The frenzy of bidding competition accompanying a strengthening recovery in many areas has some companies cutting costs to the bone, and others promising faster completion dates. If you want the work, here are three bidding tactics Caterpillar recommends for getting it and preserving some profit:
1. Stop going after projects you have little or no chance of winning.
Bidding more projects may be less productive than bidding fewer projects more carefully. Take a look at the types of projects you consistently complete profitably. What characteristics do they share? Document them. Use those as parameters for the types of jobs that you are going to actively pursue. Use the data that machine technology makes available to you. Those numbers are real. They can guide to you bigger margins.
2. Create a bid/no-bid process.
Based on the types of jobs at which your company excels, create a go-no go standard. The hard part? Following it. Deciding not to bid on the first potential job is always the hardest. But it’s the smartest. Instead of estimators spending too little time on multiple bids, they will be able to refine proposals more carefully for work you really want. Just say no to bids that don’t fit your company.
3. Invest in estimating the way you do your equipment fleet.
Some of the biggest problems identified in the estimating process come from inadequate attention to detail:
- Lack of consistency with other industry bids
- Inadequate level of detail as to how the numbers were arrived at
- Clear use of dated or incorrect information
- No strategy for contingencies
Each of these estimating gaps can be fixed with an investment in training, process and calculation. Investing in your estimating process can set your company apart because your estimates will share the same high quality as your work.
4. Don’t forget the people part of bidding.
Whenever you have the opportunity to ask questions or meet with prospective customers, do so. Plan to make a presentation out of your bid or proposal on private jobs, so you can present your approach and answer questions. Even if you can’t present a proposal, take steps to learn as much as possible about the selection process and how bids will be evaluated, so you can adapt your bid appropriately