Bidding everything that hits your inbox
Write rules for a good job and check each invite.
When work is slow, every invitation looks like a lifeline, so the estimator prices all of it. The trouble is that estimating time is limited, and every hour spent on a job you'd never want is an hour not spent on one you would. A pile of bids also produces a pile of wins on the wrong kind of work, such as a GC who pays slow, a job type your crew doesn't do well, or a site two hours away. You end up busy and thin on margin. Choosing what to bid is the cheapest profit improvement in the company, since it costs no more than a conversation.
Three moves, in order
What CFOS does about it
The CFOS bid pipeline records each invitation with its value, bid date, and your chance of winning, so you can look at the list and see where your estimating time is going. Because a won bid becomes a job and job cost is tracked against the budget by cost code, you can compare the jobs you won with how they finished. CFOS reads bid invites, contracts, and spec books and pulls out the terms, which helps the estimator spot payment terms or retainage that a good job wouldn't have. The leads form on your website feeds the same pipeline.
Who owns this: Owner.
At $4M, one estimator can price only so many bids a month. Each job they chase that doesn't fit takes a slot from one that does. The rules protect those slots.
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Step 04: Estimating system
The estimate maps one to one onto the job cost codes, so variance means something the day it appears.
Other problems step 04 solves
Other things that go wrong
What owners ask
Which jobs should a subcontractor bid?
Write rules for a good job and check each invite. When work is slow, every invitation looks like a lifeline, so the estimator prices all of it. The trouble is that estimating time is limited, and every hour spent on a job you'd never want is an hour not spent on one you would. A pile of bids also produces a pile of wins on the wrong kind of work, such as a GC who pays slow, a job type your crew doesn't do well, or a site two hours away. You end up busy and thin on margin. Choosing what to bid is the cheapest profit improvement in the company, since it costs no more than a conversation.
Which part of the system fixes this?
The step is number 04, estimating system. The estimate maps one to one onto the job cost codes, so variance means something the day it appears. It's drawn from chapter 4 of CONTROL: C.F.O.S. Construction Financial Operating System.
Is this normal for my trade?
Across the 48 trades that publish a figure, net profit at $1M to $5M averages 7% before taxes. If you're well under that and this page describes your month, the two are usually the same story. The published average tells you where the pack is, and your own job costing tells you where you are, which is the number that pays payroll.
Where do I start?
Look at your last year of closed jobs and mark the five best and five worst by margin, then write what they had in common, such as the GC, the size, the location, or the type of work.
Won't I lose GCs if I turn down their invitations?
Rarely. Most GCs would rather get a clean no than a late or padded number. A short reply saying what you can and can't take keeps you on the list for the work that fits.
How do I know which jobs are good ones?
Use your own closed jobs, not a guess. Job cost by cost code shows how each job finished against the estimate, so the good and bad ones are easy to sort. The traits they share become your rules.
Can I fix this without touching anything else?
You can try, and it doesn't hold. Step 04 depends on step 01, job cost structure and step 03, overhead calculation. Install it ahead of those and it produces numbers the field won't trust, which is worse than the problem you started with.
Wrote CONTROL, the 8 step system behind these figures. More about the author.