the wrong person or the wrong address.
2. Your tender wasn’t in the format requested.
3. Your company doesn’t meet the client’s criteria to build the project. This may be because you don’t have the correct registrations, aren’t large enough or don’t have the required financial strength or insurances.
4. You failed to submit all of the documentation that the client requested in their bid documentation. These may include; copies of insurances, surety bonds, financial statements, safety records, quality plans, etc.
5. Your tender didn’t comply with the client’s requirements such as; you haven’t priced everything requested in the document, didn’t comply with stipulated requirements or comply with the required methods of construction.
Carefully read the tender document and instructions so that you can ensure your tender will not be disqualified.
Submit a competitive price
Well this sounds really obvious and yet many companies don’t get it right.
1. Sometimes your price is just never going to be competitive because you are pricing against companies who can do the particular work better and more cheaply than you, or are better located to provide a cheaper price than you can. Understand your opposition and your shortcomings. If you know you are unlikely to be competitive don’t waste your time and possibly embarrass yourself with the client when your price is far higher than others. If you were invited to price the project, politely decline the tender.
2. Make sure you obtain competitive quotations from suppliers and subcontractors.
3. Understand the risks. Unfortunately you cannot price all the risks. Some contractors see ghosts around every corner and want to price for everything that could possibly go wrong. Unfortunately you can’t because you will never win a project. You will probably have to accept some risk.
4. If you aren’t sure of something rather ask questions during the tender period, or qualify what you have priced. Don’t assume the worst case scenario and then price it. You can be sure your opposition probably won’t.
5. Understanding who your opposition will be may also influence the level of profit you add to your price. If you know some are desperate for work you can be sure they will submit a keen price. We often had a good feel for how our opposition would price different projects and which ones they would be less interested in.
Provide compelling reasons for the client to use your company
Although some clients select contractors on price alone there are many who are more astute and can be selective. They understand the importance of selecting a contractor who is capable of delivering a quality project, on time, without accidents and with minimal risk to them or the project.
Some things you could consider adding to your tender:
1. Address any concerns that the owner/client has raised in their documentation or at pretender meetings.
2. Highlight why your company will be the best contractor to construct the project.
3. Demonstrate that you have the resources to do the work. It’s useful to include your proposed project management organisation chart as well as the profiles of senior members of the project team.
4. Show you have an understanding of the project. A tender schedule included with your submission is useful in this regard as is a brief method statement or overview of how you will carry out the work.
Try and differentiate your company from the other construction companies.
Think out of the box – how can you make your price cheaper (without sacrificing profit)
Sometimes it’s possible to improve your price even further by:
1. Offering a discount for early payment or if the client withholds less retention money or releases it sooner.
2. If the client has brought out a number of packages of work, it may be beneficial to offer a discount should your company be awarded more than one package of work.
3. Offering alternate materials which may be cheaper.
4. Offering alternative construction solutions which may be cheaper.
Often tender documents require you to price the original documentation and specifications and these alternatives may have to be offered separately.
I have won many projects despite not having the cheapest price. Often this has been due to the strength of our tender submission which resulted in our client electing to pay a premium to engage our company knowing that ultimately their project would benefit from our expertise.
Next week I will discuss your tender submission, how important it is and what you should include.
Other useful articles by the author:
The importance of maximising your monthly valuations
Should contractors price every project?
[Of course if you don’t want to wait until next week for the next article you can order my book ‘Building a Successful Construction Company: The Practical Guide’. The Kindle or eBook version is on special on Amazon dot com and Amazon UK this weekend.]
(Written by Paul Netscher the author of the acclaimed books ‘Successful Construction Project Management: The Practical Guide’ and ‘Building a Successful Construction Company: The Practical Guide’. Both books are available in paperback and e-book from Amazon and other retail outlets. This article is adapted from information included in these books.)
© 2015 This article is not to be reproduced for commercial purposes without written permission from the author.