What construction projects should you be pricing?
Some contractors are like some actors. They sign up for every project that crosses their desk.
This often means that the estimating team works long hours and price estimates are rushed. Little thought is put into ways to make the price more attractive to the client.
When pricing is rushed it could result in errors with the price, which could mean that the price is too high, so the company doesn’t win the work anyway. It could also result in the contractor not winning the project. Often it takes more than just having the lowest price to be awarded a construction project.
In addition, contractors may end up winning the wrong project – one which they don’t have the resources or expertise to complete successfully.
Contractors should focus on pricing the right project, then put all their thought and effort into submitting a winning bid.
What is the right construction project for your company?
Construction projects vary hugely in size, type, location, risks, and clients. Not all projects may be suitable for your company right now. In fact, some construction projects are best avoided if they’re excessively risky or the client is difficult.
Picking the wrong project can be disastrous, while the right project can lead to bigger and better projects later. It’s important to understand the project fully when pricing it and be selective about which projects you price.
It’s also important to consider the pricing or bidding procedures. If there are multiple contractors pricing the project, your chances of winning the project may be slim.
Sometimes there are competitors who have strong relationships with the client, have more expertise in the type of work, or that are already operating in the area. These competitors will have an advantage over your company, and it may be difficult to win the project.
Try to pick projects that are winnable. Don’t waste time pricing projects that will be nearly impossible to win.
All the above points would seem obvious, yet, it’s surprising how often they aren’t considered by contractors as they get caught up in the excitement and possibilities of pricing a new project. After all, what could go wrong?
Many construction companies have been destroyed when they’ve taken on a project they shouldn’t have accepted – a project that was doomed before it was even started. Always take care to select the right projects with the right clients. Never be tempted by desperation to take on the wrong project.
Always thoroughly research the project and the client to ensure that the project is right for your company at this time. Be prepared to decline a project that’s unsuitable.
Put every effort into submitting a winning presentation and price for the right project.
Have you accepted a project which you shouldn’t have taken on? What were the consequences?
Have you been the unfortunate project manager given a project that the company shouldn’t have taken on?