How to Win Construction Bids in 2024 being a Subcontractor?

How to Win More Construction Bids in 2024 being a Subcontractor?

It doesn’t matter if you’re a big name in construction or a small company, everyone in the industry can bid smarter by following few simple steps.

So, what does it take to win more construction bids?

All the steps necessary to win more bids are mentioned below:

1. Find Quality Construction Leads

Don’t bid on every opportunity that comes your way. You need to find the right amount of quality leads. Here’s how to find the quality construction leads: 

  • Search For Owners and General Contractors You Want to Work With: Showcase your experience and skill in your industry to promote your business. Ensure they know your qualifications and the kinds of projects you are interested in bidding on. Establishing these connections takes effort, but it is worthwhile. Trust can help lead to more invitations to bid (ITBs). 

  • Content Marketing and Lead Generation: Create valuable content targeted towards your ideal clients. This could be blog posts, articles, case studies, or even videos showcasing your expertise and the projects you excel at. Promote this content through social media, email marketing, and industry publications. Some companies are utilizing Instagram, TikTok, and YouTube to showcase their expertise.Being a subcontractor , it has become very important to use digital marketing.

  • There are also Organizations like: the Association of General Contractors you can join. Organizations for specific trades and locations are also out there. Do a quick Google search to see if there’s a group for your trade or hometown! 
  • Networking Events and Industry Conferences: Attend industry events, conferences, and trade shows. This allows you to connect with potential clients, architects, engineers, and other decision-makers in person. Build relationships, showcase your work, and actively participate in discussions to increase brand awareness and generate leads directly from those seeking construction services.
  • Online Lead Generation Platforms: Utilize online platforms specifically designed to connect contractors with potential clients. These platforms often allow you to filter leads based on project type, budget, and location, ensuring a better fit for your company’s capabilities.

A few of them known for lead generation are: PlanGrid, ConstructConnect and ServiceTitan.

2. Find the Right Projects to Bid

Now that you know how to find quality projects, you must find the right ones for your construction business. It is just as horrible for your firm to lose a bid as it is to win one for a project.
Please keep in mind that you can always drop your bid at any time, even after you’ve begun working on it. You might realize that you wouldn’t make money on the project once you start looking at the prices. The best course of action in this case is to withdraw the proposal and hunt for another project.

Choosing the right project to bid is necessary to make a profit being a subcontractor. That’s why it’s important to have a strong bid/no-bid decision process in place. 

  • Scenario 1: You receive a bid for a large residential development with a tight deadline. While the project value is tempting, the timeframe seems unrealistic for the size and complexity of the electrical work. Rushing the job could compromise quality and lead to safety hazards.

Bid/No-Bid Decision for This Scenario: Research typical timelines for similar projects. If the proposed schedule seems unreasonably compressed, factor in potential costs associated with overtime or cutting corners. It might be better to walk away and focus on bids with achievable deadlines.

  • Scenario 2: You’re excited about a potential project with a new GC you haven’t worked with before. However, a quick online search reveals negative reviews from previous subcontractors regarding late payments.

Bid/No-Bid Decision: Before investing time in a bid, check the GC’s reputation for timely payments. Contact references or previous subcontractors to get a sense of their financial stability. A history of late payments can strain your cash flow, so it might be wise to prioritize bids from reputable GCs.

  • Scenario 3: Your company specializes in high-end residential kitchen renovations. You receive a bid for a large commercial kitchen project in a restaurant. While the project value is high, your experience lies in a different sector.

Bid/No-Bid Decision: Consider your team’s qualifications and experience. Bidding on a project outside your expertise could lead to difficulties and potential rework. It’s better to focus on bids that align with your strengths to ensure quality and efficiency.

3. Monitoring Bid-Hit Ratio

Do you monitor your bid-to-hit ratio? If not, you need to start.

What is the Bid-Hit Ratio?
The number of jobs you have to bid on to get one is known as your bid-hit ratio. You can determine how many projects you need to keep your pipeline full by understanding this ratio. You can eliminate bids that you would not be able to win with its assistance.

