You lost the bid and no one looks at why
A lost bid gets blamed on the estimator, and the company learns nothing about what was off or by how much.
When a bid is lost, the estimator, the PM and the superintendent review it together to see what was off and by how much. If the company gets feedback from the client, that goes into the review. Then the company makes adjustments. One might be a lower profit percent, which could have won the job. Because the company job costs, it knows its floor, so the adjustment stays above the number that keeps the company out of trouble.
Three moves, in order
Step 04: Estimating system
The estimate maps one to one onto the job cost codes, so variance means something the day it appears.
Learn this part of the job
SPM The Construction CFO publishes this course. It's a separate company from this one, and the course is on its own school site.
Other problems step 04 solves
Other things that go wrong
What owners ask
How should contractors review bids they lose instead of blaming the estimator?
A lost bid gets blamed on the estimator, and the company learns nothing about what was off or by how much. When a bid is lost, the estimator, the PM and the superintendent review it together to see what was off and by how much. If the company gets feedback from the client, that goes into the review. Then the company makes adjustments. One might be a lower profit percent, which could have won the job. Because the company job costs, it knows its floor, so the adjustment stays above the number that keeps the company out of trouble.
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% after 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?
Hold the review with the estimator, the PM and the superintendent after each lost bid.
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.