Rocket Estimation USA

Costly Bidding Mistakes & How to Avoid Them Overlooking Risks: Identifying and managing risks is probably the most overlooked aspect of preparing a bid proposal. Every construction project comes with its own unique set of risks. Once you’ve identified the potential risks, you need to analyze and evaluate each one individually so that they can be properly managed and mitigated if or when they occur. Take into account the probability of the identified risk and the impact it can have on the project. A low probability risk with a low impact might be easy to mitigate, but a high probability risk with a high impact that you can’t effectively manage could be detrimental to the profitability of the project. By identifying and evaluating possible risks associated with a project while preparing a bid will make you better prepared to handle a situation when something goes wrong. Preparing a construction bid proposal is no easy task. A competitive and winning bid proposal requires a lot of time and attention to detail. Making mistakes can lead to submitting a lot of overpriced, noncompetitive bids or worse a lot of underpriced bids that you win but make no profit on. The key to winning more bids is being able to accurately estimate all costs required to complete the job while factoring in a reasonable profit for your company. That can easily be accomplished by avoiding these 13 deadly sins of construction bidding.

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Costly Bidding Mistakes & How to Avoid Them Rushed Bids: Preparing a good competitive bid proposal takes time. If you try to rush through putting a bid together it is going to lead to mistakes. You need adequate time to read through and understand the plans and scope of work and gather and evaluate subcontractor bids. Don’t fall into the trap of thinking that if you’ve done similar work in the past that you can just slap a bid together without doing your due diligence. Putting a bid together is more involved than just pulling some numbers together and filling out a bid form. If you don’t have the time to fully evaluate and compile a proper bid then you shouldn’t attempt to do so. Sometimes not bidding on a project is a better business decision than submitting a bid that you threw together at the last minute.

Costly Bidding Mistakes & How to Avoid Them Misunderstanding Material Requirements: Costs for building materials and supplies can change rapidly and can vary greatly in different areas of the country. If specialty materials are required that you aren’t familiar with you shouldn’t assume that the cost is comparable to similar items. Your best bet is to call around to local suppliers to get up-to-date costs for materials and delivery.  Make sure that the building materials and supplies required in the specifications are clearly defined so that you are pricing the right materials. If you are uncertain of the materials being requested in the specifications you should always get clarification from the architect, owner, or owner’s representative.

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Costly Bidding Mistakes & How to Avoid Them Not Factoring in Overtime: Wage rates can vary greatly from state to state and even from county to county. It is important to understand what, if any, wage rates apply to the project you are bidding on in order to incorporate those rates into calculating your labor costs. Wage rate determination is required on all Federal Government construction projects as mandated by the Davis-Bacon Act. Wage rates are determined by the location of the project and the type of construction being performed. There are 32 states with prevailing wage laws for public construction projects. Always be sure to check the current prevailing wage rates where the construction is taking place so you can accurately determine your labor costs. When determining your labor costs don’t forget to factor in any projected overtime needs as the wage rates for overtime hours worked can be as much as double the prevailing wage rate.

Are You Bidding these days?

Costly Bidding Mistakes & How to Avoid Them Labor Implications: Being able to accurately estimate labor costs can be one of the most difficult and trickiest aspects of preparing your bid proposal. To determine your labor costs you have to factor in hourly wage rates with the number of man-hours a specific task will take to complete. You need to take into account the productiveness and experience of your workers. Employee turnover, absences, and injuries can all affect your actual labor costs. More experienced workers may be able to complete tasks quickly which would reduce the number of man-hours needed but you will have to pay a higher rate for their services. Workers with less experience will require more man-hours to complete a job but you can pay those workers a lower wage.

Costly Bidding Mistakes & How to Avoid Them Not Qualifying Subcontractors: Getting subcontractor pricing can be complicated. You want competitive prices from your subcontractors but you also want some assurance that they can perform the work required effectively. This is true whether it is a subcontractor you are using for the first time or one that you have worked with for years. One solution is to set up a prequalification process for subcontractors who wish to work with you. This allows you to have a better understanding of the type of work they are capable of performing by evaluating the quality and performance on past projects. At a minimum you should get bids from at least three different companies for each trade you will need to subcontract out work for to ensure you are getting the best prices. Carefully review and evaluate every subcontractor bid to make sure that the prices quoted are complete and accurate. When requesting bids from subcontractors, clearly define the scope of work that the subcontractor is expected to perform. If you don’t clearly define the scope of services being requested from subcontractors it may result in unnecessary costs being added to your bid from overlapping work being bid by both you and your subcontractor.