5 key factors to consider in the bid / no bid decision process


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“To bid or not to bid, that is the question.” It’s not exactly Shakespeare, but the decision to bid on a project is not to be taken lightly. You are investing a significant amount of time and resources in compiling the bid, so it is important to ensure that you carefully select the appropriate projects to pursue. One way to do this is to conduct a comprehensive bid / no bid analysis that meets your company’s goals and aligns with your long-term strategy. In order to make a bid / not bid decision, there are a number of factors that must be considered in order to make an objective decision, not a personal one. Profitability The bottom line is that if you can’t turn a profit on a project, you won’t have the business of bidding on it in the first place. Make sure you have an accurate and comprehensive account of your annual labor and equipment costs so that you can properly estimate your business costs. When calculating labor costs, be sure to include taxes, insurance, labor companies, vacation pay, tools and equipment, and any and all of the fringe benefits that you offer your employees. Once you have determined the cost that will cost you to complete the project, you need to consider other variables such as location, contract requirements, planned construction method, etc. and determine whether the job will be profitable in the event of a winning bid. Capability Well, now that you have decided that you can make some money from the project, you need to determine if your company is able to do the work. Review the current backlog of upcoming projects to ensure that you can provide manpower, equipment, personnel, and other resources to adhere to the project when construction is expected to start and complete within the required schedule. You also need to ensure that your company is financially capable of completing the project, which means that you have the capacity to be connected and have sufficient cash flow to do the work without putting any of your other obligations at risk. There is such a thing as having too much work. Know your limits so you don’t exceed what you can do. Historical analysis In order to bid better and win more work, you must keep records of all your bids, whether successful or not. It is important to have a clear understanding of what caused you to lose a bid, whether it was a lack of experience or if the price wasn’t low enough. Don’t be afraid to ask a customer to comment after the bidding process is complete. You should also take a look at your performance on the projects you’ve won and completed. Were you underperforming or were you able to successfully manage the project or identify areas for improved productivity to complete the project under budget? By analyzing historical data, you can better determine which bids you should be pursuing. Long-term strategy Consider whether the project you are looking to bid on fits within the long-term strategy and goals of your company. Are you looking to maintain your current level or are you trying to grow your business? Are you looking to expand into new locations or new markets? Maybe you want to start doing more private business or you want to start doing bigger projects like hotels or hospitals. Regardless of your company’s long-term strategy, be sure to identify and track projects that align with those goals. Risk Assessment Before deciding to bid for a project, you must carefully identify all potential risks that could arise in the project. Review project bidding documents, plans, and specifications and rely on historical data from similar projects you have completed to determine risks. Common risks include incomplete construction documents, unknown site conditions, accelerated schedules, safety concerns, etc. Prioritize risks, keeping in mind the amount of time, money, and work required to manage each risk effectively. If you have identified a large number of high-impact and high-probability risks, it may be time to turn away and move on to your next opportunity. Other factors to consider when making a bid / no bid decision include project location, duration, size, scope, competition, client and designer. Once you have identified the factors and criteria most important to your company, you need to create a score matrix and a threshold score for deciding whether or not to bid. With a data-driven approach, you will be able to make smart and informed decisions about which projects to pursue in the future. Make better bidding decisions with our free bid / no bid decision making tool.


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