To make your bid-hit ratio work best for your business, you should do the following things

  • List the projects you’ve bid on and arrange them into specific categories. These categories can be: 
  1. Private projects 
  2. Types of buildings 
  3. Who is the general contractor
  4. Trades required 
  5. Who is the project owner? 
  6. Locations of the projects
  • Once your bids are grouped, indicate which ones you have won.
    At this point, you can compute your ratio. It is the ratio of bids you have placed to those that you have successfully withdrawn.
    For instance, if you submitted bids for six public projects and were successful in one of them, your bid-to-hit ratio would be 6:1.
  • Perform this computation for every category you have.
    Compare each of your ratios now.
  • The goal is to find the ratio with the smallest difference between the two numbers. 
  • Here’s an practical example. If your public project bid-hit ratio is 6:1and your bid-hit ratio for private projects is 3:1, you have a better ratio with private projects. This implies that instead of spending as much time bidding on public projects, you should concentrate more on those private prospects.
  • Practical Examples in Texas:
  1. Scenario 1: Your bid-to-hit ratio for public schools in Dallas is 8:1, while for private residential projects in Austin it’s 3:1. This suggests focusing more on private residential bids in Austin as they have a higher win rate.
  2. Scenario 2: You discover a high bid-to-hit ratio (7:1) when working with a specific GC known for delayed payments. This might be a sign to prioritize bids with GCs known for timely payments, even if the project value is slightly lower.

By monitoring your bid-to-hit ratio and analyzing it across categories, you can refine your bidding strategy. Focus on project types, locations, and GCs that lead to higher win rates and a more profitable subcontracting business in Texas.

4. Review Profitability

After you’ve decided which projects to pursue, it’s essential to consider the profit they will bring in. You must first precisely track the prices of supplies, labor, and equipment used in the job in order to complete it correctly. After that, you should assess the following by contrasting your actual costs with your estimates:

  • Were my labor and material estimates, correct?
  • Did I factor in bonding, supplies, equipment, and other job-related expenses while creating my estimate?
  • Did I accurately account for my profit and markup on overhead?
  • Was my emergency fund sufficient?

If your profit margins aren’t what you anticipated, there may be problems with productivity at the location, which led to a rise in costs, or your projections may have been too low.

Regardless of the cause, you should work to resolve the issues to get your profit margins where they need to be. 

By combining the data from your bid-hit ratio and your profit margin analysis, you can identify the projects with the highest likelihood of success and financial gain.

Practical Examples in Texas:

  1. Scenario 1: You win a bid for a large commercial project in Houston based on a competitive price. However, during construction, unexpected hazardous materials require disposal, impacting your profit margin. This highlights the importance of considering potential contingencies in your estimates.
  2. Scenario 2: Your profit margins are consistently lower than expected for electrical work in Austin. Analyzing your data reveals underestimated labor hours due to the complexity of the wiring in historic buildings. This suggests adjusting labor estimates for similar projects in the future.

By combining bid-hit ratio analysis with a close eye on profit margins, you can make informed decisions. Focus on project types, locations, and GCs that not only lead to winning bids but also ensure healthy profit margins for your Texas subcontracting business. This data-driven approach allows you to identify the “sweet spot” – projects with high win rates and strong profit potential, paving the way for long-term success.

5. Conduct a Bid/No-Bid Review

You must thoroughly examine each opportunity as a bid or no-bid before devoting time to a bid proposal.
Here’s how to do it:

  • Gather all plans, specifications, and project documents.
  • Spend some time to thoroughly read them.
  • Perform calculations to see whether you can turn an adequate profit.
  • Determine that you have the personnel and tools necessary to finish the assignment on schedule.
  • Ensure that you can manage the project’s scale and scope.
  • Keep an eye out for any “red flags” that could lead to problems: Unknown site conditions, safety problems, accelerated schedules, and incomplete or inaccurate bidding paperwork are a few examples of red flags.

You might also consider the following things in your review:

  • The project’s location.
  • The duration of project.
  • Potential competitors for the project you are competing against.
  • The project owner’s details.

When the time comes to select an opportunity, you will benefit from having completed the bid/no bid analysis and figured out what other factors are most essential to your business.

