Will Specialization Boost Your Bottom Line?

At first glance, specialization can seem like a risky proposition that could cause you to miss out on opportunities. In reality, positioning your firm to stand out from other construction professionals is one of the most effective ways to both attract more clients and increase your profit margins.

construction professionalsA Reputation That Precedes You

Your would-be clients aren’t looking for a “construction firm,” but for a company that can provide the exact service they want. If your firm is strongly positioned as a leader in that area, you’ll be the clear first choice. Keep in mind that it’s far easier to rise as a leader in a defined niche than in a broad market. You’re also more likely to receive referrals from construction professionals who remember your firm’s name in connection with your specialty.

Generally speaking, whatever you do best will become your specialization, but there’s more than one way to approach defining your specialty.

  • Building type: medical facilities, office buildings, custom homes
  • Customer type: entrepreneurs, homeowners, developers
  • Location: urban or rural, neighborhood, topography
  • Contract type: bid or negotiated, design-build or plan-spec

Having more than one specialty extends your reach in the construction market. If you go this route, though, segment your client base and target your marketing to each one.

The Perception of Excellence

Your specialization is evidence you’ve invested time in developing your knowledge and skills. It displays the kind of focus, hard work, and commitment we all admire in a professional. The very fact you’ve made the effort to specialize inspires trust, which in turn helps you win over more clients.

Clients also know that effort pays off. Specialists nearly always provide higher quality with greater efficiency than generalists. They hire foremen and subcontractors with a deep knowledge of their individual areas of focus. They’re experienced at managing the challenges that come with their specialty. When you offer this level of service, you can command premium prices because your clients know you’re worth it.

For more information on specialization for construction professionals, contact Construction Monitor today.

4 Steps for Better Residential Construction Bidding

Your skill at bidding on a construction project is a major factor in how much profit your company turns each year. Because bidding is a complex process, there’s always room to improve your skill, and sometimes even minor refinements pay off in big ways.

bidding on a construction projectFamiliarize Yourself with the House

Take time to get thoroughly familiar with the house or renovation project the client wants. For a renovation, make sure you understand what problems the homeowner is trying to solve. Do a walkthrough of the home to get an accurate idea of what’s needed.

Try to obtain working drawings or at least a scope of work. In addition to preventing miscalculations, this preparation also helps you avoid bidding on a construction project that will only turn into a major headache.

Consider All the Costs

Even small renovation projects are complex jobs with many variables. Instead of guessing and fussing with spreadsheets, use professional construction estimating software to create more accurate estimates faster. These programs let you account for all costs, including sitework, subcontractor fees, materials, labor, and requirements for HVAC and plumbing.

Calculate Your Profits

In your excitement to gain a new client, it’s tempting to low-ball and forget about profit. Including your overhead costs and profit margin in every bid ensures that you not only keep your business running, but also have the budget to expand by advertising, hiring help, and investing in new equipment. Keep in mind construction overhead fees can run as high as 54 percent of revenue with profit margins of just 3 percent.

Hand in Your Bid

Sending in your bid by email or post may seem like it would save everyone time, but it’s ultimately less efficient. Instead, meet with your client to present your bid packet in person. This gives you a chance to explain the bid and answer questions, which prevents miscommunication and confusion that could cost you the job. The rapport you build during this meeting also increases your chances of gaining a client.

For more experienced-based tips on bidding on a construction project, contact Construction Monitor today.

Leveling the Bidding Competition

Your skill at bidding on a construction project is a major factor in ensuring your firm’s success. There’s no need to overcomplicate the process, though. Sometimes a few minor improvements in your technique are all it takes to outmaneuver your competition.

bidding on a construction projectCover the Basics

It may seem obvious, but before you create your bid, thoroughly review the project requirements and make sure you can meet them. Avoid the temptation to take a scattershot approach by bidding on everything you can. Bidding on a construction project you’re not a good fit for only wastes your time and resources.

If the general contractor requires a prequalification form, you’ll need to submit one to even be considered. Show you’re serious about the work by filling out the prequal form with complete and accurate information, and include all requested supporting documentation.

Review the latest version of the project plans, along with the most recent addenda. Skip this step and you could end up submitting a proposal that fails to address a critical point. When you create your proposal, state what plans you based it on and note the approval dates of any addenda.

Put in a Little Extra Effort

Submit your bid to all the GCs involved, not just the one you usually work with. By limiting yourself to one, you’ll lose out if your favorite GC doesn’t win.

Sitting around waiting to hear back on a bid is not only frustrating, it’s often counterproductive. Instead of waiting, check up on your bid in a friendly, professional manner. GCs have a lot going on, so your check-ins keep you on the radar and help you stand out from your competition.

When you’re offered work, take the time to protect your own interests by thoroughly reading every contract involved before you sign it. Signing off on something you assume is a routine formality could lead you into some expensive, time-consuming trouble if the contract contains unexpected requirements you weren’t prepared to meet.

For more tips on bidding on a construction project, contact Construction Monitor today.

