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The competitive bid market always has been a brutal arena, even during the best of times. Winning a contract takes more than having a tight estimate or the best lighting fixture quote. Even having the lowest price won’t ensure you get listed by the general contractors. Too many times we hear a common sob story from electrical contractors: “I think my number got shopped.”
Price shopping can be the result of various scenarios. The most common ones are that you released the bid too early, you bid to the wrong clients, and you never forged a strong relationship with the GC.
The GC says he needs his price early!
Maybe he does. Maybe he doesn’t. The question is whether other electrical contractors are submitting their prices early. If not, why should you?
Now, perhaps a certain GC will protect your price. Maybe that GC will make note of who helped out and who didn’t. Maybe this matters even if your price is not the lowest. Maybe the GC will “owe you a favor” and tell you if your price is the winning number. Maybe the GC will shop the job to you.
You must have a bid-day strategy that addresses this issue. You need to determine to whom you are going to bid early and who won’t get an early price, as well as who you will give your best price to and who will get your highest price.
Don’t wait too long, either. There is a fine line between holding your price until just the right time and waiting too long. Imagine hearing your low price didn’t get used because you submitted it too late.
Build solid relationships
Estimating is not just about pricing projects. It also is about servicing your clients, the GCs. You need to build solid relationships, getting to know them and ensuring they know you. The more a GC knows and works with your company, the better it will feel about your pricing and the more it will trust your price, even when it is high.
Make sure the GC knows you are 100 percent focused on the project and know everything about it. Discuss your proposal with the GC before the bid. Help it understand how your bid is put together, and ensure it knows about the work you have included that the competition may have excluded. Eliminate any and all surprises. GCs like this.
Bid only to GCs you can trust
Don’t bid to everyone on the bidder’s list just because they are on it, especially if you care about the GCs you are going to work under contract with. I have heard nightmare stories about the contractor who had a terrible GC and is losing money every day. This often is because the EC bid a project with a GC it had never worked with before.
Is it unavoidable? Do you have to bid to every GC on the bidders list? Any one of them could be the winner. And how frustrating is it to hear that you actually had the lowest electrical price, but the one GC you didn’t bid to won the job?
Do your prebid homework and find out as much as you can about every GC you plan to bid to. Check the license status of each; find out if there are any liens levied against the company or if it is being sued. Call some of your EC allies to see if they ever have worked with this GC and what their experiences were. See if their prices have been shopped. The more you know about the entity to which you are bidding, the better you can judge the price you are willing to give it.
Be wary of false advertising
Be careful when a GC tells you your price needs to be lower. Ask questions: How much lower? How do you know the other price is good? What is it based on? Whose price is it? How did they estimate the project? What does this “lower price” include? What does it exclude?
Here again, much depends on how much you know and trust the GC with which you are working. Getting this inside information can help you win the bid. But it also can be a trap by a GC who is just trying to lower his bid by using you. Of course, if you play the price shopping game, you must accept the possibility you may be on the losing side.
We work in a competitive, harsh and often unfair industry. You must take control of your bid and do everything you can to ensure your estimating efforts are protected. I am always amazed when I hear a contractor gave his price out early. On one hand, it is good to know he had the bid together hours or a day before the official bid time. Still, I can’t help think he basically wasted his time (and money) by giving out his number too early, only to risk having it shopped to the competition.
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 and [email protected].