It has been estimated by experts that most construction companies only manage to win around 10-20% of the projects they bid for. As one may imagine, this can often result in project acquisition devolving into simply a numbers game.
While conventional wisdom states that the more estimates you produce, the more projects you are likely to win, there is another method available. This is by specifically seeking out and pursuing larger project clients.
First, it is important to note the expected (and very reasonable) risks that come with pursuing larger clients. These projects often are more complex and difficult than smaller ones and may necessitate significant growth from you and your team in order to successfully complete. It will often require a deeper and more complete knowledge of the subject matter in order to successfully deliver the project to completion.
Still, with all that said, there are a myriad of benefits that come with taking on larger projects as well. Not only do they command a high budget, but larger projects also elevate your business’s status and visibility. References and acknowledgments from a high-profile client are much more likely to garner attention than from a smaller or less known one. Here, a large client’s project exemplifies your business’s ability to handle complex projects, telling everyone you can get the job done no matter what.
There is a lot that a larger construction project can offer for those willing to put themselves out there and are willing to have a finely tuned process for estimating in order to compete.
Here, we’ve found the things you will need to know in order to position yourself for success.
ANATOMY OF A MAJOR CONSTRUCTION PROJECT
First things first, it is important to remember what makes larger construction projects so much different from smaller ones.
These projects aren’t different purely due to size alone. It is also the additional opinions and demands of the stakeholders that come along with them. Here, you aren’t just accountable to a single owner. Instead, there will likely be many players involved such as investors, engineers, clients, project managers, architects, zoning boards, oversight committees, or specialty contractors.
Because of the increased number of individuals involved, there is simply more to factor in and pay attention to. Each stakeholder will have their own individual priorities and perspective for the project and they must all be taken into consideration before even starting.
In addition, larger projects generally also have higher stakes as well. As most owners may not fully understand your construction or design process, it is up to you to navigate their expectations with best practices as well as understand how to turn their ultimate vision into a reality.
THREE THINGS REQUIRED TO WIN BIGGER PROJECTS
Because larger construction projects are more difficult to complete and generally require more finesse to acquire, you will likely need to improve the method used for delivering an estimate. Here are three things you will need to implement if you want to win over bigger project clients and ultimately grow your business.
#1. MINIMIZE ERRORS AND INCONSISTENCIES
Errors are some of the greatest killers when it comes to causing suffering to your profit margin. As you can expect, the larger the project, the greater this is magnified. You will need to standardize your estimating process in order to eliminate as many errors as possible while covering every item possible. This is the most important factor of the three and is absolutely essential before considering anything else.
A tool to help avoid common errors when estimating is a database-driven cost catalog. This catalog should include common factors to an estimation such as labor, materials, and other associated costs. This way you will have a more accurate bid at all times.
When working from a database, you are also able to more easily review the accuracy of an estimate, allowing you to quickly spot a mistake or an accidental omission before finding out after the fact and ultimately killing your margins.
It is also important to implement a clear audit trail. This will safeguard your estimates and further prevent any potential mistakes. If you are not currently doing so, at least train an estimator in order to use notes in order to capture any changes made.
#2. DELIVER CUSTOMIZED ESTIMATES AND REPORTS
In addition to ensuring the accuracy of your projects, you’ll also want to tailor and customize your reports and estimates to fit their personalized requirements. As each stakeholder will prioritize a different aspect of the bid (details, metrics, content, formatting, or delivery) before saying yes, you are responsible for ensuring your estimate properly highlights all information they may be most concerned over in order to secure their agreement.
To do this, you will need to learn as much as you can about everyone involved with the project on the client’s side. You’ll need to identify what influence each stakeholder has on the group and what are the overarching group dynamics at play. Be sure to ask questions to identify what their main concerns may be as well as what they are most interested in seeing on the report.
In addition, it is important to also find out each stakeholder’s preferred method of learning. Do they prefer simple text or will they want charts and graphs? This information will help tailor the estimate to them specifically rather than as a generic “cookie-cutter” template, increasing your overall chances as a consequence.
#3. VALUE ENGINEER YOUR ESTIMATES
For larger and more complex projects, it is essential to use value engineering. This allows you the ability to find options to increase the value of the project while potentially reducing the overall costs. It also demonstrates both your willingness and ability to find the best option for the owner and their stakeholders.
To fully understand all potential areas where you can value engineer, look for these areas of a project to impact:
* SPEED: How long is it taking for you to schedule and deliver a project? Is it possible to complete it faster? How much could you save, in terms of staff and resource costs, by finishing the job faster?
* MATERIALS: Take a look at the materials you are using. Is it possible to use alternative products that are more durable at a more affordable rate? Are there more environmentally sound options available?
* LABOR: Consider taking on specialty contractors or alternative manufacturers. Would using them and their expertise add value to the scope of the particular project?
Construction firms that win the larger clients generally rely on using a database-driven process in order to increase their overall productivity. By increasing efficiency throughout the entirety of your estimating process, you ultimately allow yourself time to value engineering. By using that extra time wisely, you can ultimately place yourself in a position to win a project you may have otherwise lost.
HOW PREPARED ARE YOU?
In order to compete for the bigger projects, you are going to need to have an estimating process that is up to the challenge and can go the distance. In order to know this, you’re going to have to take an honest look at exactly where you’re at and what your weaknesses may be.
* HOW OFTEN DO ERRORS OR OMISSIONS FIND THEMSELVES IN YOUR GMP ESTIMATES?
* HOW EASILY CAN YOUR CURRENT ESTIMATING PROCESS PRODUCE A CUSTOMIZED ESTIMATE OR REPORT FOR A CLIENT?
* HOW MUCH VALUE ENGINEERING ARE YOU ABLE TO ACCOMMODATE IN YOUR ESTIMATION PROCESS?
If you’ve found that your estimating process isn’t where it should be, there is good news. By identifying your weak areas, you can ultimately resolve them and place yourself in the perfect position for success.
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