Precision and strong attention to detail are imperative to satisfying your clients and gaining competitive edge against other contractors.
Perhaps your company is already producing highly accurate estimates for clients. But, when is the last time you evaluated the types of projects you’re bidding on and why?
All too often, contactors increase their overhead costs by spending time planning and estimating projects they have a slight chance of winning. Unfortunately, it’s easy to get caught up in the habit of bidding more work with the intent to increase profit. This is not the right strategy.
So what can you do?
First, you need to assess your track record as well as your crew. This is an essential part of crafting your strategy for increasing profit. Start by answering the questions below.
1) What is our bid/win ratio? What do I consider to be the ideal ratio?
2) How do I use my bid/win ratio during prospecting for new projects?
3) What types of projects does my crew have the most success completing because of their current skillsets and expertise?
4) Looking at our project history, what types of projects have been the most profitable? (Consider who the client was, project size, location, and public/private.)
5) How long does it typically take to build an estimate? Do we need to improve this area? (If yes, how can we improve)
6) How often are we too high/too low on bid numbers?
7) Have I determined the margin I need to hit my overall overhead and profit goals?
By answering these questions about your business, you will learn a great deal about where your crew should invest their time and efforts. You may learn there are certain types of projects that your company rarely ever wins.
Second, apply the information to your new strategy! Check back with our blog next month to learn how to best utilize this information towards your goals.