Conley Smith, Sr. Business Writer
It’s Bid Day and do you know how accurate your numbers are? Construction industry insider George Hedley estimates 80 percent of construction owners don’t know the true cost of doing business. Sure, most contractors have a backlog of work, but bidding more does not always translate into winning the right work—especially if you’re using bad numbers.
Does anyone ever want to expose their company to unnecessary risk? Probably not. But that’s exactly what you’re doing when you fail to prepare an accurate estimate. You can count quantities correctly all day long, but if you haven’t fully assessed the scope and requirements of a project, you may end up on the wrong end of a low bid.
Did You Double-Check?
OK, you only have minutes to spare to complete your bid. Did you double-check labor rates? Have all the change orders been handled? Your success is riding on your ability to take the proper amount of time to prepare the bid in a professional manner. Whether it is rebar, mortar, or sand, be sure every bid awarded is accurate, not overcharged, or low-balled.
One way to do this is to take a closer look at how well your estimating process is working. Asking tough questions may result in your stopping the vicious cycle of using bad numbers over and over again!
Don’t Overlook These 5 Potential Misses
Remember, it’s always a challenge to precisely project costs on a labor-intensive project.
Here are another five items you don’t want to miss in your final bid.
1. All of the equipment required - Calculate for each piece of equipment—from the company pickup truck to special rental cranes and forklifts. Be sure to divide lifetime ownership by billable hours to arrive at an accurate cost.
2. Where the dirt will go once it is excavated - Inspect the site and calculate the number of cubic yards of dirt to be excavated. For example, if you win the low bid for digging a swimming pool, taking away the dirt could cost thousands of dollars.
3. Long lead-times for certain items that might impact deadlines - Make sure to plan for long-lead items like cladding and glazing systems, escalators, and steel frames. Show how you will handle these items in your bid so you don’t slow the construction schedule.
4. Special safety rules that may apply in the state where you are working - Don’t overlook the cost to ensure public safety like cones, barricades, locks, or gates. There may be additional state laws concerning the proper disposal of hazardous waste.
5. Whether the construction site is on a hill, in a rural area, or in a city with little room to work - Make sure to visit the site so you are aware of all physical conditions. Unique conditions like working in a tight urban space could prove more costly and cut into your profits.
Avoid the Pitfalls of Estimating
Bidding and winning a lot of jobs may seem like a great strategy—until it’s not. You never want to win projects you can’t properly manage or deliver. When you include all of these elements in your bid, you can focus on selecting the right work to bid and maintain a profitable business.
Estimating is perfected through experience, practice, and intuition. If you want to learn more tricks and tips, get our free, step-by-step white paper—Overcoming the Pitfalls of Estimating—now.