As an electrical contractor, you must consider some important factors before choosing the best projects to bid on, the most important of which is to only bid work that has the potential to make a profit. Estimating time is expensive and valuable. Most estimating departments do not need estimating practice. So use your time wisely, and only select the best projects to bid. All contractors need work, but only work that is right for your company. Before deciding to bid a project, make sure the decision was made on principles that fit your company’s capabilities. Consider the following when contemplating to bid or not to bid a job.
Think about your own comfort level
The ideal project is one that you have similar experience with and have previously performed successfully. Be sure that the scope of work is clear, you have a good understanding of the project, and provide the necessary tools/equipment for your workforce. If the project is out of your local area, check to see that there are electrical suppliers you can work with.
Out of town projects have unique challenges. Dealing with lodging and travel times will affect productivity and profit. Be sure your employees can handle working out of town away from their families for an extended period.
Some projects have compressed schedules, so ensure you can provide the necessary manpower to complete the project on time. Renovation projects sometimes have unique phasing requirements. You may be required to have several mobilizations and demobilizations throughout the duration of the project. If this is the case, you must have other projects going on at the same time to move your manpower in and out of.
Be sure that you have a qualified project manager and experienced foreman to assign to the project. If speciality tools will be required, make sure you own them or have availability to rental options. If you are the successful low bidder, be sure your office and field staff will not be overloaded with this additional project. Most of all, do not take on a project that has no possibility of a reasonable profit.
Consider the architect and electrical engineer
Just as businesses have reputations, architects and electrical engineers also have reputations. If you’ve never worked with the architect and engineer on the project you’re bidding on, it would be best to consult with other contractors who have completed one of their projects. References may be found with the Better Business Bureau or a local state agency.
Some projects are put out to bid while still in the design stage. A good question to ask the architect is, “Are the drawings 100% complete for construction?” Quality drawings will have consistent detail notes, building match lines, and column lines. Accepting a contract on a project where the drawings are incomplete typically results in extensive non-productive time for your labor force. The paper trail of correspondence will be demanding.
A careful review of the specifications is important. Be sure there is a clear scope of work. The specifications should contain all necessary sections related to the electrical scope of work. Most importantly, ensure it is a legitimate project. Sometimes architects will seek budget pricing for their clients. Don’t allow your company to be used as a pricing service.
Consider the general contractor
It is always best to work with general contractors (GCs) that you have had previous success with (i.e., profitable projects). Be sure the GC has a good track record for keeping the project on schedule and well-coordinated with its subcontractors. If an opportunity arises with a GC that you have never worked with, it would be wise to check with other electrical contractors who may have worked with them in the past.
One of the most important responsibilities you have is contract management. Read the subcontract agreement before signing. Carefully check the payment terms, change order procedures, and delay clauses. Not all GCs are created equal. A quick check with your contractor peers should reveal the GC’s payment record.
Consider the market
Keeping a steady flow of work can be challenging. Those involved in contracting know that it can be feast or famine. If available projects to bid are scarce, you will more than likely have lots of competition. It is good to choose projects where you’ll have limited competition. Not every project is for every contractor, so choose projects that are unique to your company’s capabilities. Remember: Never try to bid against the “low ball” contractors. When you know your competition has a reputation for very low bids, patience will be the order of the day.
Most contractors have a good relationship with area architects. They are a useful source for projects that will soon be available for bid. So keep in mind there may be better projects forthcoming. You don’t have to bid every project. Qualifying the project is the best way to bid. By evaluating your staff’s comfort level, the architect and electrical engineer of record, the GC’s reputation, and current market conditions, you will make a more informed decision to bid. Some decisions may be between good, better, or best. Never settle for good when you can have the best.
Kiper is an independent electrical estimating consultant based in Niagara Falls, NY. He can be reached at [email protected].