How to Win Construction Bid Proposals
Everyone thinks the hard work in construction is in the actual building. But in fact, that’s the fun part—it’s what you signed up for when you first got involved in this industry.
The real grind happens before a single shovel ever hits the dirt: the construction-bid-proposal process, in which you essentially apply for jobs over and over again, only to get “laid off” at the end of each project, left to find another employer. It’s a necessary part of the business, but that doesn’t make it any more fun.
For general contractors, a bid-to-win rate of one out of six is standard, and some see worse returns than that. Roughly 83 percent of your bid-proposal time is spent on the drudgery of paperwork, and when a client chooses the lowest bid from a less-qualified competitor, it can be maddening. But, take heart; there are a few simple things you can do to set your bids apart from the pack and make your potential clients take notice.
1. Move quickly
According to Honest Buildings, a capital planning and project management platform purpose-built for real estate owners, the median time it takes for the first bid to come in following a request for proposals is 8 days. That means there’s more than a week’s time between when the client begins to expect bids and when the very first contractor is able to talk to the client. This time gap is a huge opportunity for any construction business looking to win a bid.
Obviously, crafting a bid proposal isn’t like applying to a job ad on Craigslist. You first have to compile a huge quantity of data, measurements and budget figures to create a cohesive argument as to why the client should select you. That takes time. But take a good, hard look at your current timelines. Then decide: If you really tried, could you shorten it?
If you could turn that bid proposal around in, say, 4 days, think about the tremendous advantage that would give you. You’d most likely be the very first bidder to reach the client’s inbox. At this stage, clients are working through myriad questions in their minds—questions like, “Is this part of the project even feasible from an engineering standpoint?” and, “Is my cost expectation for the flooring reasonable?”
As soon as the client receives that first bid, they’re looking to find the answers to those burning questions. If you’re the first to move, your proposal becomes the standard by which they judge their project expectations. Don’t underestimate the importance of this aspect of your proposal. It’s a simple change that can have a gigantic impact on your ability to win bids.
2. Talk to the Client
Of course, being first won’t keep you on top of the client’s mental list forever. You must nurture the relationship you’re building and keep redirecting the client’s attention to your proposal. Don’t worry about the client comparing other proposals to yours—you’ve already set the standard. Just keep “teasing” your potential client with more information at each stage of the process. Here are a few ways you can do that:
- Anticipate your competitors’ bids—You probably have an idea of some alternatives your competitors might propose. Follow up with the client to discuss these alternatives and why your approach is superior. Otherwise, your potential client may give these alternatives equal footing with yours.
- Anticipate your client’s concerns—Research past projects on which the client has been involved, as well as what sort of issues were most important. Or, even better, ask them outright. For example, if a previous contractor badly underestimated heating, ventilation and air conditioning (HVAC) costs, explain how your company will avoid committing the same mistake.
- Create a one-sheet—A single sheet that lays out the basics of your proposal in a visual style is a great item to pass on to your potential client at a key point in the process. A perfect time would be on the twelfth day, after the request for proposal is released, and the client probably has a few bids in and is starting the process of figuring out which one to go with.
3. Work on Your Value Proposition
You may not think that a past competitor who lowballed you and won the job had a compelling value proposition, but actually, they did. They offered the client the opportunity to save a bunch of money at the outset. That’s the simplest value proposition there is. What you need to do is offer the next client a better value proposition than being the cheapest. That race to the bottom just means disappointed clients and razor-thin profit margins.
All clients want to save money, but most realize that they have to pay for high-value products and services. People pay for value over price all the time, whether it’s brand-name paper towels that do a better job than the generics or higher-quality electronics that offer more features and last longer than those of lesser quality.
our future clients are no different—they will pay for value if you can show, not tell, your value proposition to them. So, how do you show value? Take the hypothetical client with the previous HVAC disaster as an example. If you hired a competent HVAC specialist to work (successfully) on previous projects, that information is will render you more than enticing to someone who saw the budget of their past project balloon by tens of thousands of dollars because of the mistakes of an unqualified firm.
If you don’t have such a specific example to point to, focus on your customer service. Show how you treated your past clients when crises inevitably arose and how you kept their minds at ease. Whatever it is, there’s something you do better than anyone else. Identify that and then find ways to demonstratively communicate that to potential clients.
4. Put a Plan into Action
These are simple, fundamental ways you can increase your rate of bids won. Now it’s time to take action and come up with a plan. To begin:
- Hold a meeting with your team to figure out how you can shorten the bid-proposal timeline so that you can submit your bids first.
- Carve out some time to research your potential client after the initial bid is in so that you can begin crafting a follow-up strategy.
- Create a simple, succinct value proposition that will separate you from the pack and then figure out ways you can demonstrate that to the client.