When I became a trainee estimator, I never worried about what I was going to bid next. My method was simple; I bid on every project my boss told me to. That strategy changed when I moved on to my next employer. For the first few months, the “do-what-you’re-told” strategy remained the rule of the day. Then the boss hired a management consultant, who asked me how I selected projects to bid. I told him that was not my department. He then asked me to develop a method of selecting projects to bid as if it were my responsibility.
This really intrigued me. I had recently completed an advanced estimating class, and we had just purchased a personal-computer-based electrical estimating system. I had also been told I was going to get my first project management assignment. I was very excited about the future of the company, so I launched myself into this new task with great enthusiasm.
At first, I thought the process would be complex and difficult to implement. However, the more I worked on it, the simpler it got, until it boiled down to an easy-to-use, four-line decision matrix. The consultant and the boss liked it a lot, and I have been using it ever since. Here it is:
Type I—The job is yours.
Type II—One general contractor/owner
Type III—Several general contractors
Type IV—Advertised work
Type I projects are the most desirable. Someone you have a relationship with calls you, asks for a price and tells you to go to work. The hard part about Type I projects is creating these relationships, which are worth their weight in gold.
Type II projects are already under contract to one general contractor or are being bid out by the owner. Usually, only three or four companies are bidding against you, making your chances for winning a contract pretty good.
Type III projects have multiple general contractors. They put the project out to several electrical contractors for bids, and it is not unusual to have nine or more competitors bidding these jobs.
Type IV projects are advertised public projects. They have the lowest chance of becoming a contract, simply because of the large number of competitors bidding these jobs. The worst I saw was a project in New Jersey that had 30 electrical contractors bidding on a project. The odds are one of them will make a big mistake and end up with the project.
These four types are a general framework for making decisions about which projects to bid. However, there are other factors to consider when making your bidding decisions.
Let’s take a closer look at Type IV projects. There are times when it may be necessary, even desirable, to bid this type of project. You may have skills or expertise in an area that gives you an advantage on certain bids. For instance, if you do your own high-voltage work, you have an advantage over companies that need to hire a high-voltage subcontractor. If a general contractor to which you are marketing asks you to bid an advertised project, you need to provide a bid as part of those marketing efforts. If a general contractor that you have a good relationship with asks you to bid an advertised project, you should have a better chance of winning the bid. There also are times when an advertised bid does not have a lot of bidders. If you have created relationships with the right people, they can make you aware of those opportunities.
Do you have what it takes?
Another part of project selection is resource scheduling. Does your company have what it needs to take on the project? Can you bond the project? Do you have the cash to finance it? Do you have the experienced supervisory staff needed to run the project? Do you have the trained field labor required for the type of work you are bidding? Do you have the tools needed to make the installations? Finally, can your office staff support the project?
Who are your friends?
Something else that may help when making project-selection decisions is knowing your customers. How well do you know the companies you are bidding to? Do you know if they participate in bid shopping? Do they have good supervision? Do they pay their bills on time?
Creating and maintaining relationships with general contractors and owners is a key factor for keeping your win ratio of successful bids high.
Picking the wrong projects to bid is not only a waste of time, but it also can put you out of business. Picking the right projects will lead to profitable jobs, with the right customers.