Recession Protection

By Stan Shook | Mar 15, 2008
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During the past 10+ years, I’ve worked with contractors of all different shapes and sizes. With many of them—regardless of shape or size—I have witnessed a common, dangerously fatal reaction to the “we-got-work-now” situation. The reaction is, “We got a lot of work booked (or we just landed a big job), so we don’t need to estimate any jobs for a while.”

Too often, I hear contractors say they are waiting until their current projects are either almost done—or worse, 100 percent done—before they even look at bidding new work. This is a scary strategy that can lead to the demise of a contractor’s business.

As your company moves deeper into managing all of last year’s awarded work, keep in mind the grim reality that these contracts eventually will come to an end. When they do, you again will urgently need to land a job or two (or three). If you haven’t been bidding on any new opportunities this late winter, chances are you will find yourself without any new contracts this spring and summer. If this happens, you most likely will begin a frantic rush of bidding as many jobs as possible in hopes of landing just one to keep it all going.

Bidding in this “we-need-a-job-now” mode is very dangerous and can land you projects you wish you had never bid. These “loser projects” can divert your company’s project management and estimating resources, keeping you from bidding the good jobs you so desire.

My point is that you definitely should focus on your awarded contracts in hand, but don’t wait too long before bidding on new contract opportunities.

Also, when you look for new jobs to bid, look for high-quality ones with a fair amount of time to estimate before they bid. Seek out negotiated projects, or try to get yourself on a design/build team. Use nonbidding time to build stronger relationships with your general contractors and other clients. This approach will help increase your possibilities of landing better contracts.

The recession is coming?!

There’s buzz about the strong possibility of a major recession. Politicians are talking about it in debates and speeches; TV and radio talking heads, newspapers, and magazines are setting the stage for it and urging us to get ready. It’s almost like watching weathermen talk about an approaching winter storm (which often doesn’t materialize anyway).

Assuming there is a recession, how will it affect the construction industry? More specifically, how will it affect the contractual pursuits of electrical contractors and our work as electrical estimators?

Since I’m not an economist and have no idea what the future will bring, I can only speculate. So, I speculate that if a recession hits us, it will impact us because of either of the following:

A. Construction spending will lessen significantly, and there will be fewer projects to bid on.

B. Construction spending will increase as a means to create more jobs and stimulate the economy.

In my speculative opinion, both scenarios add up to the same thing: Contractors (estimators) will need to bid more jobs.

Scenario A: Fewer projects to bid = more projects to estimate

I know, I know. It sounds like fuzzy math. The obvious thought is if there are fewer projects to bid, then there are even fewer chances to win, right? OK. But there would not be fewer competitors—well, at least not at the beginning of a recession. So what this really means is you need to bid more jobs than usual just to win one. Find any and every project you can to bid or pass on any offers to bid. This, I deduce, will mean you have to estimate more jobs.

Scenario B: More projects to bid = more to estimate

Most of us are living this nightmare already. If there are more projects to bid, then there are more chances to win. This is a good thing. It also means you can afford to get a bit picky with those your company wants to win. However, in the recession scenario, there definitely will be more competition, and you still will have to bid more jobs in order to win one. Again, more estimating will be required. I rest my case.

Recession or not, never stop bidding work. When you do, you lose your edge. Bidding work is like making sales calls: As soon as you stop calling on clients, they forget you exist. And let’s face it, if you don’t bid jobs, you won’t win contracts.

Also, most project contracts take a few weeks, if not months, to start. Consider this in your ongoing projects ending versus new contracts starting scheduling.

The trick is to win projects that start just as others finish. Not too difficult, right? Just a bit of speculation about the future, knowing which jobs to bid and an expanded amount of estimating.

SHOOK is the president and chief estimator for his estimating company, TakeOff 16 Inc. He has worked in the electrical construction industry for more than 18 years. Reach him at 707.776.0800 or [email protected].

About The Author

Stan Shook was ELECTRICAL CONTRACTOR's estimating columnist from 2005 to 2012. He works as an electrical estimator in California. Read his blog at or contact him directly [email protected]





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