Additional Considerations for Texas Subcontractors:

  • Project Location:
  1. Factor in travel time and logistics costs associated with the project’s location.
  2. Consider if the location requires any special permits or licensing for your work.
  • Project Duration:
  1. Analyze the project timeline and ensure it aligns with your current workload and crew availability.
  2. Consider potential delays due to weather or unforeseen circumstances in Texas’ climate.
  • Competition:
  1. Research the project’s potential bidders to understand the competition.
  2. Analyze their qualifications, experience, and typical pricing strategies.
  • Project Owner Details:
  1. Research the project owner’s reputation for timely payments and clear communication.
  2. Look for past reviews or experiences from other subcontractors who have worked with the owner.

6. Identify and Manage Risks

For a Subcontractor, identifying and managing risks could be the most underestimated part of getting to prepare a bid. In order to address any possible risks that you may have discovered, you must examine each one separately.
The risk may be simple to manage if it doesn’t appear very likely to occur or if it would not significantly affect progress. On the other hand, a risk that can negatively impact the work might hurt your profits.
If you are able to recognize the risks associated with a project, your bid will be considerably more competitive and have more chance to win. Additionally, it will improve your readiness to manage a crisis in the event that something goes wrong.

By getting started early in the process, you can avoid placing bids on non-profitable projects. Additionally, it can assist you in creating more precise bids and fallback budgets. As project advances, project management will function more smoothly and you’ll save time, money, and resources.

7.Seek Clarifications, Avoid Assumptions

In addition to your labor and equipment, make sure your bid includes everything the architect or project owner would need.
These things can include: 

  • Particular bonds.
  • Setting participation targets for MBEs, or minority business enterprises.

Verify all the drawings and specifications to see if there are any requirements like these. Get in touch with the owner, the architect, or the owner’s representative right away if you have any questions. This is due to the fact that inquiries frequently have deadlines. Deadlines give the project team time to revise the plans and specifications and send out any add-ons to plan holders and bidders.

Not getting clarity is no way to win a bid. If your inquiries aren’t being answered in a way that is useful, you might want to reconsider if it is still worthwhile to submit your bid or not

Most opportunities let bidders tour the job site and attend a pre-bid meeting. Often, these are required in order to submit a bid. This is useful as each construction site is different. When construction begins, things you don’t know about the site can cause unexpected and costly issues. Therefore, it is very important to visit the site.

The following actions should be taken when performing a site visit:
• Determine dimensions.
• Examine the topography and, if necessary, collect soil bore samples.
• Examine traffic and road access to the location.
• Determine how much space there is for equipment and materials.
• Ascertain whether environmental safeguards are required while building is underway.

You won’t have another opportunity to learn about the specific requirements of the project if you don’t show up for a pre-bid meeting. It could also be the sole chance to stroll around the property and see what you would be working with.
      You won’t be able to bid at all if you miss the required pre-bid meeting.

8.Ensure Accurate Takeoffs & Measurements

Your takeoffs lay the groundwork for your estimates . Your estimations can be affected if they are inaccurate or incomplete. Precise takeoffs enable you to determine the exact amount of materials and supplies you want. To ensure that you hire adequate staff and purchase enough equipment, you must be aware of the exact amount.

You can harm your business if you make an estimation error or overlook something during takeoff. Moreover, you run risk of underestimating the costs and getting a project that won’t bring in a lot of money, or overestimating them and losing the bid.

To ensure the accuracy of your measurements and estimations, takeoff software like PLANSWIFT, BLUEBEAM etc are a fantastic choice. Additionally, it saves you a ton of time compared to manual takeoffs.
These are the things you should keep in mind when taking off, whether you are using software or not:

Make sure your measurements and takeoffs are accurate by carefully going over the drawings and specifications. 

Make sure you’re using the appropriate scale and units of measurement. Plans might require you to utilize specific computed or written measurements.
Sometimes a scale appears off when blueprints are printed out or uploaded to the internet. Get in touch with the architect if you have any questions or if something doesn’t seem correct. Do not forget that it is better to be safe than sorry!