Beyond the Low Bid: How to Win More Jobs

Low-ball bids might win you a few jobs, but they’re not great for your bottom line and underbidding isn’t a viable long-term strategy. For sustainable growth, invest in the more profitable approaches to bidding on a construction project.

bidding on a construction projectLay a Solid Foundation

Specialized expertise helps you stand out in a crowded market and attract your ideal customers. Your specialty might be high-end custom homes, eco-friendly materials, reliable design-build services or any other in-demand area of knowledge. Decide what your firm does best and build your reputation around it.

Stay up to date with developments in the construction industry. This includes both equipment and materials, as well as business management technology. You’ll be better able to compete with other firms and show your clients you can adapt and grow in order to deliver the best product possible.

Once you’re clear on your firm’s specialty and capabilities, take some time to create a marketing plan. Set specific goals for sales and profits, and define your market areas and the methods you’ll use to reach them.

Refine Your Focus

Much of your chance of success when bidding on a construction project depends on your reputation in the industry and with your prospective client. To strengthen your position while staying within your budget, focus on proven marketing techniques.

  • Get involved in industry associations and community organizations such as the Chamber of Commerce, development programs, and social enterprises. Aim to connect with potential clients in person every week.
  • Ask your current loyal clients to refer work to you. Provide a referral form that allows the client to fill you in on details beyond the referral’s name and number.
  • Maintain a mailing list of your repeat clients and referral partners and mail something at least bi-monthly.
  • Polish your presentation skills to come across better in your project interviews. Learn how to present the information your clients want in a clear and engaging manner. That includes knowing how to organize information, use visuals, and incorporate persuasive stories.

To get more tips for successfully bidding on a construction project, contact us at Construction Monitor.

 

Get the Job: 3 Techniques for Bidding on a Construction Project Successfully

bidding on a construction projectGiven the resources invested in bidding on a construction project, your skill at choosing projects to pursue is a major factor in your success. A few simple techniques can help you identify and win the projects that will profit you most.

Watch Your Labor Investment

Bidding on a construction project is always a commitment of time and money, but it’s important to be alert for signs that a proposal process isn’t worth the effort. Watch out for highly labor-intensive proposals that require your technical staff to work out complex details specific to the project, such as LEED scorecards. If your marketing department can’t handle a proposal alone, you may be putting in too much effort.

Keep in mind the work you’ve put into the details doesn’t always go toward the finished project. Even if the client accepts your proposal, they may require changes.

When deciding whether or not to pursue a project like this, consider the potential opportunity costs. Tying up too many of your resources in one complex proposal can leave you unable to go after more profitable projects.

Consider PPP Projects Carefully

Public-private-partnerships, also known as PPP or P3, may appear lucrative, but the cost to pursue them is often excessive. Much of the cost comes from the need to hire an outside adviser who can conduct your due diligence in terms of legal issues. P3 projects are also rife with political intricacies that can complicate contract negotiations and cause delays. In addition, developing P3 estimates requires more documentation, such as the Operation and Maintenance Scope of Work documents.

Stay Flexible

The results of your go-no-go process shouldn’t be carved in stone. Stay open to new information about the client and the project, and update your go-no-go process documentation accordingly. You may find the client is difficult to work with, or that you’re bidding against an exceptionally strong competitor. That said, after you’ve finalized your go-no-go decision, it’s rarely beneficial to make major changes to your proposal.

For more tips on bidding on a construction project, contact us at Construction Monitor.

 

Bidding on a Construction Project Goes Better When You Avoid These Pitfalls

Bidding on construction projects is a necessary but sometimes tedious and labor-intensive part of being a successful builder. Creating and submitting successful bids takes careful planning, a thorough understanding of the project being offered, and a comprehensive knowledge of what your company can accomplish.

Here are some of the pitfalls to avoid when bidding on a construction project.

  • construction biddingImprecise calculations: Successfully bidding on a construction project requires accurate figures and realistic accounting of costs, expenses and profits. Rule-of-thumb estimates may provide a good starting point, but the formal bid itself needs to contain detailed numbers and realistic financials. In most cases, it’s a good idea to use sophisticated financial software or bidding programs to handle the complex calculations. These programs will let you make changes and should automatically recalculate the bid. Be careful if you do make these types of changes; one small difference in a crucial area could throw off the numbers for the whole bid.
  • Inconsistent standards: Whether you’re doing all of your estimating and bidding in-house or you’re hiring other companies and estimators to help, you need to develop a consistent set of standards for developing and submitting bids. Multiple factors need to be taken into consideration, from the most basic services provided to specialized labor or equipment needed for the job. Bidding standards should also be formulated to allow close adherence to the requirements of the contract. This ensures that your bid completely meets the customer’s needs while ensuring you have the resources to do the job properly.
  • Impatience in bidding: If you’re too impatient when approaching bidding on a construction project, you could easily end up bidding too low or unnecessarily slashing your profits on the job. Give the estimating and bidding process the time it needs while also meeting all required deadlines for bid submission.

Construction Monitor helps construction industry managers, business owners and related professionals with the latest information on building permits, housing starts and industry trends. Contact us today for more information on bidding on a construction project and how to make your bids successful more often.

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