Your ‘Bid-Hit Win Ratio’ is the scoreboard showing your win-loss percentage for jobs you propose and bid on. If your scoreboard shows a 4 to 1 Bid-Hit Win Ratio, you are averaging one contract award for every four jobs you bid on.
Construction companies who negotiate lots of work tend to have lower Bid-Hit Win Ratios but also require additional overhead expenses for marketing, sales, pre-construction services, customer development and public relations. Companies that procure most of their work from bidding public works jobs, or regularly bid against a long list of competitors, have higher Bid-Hit Win Ratios and generally have more estimators on staff which offset the fewer marketing dollars they spend.
To be successful, first you must know and track your win ratio by job and customer type, and then look for ways to improve it.
What’s your strategy to improve your win ratio?
The best strategy to improve your Bid-Hit Win Ratio is to start tracking job types, customers, job sizes and project locations you bid and the competition you bid against. You want to find projects and customers where your bid odds will be the highest possible by getting on the right bid lists.
Focus your efforts on jobs where bid lists are short and there is less competition. These jobs typically have a high barrier to entry, are hard to get on the bid lists, require pre-qualifications, demand more paperwork or certifications, are more difficult to build, are only open to specialists in the project type, or you need to have a relationship with the decision maker.
Better choice = better odds to win
Over the years our construction company wasted lots of time bidding jobs we wouldn’t get unless we were really low and didn’t really want. When your estimating department is too busy bidding too many jobs you can’t get, they won’t win the jobs you want either. Once we decided to focus on jobs where we were the best choice, in specific locations, for certain types of customers, and at a reasonable mark-up rate, we improved our Bid-Hit Win Ratio dramatically.
Don’t get stuck on a bidding treadmill chasing the same kind of jobs and customers you’ve always bid to over and over. When you dilute your estimating staff, it lowers your chances of winning the good projects. Be selective and eliminate projects and customers you don’t want by diligently pursuing jobs you want instead of jobs with long bidder lists which are easy to get on.
Determine where you can find better customers and projects with less competition and more profit potential. Make this your top priority, and work hard to get qualified or selected for these projects by implementing a bidding strategy that capitalizes on your strengths with lower competition.
Winning ways to improve your odds
Another way to increase your proposal winning percentage is to make tough decisions. Never invest estimating time bidding projects to customers without a high chance of winning the work. Eliminate bidding jobs you won’t get no matter how low you bid, jobs with too many bidders, or where the customer has used the same contractor on the last 15 jobs in a row. Decide how many qualified and professional competitors you want to compete against.
Always try to get a commitment and understanding from customers on how the contractor will be selected before you start working on a preliminary budget, estimate or bid. Also don’t bid jobs you can’t get where your company is not the perceived specialist in a project type, you are not a local contractor or subcontractor, or you don’t have enough trained help to man the project properly.
Determine the ideal job size to target by creating the minimum profit margin you want by setting your minimum contractor overhead and profit fee. This will eliminate small projects you don’t really want and take lots of time to bid. This will also make your estimating department more effective and competitive by focusing on specific project sizes.
Whenever possible in your proposal, offer MORE than price, service and quality. Service and quality construction is expected and won’t give you an advantage over your competition. Give customers a differentiating reason to hire you instead of your competition. Give customers what they want, help solve their problems, provide total solutions, reduce their risk, offer a guarantee and set your company apart.
Never bid jobs without meeting the decision maker. This is my biggie for private construction work. Unless you can meet with the decision maker before you start working on an estimate, don’t waste your time and pass on the opportunity. When you meet, ask if they will negotiate, who else is bidding, who they used on their last five projects, how will the bids be opened and reviewed, what’s the selection criteria, and the most important factor?
Not all of these tactics will work for you. But, try them and you’ll like the outcome as they improve your Bid-Hit Win Ratio and help you get more work.
Email GH@HardhatPresentations.com to get your copy of BIZ-DEV Worksheets. These bold and scary decisions will transform your company from a "too busy, low profit" contractor selling price into an "above industry average profitable" company.
George Hedley CSP CPBC is a certified professional construction BIZCOACH and popular industry speaker. He helps contractors grow, make more profit, build management teams, improve field productivity, and get their businesses to work for them. He is the best-selling author of “Get Your Construction Business To Always Make A Profit!” available on Amazon.com. E-mail GH@HardhatPresentations.como sign-up for his free e-newsletter, start a personalized BIZCOACH program, attend a 2 day BIZ-BUILDER Boot Camp, or get a discount at www.HardhatBIZSCHOOL.com online university for contractors. Visit www.HardhatPresentations.com for more information.