9.Nail Down Labor Costs

When it comes to your estimate, labor costs may be the most difficult to determine. A lot of factors are at play, including: 
• The number of staff on board.
• Their degree of expertise.
• The salary range.

Take these actions to assist you in staying on task:
• Find out how many hours a task might take by employees to complete.

• Skilled employees may be able to complete jobs faster, cutting down on the number of hours required. You will have to pay them extra, though.
• Less experienced workers want a lower wage yet require more time to complete a task.
• Remember to account for the chance of overtime expenses.
• Check if the project requires prevailing wages. These can differ from the wages you usually provide each employee.
• Always keep track of job expenses, particularly labor expenditures. These records can be used to provide more precise forecasts for upcoming projects.
If you are submitting a bid for a federally sponsored or U.S. government project, you should keep in mind that the Davis-Bacon Act requires certain wage rates. The location of the project and the kind of work determine the wage rates. A useful webpage that explains the law and what it implies for you is provided by the U.S. Department of Labor.

10.Account for All Materials and Equipment Costs

When it comes to how materials and equipment will impact your bid, keep the following in mind: 

  • The costs of materials and supplies can vary by location. If your project is an area that’s new to you or requires unfamiliar materials, ask suppliers in that area for the current costs. 
  • Make sure you have all the right equipment. This may mean you have to rent or purchase some. 
  • Even if your company owns all the required equipment, check that it’s not being used for another job. 
  • Check if the equipment works or needs repairs that could cause delays. 
  • Factor in any fuel costs for the equipment and transporting it to the job site. 

Unexpectedly having to rent, buy, or repair equipment will hurt your bottom line.  

11. Evaluate Subcontractor Pricing

It can be complicated to figure out how much to pay for your subcontractors. Try these steps to make it easier for you: 

  • You should get bids from at least 3 different companies for each trade needed. This will make sure you are getting competitive prices.  
  • Make sure you have clearly defined the scope of work for each subcontractor. 
  • Carefully review each bid to make sure the prices quoted are accurate. 

It’s not necessary but think about making a prequalification process, too. This allows you to judge your candidates better by evaluating how they did on previous projects. 

Practical examples for subcontractors:

  • Scenario 1: You’re a general contractor working on a large residential project in Houston. You need bids for plumbing, electrical, and HVAC work. Instead of relying on your usual contacts, you reach out to the Texas Subcontractors Association to find qualified subcontractors in your area and obtain at least 3 bids for each trade. This ensures you receive a wider range of competitive quotes.
  • Scenario 2: You’re a concrete subcontractor in Dallas and receive an RFP (Request for Proposal) for a new shopping mall development. Before submitting a bid, you request a detailed project schedule outlining the specific phases of concrete work required. This clarity ensures your pricing accurately reflects the workload and avoids potential disputes Scenario 3: You’re a roofing subcontractor in Austin and receive bids for a large commercial building project. One bid comes in significantly lower than the others. Upon closer inspection, you discover the lower bid excludes critical details like the removal of the existing roof or the disposal of debris. By carefully comparing all bids and ensuring they align with the project specifications, you avoid the risk of hidden costs and project delays.

12. Take Your Time

Preparing a competitive bid proposal requires time. If you rush your bid, you will make errors.

   Read and fully understand the plans and scope of work to increase accuracy.

  • Take time to gather and analyze subcontractor bids.
  • Thoroughly review all measurements and spending. Consider having another person, preferably an estimator, double-check your work. CE LLC is recommended for this.
  • Make sure you have all of the required paperwork. Missing any one of these is a definite way to lose the bid.
  • Tip: Make a checklist to keep track of necessary documentation during the bid process. Your estimates almost always decide your profit. If you underestimate your bid, there is little to no cost-cutting that will make things right.

If you don’t have enough time to consider your bid completely, do not submit it. Sometimes, not bidding on a project is a better business move than submitting one on which you have not done enough research.

Win or lose, you should always do a final evaluation once the bids have been judged. If you did not win, please get in touch with the owner or general contractor to find out why. Understanding what caused the outcome of your bid will help you make better decisions about opportunities in the future.

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