Being Aware of the Common Bid Mistakes is the Best Way to Avoid Them

This is the First Step in Building a Better Proposal

Even though John was still overwhelmed and his schedule was packed, he knew the only way to ever get control was to keep his upcoming appointment with Gene.

John had spent a lot of time this past week considering the questions Gene had asked at the first meeting.

Why do you do what you do?

Do you love what you do?

Why do we need to do proposals?

As John was driving to the office of XYZ Construction these questions were still banging around in his head with a wide variety of answers and no real clarity.

Going in John smelled something amazing. He hadn’t realized how hungry he was. Gene was providing lunch this week and the smell made his hunger apparent.

In the conference room Gene was stirring some chili. “Lunch is ready. Grab a bowl and let’s get started.”

As they sat down Gene asked, “Did you come up with answers to the questions?”

John sat there for a minute and said, “I’ve come up with way too many answers. About the time I think I have it figured out; another answer shows up.”

Gene grinned, “That sounds about right.

The important thing is not having every answer to every question, but rather to continually be asking the questions and actively looking for the answers.

I still ask and answer questions every day.”

“A good way to find WHY answers is to figure out things that work and things that don’t. Let’s start with a WHAT question. Gene handed John some papers and said,

“What are the common bid mistakes made by contractors and how can you avoid them?”

#1 Your customers lack clarity – You remember the story I told you last week about that misunderstanding I had with a customer? This is a perfect example of how the lack of customer clarity is a problem. You need to provide a clear detailed description of the work and the materials that you are going to provide. A clear scope of work helps avoid customer confusion. The Blueprint for Building a Better Proposal will provide you a system for giving clarity to your customer.

#2 Production crews lack clarity – The scope of work not only provides customers with clarity, but it also gives the production crews a clear understanding the work to be done. This prevents subcontractors/employees from doing more or less than the project includes. Too much work done means cost overruns. Too little and the customer is unhappy. The Blueprint for Building a Better Proposal will give the production crews a clear description of the work to be done.

#3 No production budget – When the production crews don’t know what dollar amounts have been figured to do the project, they often spend more than expected. These cost overruns mean less profit.

If you take care of the pennies, the dollars will take care of themselves.

Let your production crews know how many pennies they have to spend. This will lead to more dollars of profit. The Blueprint for Building a Better Proposal will provide you with budget numbers automatically.

#4 Unsatisfied customers – Discontented customers are the worst. Not only can they be a drain on company morale, they can become serious problems that can cost you money and hurt your reputation. They’re paying you to have their dream turned into reality. When they don’t have an accurate dollar amount before the work is done, they will not be happy when it’s finished and costs more than they expected. The Blueprint for Building a Better Proposal gives the customer a clear expectation of cost before the work starts so that when it’s done for that price, they will be happy.

#5 Unprofitable projects – One of the biggest problems in construction is Guesstimates. Guessing at the amount of time and material it’s going to take to do a project is a big risk. Different size projects require different overhead and profit margins. The Blueprint for Building a Better Proposal provides predetermined options of overhead and profit when preparing a proposal. Proposals done this way can increase the profitability of your projects.

#6 Trying to do everything yourself – Most small construction companies only have a few people working. The focus is on the physical construction and doesn’t leave time for doing accurate detailed proposals. Most contractors don’t like paperwork. This leads to hasty, inadequate and oversimplified proposals. The Blueprint for Building a Better Proposal is a system that allows you to focus on doing construction while office staff does paperwork.

#7 Your bidding system isn’t customizable – Most construction projects consist of a variety of different areas of construction. You need a system that can include all or one. Because markets and geographic locations are so different, you need a system that you can adjust to your specific requirements and rates wherever you are. The Blueprint for Building a Better Proposal allows you to be able to customize proposals in these ways and more.

Gene could see that John’s eyes were glazing over. “I know this was a lot to take in and doesn’t feel like we’re getting any closer to actually doing proposals, but I assure you…

Getting clear on these mistakes will give you a head start to providing better proposals.

And next week we’ll start working on the first step to Building a Better Proposal.

Previous post in this series:

What is Construction Clarity and How Do You Find It?

Learning How to Get a Construction Project Started Out Right

It’s Time for the First Meeting

Your Business Doesn’t Have to be a Scary Movie

How to Avoid Business Disaster

Have you ever noticed how in horror movie’s people make the worst possible decisions? The Geico commercial where the young people decide to hide behind the chainsaws (while funny in the commercial) is way too real for most construction companies. In the commercial they choose to ignore the one running car that would help them avoid the catastrophe that is otherwise inevitable.

Why do so many businesses hide behind the chainsaws?

In most cases it’s written in the script. This is the way it’s always been done. Like in the movies, this will end in disaster. It’s time to rewrite your script.

In construction one of the root causes for disaster is not having a safe and secure method for doing proposals. A silver bullet is used for stopping a werewolf, witch, vampire or other monster. The Blueprint for Building a Better Proposal is just such a bullet.

Here are 7 common mistakes that cost contractors a fortune…but don’t have to.

  1. Your customer lacks clarity – Crystal clear communication is critical to your success. A clear scope of work avoids confusion between you and your customers.

2. Production crews lack clarity – Like the customer, the people working on the project need to know what’s expected. If the wrong things, too much or too little is done it results in losing money and/or unhappy customers.

3. Unclear production budget – If subs/employees don’t know what the budget is, how can you expect them to not overspend. This is a sure way to lose money.

4. Unsatisfied customers – Your customers have hired you to provide a completed construction project. If everyone isn’t clear about the expectations the customer is not going to be satisfied in the end.

5. Taking on unprofitable projects – Guessing at what your labor and material cost are going to be is a huge risk. Having a system that uses, cubic feet, square feet, lineal feet, etc. removes the guess work. Not to mention having predetermined overhead and profit margins.

6. Trying to do everything – In small companies your focus is on the physical construction. This doesn’t leave much time for doing bids. This proposal system allows you to delegate work to others. It’s less expensive to hire administrative people than construction personnel.

7. You don’t have a system that is customizable or scales – Most construction projects consist of a variety of different areas of construction, not to mention different markets and geographic locations. Add to that markups and profits that can be adjusted. You need to have a system that can be made to fit your specific needs.

Small and medium sized construction companies too often follow the same script that everyone else is. They hide behind the chainsaws, even though they know this is a bad idea.

Don’t hide behind the chainsaws!

Rewrite your script so that there’s a silver bullet to stop the proposal monster. At the very least…get in the running car.