Experts estimate that most construction companies only win between 10-20% of the projects they bid. It’s no wonder estimating is often considered to be a numbers game. The conventional wisdom is that the more estimates you produce, the more projects you’ll win.
But there’s another way to grow your business: by pursuing larger projects. Arguably, the risk is greater. Large projects come with complexities (there’s the risk) that necessitate significant growth from your team. They’ll have to deepen their knowledge to successfully deliver the project from bid to completion.
But the rewards are bigger, too. Larger projects don’t just command higher budgets, they elevate the status and visibility of your business. When you can reference your work on a high-profile project, it demonstrates your expertise and gives more influential owners the confidence you can handle the job.
There’s much that larger construction projects can offer your business, but you’ll need to have a finely tuned estimating process to compete. Here’s what you need to know so you can position yourself for success.
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Anatomy of a large construction project
First, it’s helpful to remember what makes a large construction project different. It’s not just size alone; it’s the additional stakeholders, and their opinions and demands, that come along with it.
In a big construction project, you’re no longer just accountable to an owner. Typically, there are many players involved in a big construction project. These stakeholders may include clients, investors, engineers, architects, project managers, specialty contractors, regulators, zoning boards and oversight committees.
With more players come more individual interests. Each of these stakeholders has their own unique perspective on the project and priorities. The things that matter most to investors and lenders, for example, are different than those of a project oversight committee.
Larger projects also have larger stakes. Owners have bigger demands and may not understand how construction or design best practices don’t agree with these demands. It’s up to you to navigate competing interests, understand the big vision and find a way to make it a reality.
Three things you must do to win bigger projects
Bigger construction projects are more complicated and require more finesse to win. You may need to substantially upgrade the way you’ve delivered estimates in the past.
Here are the three things you need to do to win bigger projects and grow your business.
1. Minimize errors and inconsistencies.
Errors can kill your profit margin, and the impact is only magnified on larger-scale projects. Inconsistent processes that may have been workable for smaller projects won’t cut it and expose you to risk.
You need a standardized and efficient estimating process. One that allows you to create estimates that leave no item unaccounted for and that facilitates internal reviews before you can tackle the customization piece. If you haven’t yet standardized your estimating methodology, you’ll want to make improvements here before getting in too deep on a complex project.
A database-driven cost catalog can help you avoid common estimating errors altogether, plus make them easier to remedy if they do happen. Your cost catalog should be populated with your common assemblies—including materials, labor, and associated costs—and cost formulas. Your team can rely on this database to create more consistent and accurate bids.
When your team works from a central database, it’s also easier for you to review estimates for accuracy. And when your estimates all look the same, you’re able to more easily spot mistakes and errors of omission before they kill your margins or create doubt in the minds of your customers.
To further prevent potentially costly mistakes, you need to safeguard your estimates with a clear audit trail. If you’re not using an estimating process that includes audit capabilities, at least train your estimators to use comments or notes to capture a trail of the changes they make.
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2. Deliver customized estimates and reports.
Accuracy isn’t the only thing standing between you and bigger projects. When you’re dealing with a variety of stakeholders (any of whom could potentially hurt your chances of winning the project), you also need the ability to tailor your estimates and reports to their individual requirements.
Each stakeholder could require different content, metrics, details, formatting and delivery methods to say yes to your bid. By delivering your estimates in their preferred format and highlighting the information they’re most concerned about, you make it that much easier to secure their buy-in.
In order to tailor your estimates in this way, you’ll need to learn as much as you can about the owner and stakeholders. Pay attention to the group dynamics and identify the role and influence of each key stakeholder. Ask questions to identify their main concerns and ascertain what they need to see in an estimate or report.
If possible, you’ll also want to suss out each stakeholder’s preferred learning methods. Do they prefer charts and graphics overwritten text? Knowing this will help you further tailor your estimates and reports to be received in the best possible light, from the conceptual bid through project completion and post-project audit reporting.
3. Value engineer your estimates.
On a large or complex project, where any opportunity to increase value while reducing costs is welcomed, value engineering is essential. Your ability to explore and suggest options demonstrates your ability and willingness to look out for the best interests of your owners and their stakeholders, not to mention demonstrating your competence and expertise in construction best practices.
To uncover potential areas for value engineering, look for ways to impact these areas of the project:
Speed: Take a closer look at scheduling. Is it possible to deliver the project faster? How much money could you save on staff costs or resources by completing the job sooner?
Materials: Evaluate material choices. Could an alternative product potentially offer more durability at a reduced cost? Are there environmentally friendly alternatives?
Labor: Consider enlisting specialty contractors and alternative manufacturers. Could their additional expertise add value to the particular project scope?
Construction firms that win big projects rely on database-driven processes to increase their productivity. By increasing efficiencies across the rest of your estimating process, you open up your time to value engineer. Use that time wisely. It could mean the difference between winning a project or losing it.
How prepared are you?
To compete for bigger projects, you need to first make sure your estimating process is up to the challenge. This requires an honest assessment of your current estimating situation.
How often do errors of omission make it into your GMP estimates?
How easily can you customize an estimate or report using your current process?
How much value engineering are you able to accommodate?
If you need improvements, there’s good news. You can identify and resolve the weak areas in your estimating process—and position yourself for success.
Discover how you can compete for and win larger projects with this FREE eBook.