July 2012: Business Building

July 2012

Business Building

Winning Against Low-Priced Competition

By George Hedley

Every construction company wants a simple solution to charge higher prices and win more work than the competition. But why should customers award your company contracts, unless you are the low bidder? Bid lists have grown, and many of your competitors are pricing jobs lower than their costs to keep their doors open and crews busy. Therefore, customers are taking risks and using the lowest bidder to save lots of money.

Finally, you are realizing business is not what it was, and it will take three to five years for the economy to come back. Only a few years ago, you could get lots of work just by bidding your customer’s steady stream of work. But today, this sales strategy is dead. Now, it takes more than producing quality work and bidding projects per plans and specifications to stay busy. You must do more and offer something different than your competitors to win profitable contracts. You need to change, improve and upgrade your estimating systems, bidding strategies, proposal format, presentation methods, customer contacts, marketing plan and sales tactics to be successful.

Be low bid or get in the sales business In public works construction, the low bidder usually gets awarded the job, and there is little or no room to gain an advantage except price. This requires the lowest possible costs; the most efficient construction management and field operation possible; and lean, productive, well-trained field crews without downtime, job problems, quality issues, conflicts or mistakes. Your subcontractors and suppliers also must be supervised and managed tightly without gaps in scheduling, productivity, conflicts or quality.

In private work and in public work, where performance is a part of the award-consideration process, it takes a lot more than turning in a bid to win contracts. You have to give customers a differentiating reason to hire your company. It’s not just about price, inclusions and exclusions. Too many competitors exist who can do the same job as your company and will cut their bid to the bone to get a job. Therefore, you now have to be in both the construction and sales business. Estimating and bidding used to be the only sales tactic you needed to win jobs. Sales involve more than pricing jobs and delivering bids. It is about giving your customer what he specifically wants on each job you’re bidding.

What differentiates your company? Imagine you are driving down the freeway and need to fill up your gas tank. Do you look for the best quality, service or price? Usually, you look for the closest gas station, since they’re all basically the same. In the construction business, it also doesn’t matter which contractor or subcontractor customers use. In the customer’s mind, most contractors are all relatively equal and do an adequate job performing the work required. And most proposals look alike by only offering the minimum required per plans and specifications.

Can customers really tell the difference between your company’s bid proposal and your competitors’? If all else is equal, the only differentiating factor between your company and the competition is price. What do you do to stand out from the crowd and set your company apart? Do you offer any of these differentiating factors?

• Doing more than required for the same price
• Offering completion, service and quality guarantees
• Being the specialist, expert or most knowledgeable contractor
• Professionally presenting your company
• Using cutting-edge technology
• Being well financed and bondable
• Having well-trained foreman and crews
• Having large crews available to man the job
• Finishing jobs faster than competitors
• Meeting?? project goals and deadlines
• Offering value-added engineering ideas
• Having a trusted customer relationship
• Giving customers what they want

Give customers a reason to hire you A great way to win contracts is to have trusted relationships with customers by spending lots of time together eating, fishing, golfing or other activities not related to work. If you don’t have this kind of relationship, you have no other choice but to differentiate your company. Before you bid the next project, ask yourself why the customer should hire your company. Are you better or faster? Do you have more qualified trained people? Can you help your customer make more money?

As you create a list of reasons the customer should hire your company, include services you can offer that competitors won’t, and items not required by the scope of work. Think about how you can help your customer meet goals, build a better project, or reduce risk, while working with your company. If you want to win jobs today, you must do more than the minimum.

After you create a list of the reasons why you are the best choice for your customer to award this contract, include in your proposal a list of past projects and pictures showing how you beat the schedule, delivered results, and made your customer excited about working with your company. Include a draft schedule showing how you will complete the project 10 percent to 20 percent faster than your competition. Take your potential customer to jobsites to show them how you solved difficult problems. Give them a list of added services your company will provide and offer guarantees for completion, punch-list, quality, or extra warranties.

What’s the main purpose for your bid? The main purpose of every bid is to get a meeting with potential customers. Customers can be enticed to meet in many ways. Constantly call to ask for a meeting. Leave messages like, “Regarding the bid we submitted, I have several ways we can save you money, finish faster, make your job easier, improve the quality, help you, do more for less, etc.”

If you can’t give customers several reasons to meet, you can only hope your low bid is low enough to win the contract. At the meeting, change your role from contractor to a dynamic presenter who sells why they should only consider hiring your company.