Basic Bidding Principles
A Quick Reference for beginning Bidders
More work does not necessarily equal more money. There are many disadvantages to overzealous bidding, and over or under inflated prices per square foot. If your bids come in too low to make a profit, you lose money. If your bids come in too high, you lose money because you are not awarded the job. Bidding and quoting is a fine-line between sink and success, and carefully analyzing where your bid numbers come from will help you to balance this fine line. Qualify BEFORE you Bid: Assess the Floor: A seasoned sales person went out to bid on a large project. He ensured there was plenty of light, and carefully walked the entire floor, documenting any problem areas or patchwork that would be necessary. He pointed out everything to the customer that would require additional work, and returned to the office confident in his evaluation. The polishing firm was awarded the project and several months later, their laborers were sent out on the job to perform the work. Immediately a problem arose. The coating which was supposed to be a thin, easy-to-remove paint, turned out to be a rigid layer of mortar underneath a thin, easy-to-remove layer of paint. Not only was the customer surprised at the additional cost, but the company required quite a bit more time to complete the project. Luckily, the polisher had established a good rapport with the firm, and was able to redeem itself. However, costly mistakes such as this one can be extremely harmful, especially to small businesses starting out. Job Complexity & Risk: More complex = more risk. Budget your Project Costs: Calculate your Profit: Ensure you Cover Overhead: Set your Customers Expectations: A customer decided to have his warehouse area polished to a high sheen for a rehab project. The polisher assessed the floor, carefully pointing out several low spots in the concrete that would result in a lower sheen level. The customer understood, and moved forward with having the polishing done. At the completion of the project, the customer noticed that the sheen level in the low spots was not quite as glossy as the remainder of the floor. Disappointed in this, the customer complained. Luckily, the polisher had documented the numerous conversations he had had with the client regarding these spots, and once reminded of these conversations, the customer was satisfied.
Bidding is a lot of work. From compiling data, reading plans, pulling the leads-all of these tasks require a time investment. It is important, especially when growing a small business, that all effort is used in the most profitable way possible. One of the mistakes often made by beginning companies is bidding too many jobs and not being awarded enough of them. Qualifying your projects and your customers before submitting a quote or bid allows your business to become more productive, and helps to improve your success rate.
• Is polished concrete right for your customer?
• What polish level can this customerafford? (Take cues from the maintenance and landscaping of their building.How much money do they invest in their appearance?)
• How complex is the project? Do you have the proper machinery and experienced staff?
• You don’t want to hinder yourself from bidding, but prioritizing your leads and first bidding on the ones that you are most likely to land is a good strategy.
• Keep track of your bid vs award ratio,and adjust your bidding methods accordingly.
Always, always, always know what you are walking into. Whenever possible, be sure to assess the floor BEFORE even considering putting a bid in. On new construction projects, this isn’t possible, but even then, be sure to protect yourself with clauses in the contract regarding quality assurance for the flatwork. Ensure that whoever walks the floor is extremely competent, as your entire bid will be based on their analysis. Whenever possible, have them bring back numerous photos and samples of the floor. A simple misdiagnosis of a coating can cost thousands of dollars in increased labor time, tooling, and productivity.
If being awarded a complex project means you will have to turn down easier, more profitable projects due to the time investment required, you may want to take a moment to consider this. Some projects that are complex, especially high profile jobs, may be worth the additional effort if you can gain marketing and publicity, but if taking on a complex project means monopolizing all of your resources to accomplish the task, ask yourself, am I passing up more revenue? Ensuring that risk is analyzed in the price, and that customers expectations are clearly understood and set, will reduce the threat of having unpaid debt at the end of a project.
Complexity Considerations
• Stress of the Floor
• Access to the Floor
• Coatings
• Edgework Required
• Unrestricted Access
• Aggregate to be Exposed
If you do not fully understand what a job is going to cost you, you don’t know how much money you will need to make to be profitable, making the entire bidding process a guessing game. A form or checklist can be very handy when calculating these numbers, as your cost does not only include tooling and labor, but also includes the cost of travel, fuel, and equipment depreciation. A realistic approach to these numbers is always best, but be sure to include a healthy (but not exuberant) overage in case of unexpected challenges. It is also a good idea to keep track of your actual costs on every job, and to analyze your projections versus real costs, so you may fine tune the exactness of your future projections.
No one goes into business to break even. Making a profit is always the first objective for business. Whenever bidding or quoting a job, it is important to calculate where your profit margin should be to ensure the success of your business.
Just bidding your project costs plus profit will not make your company profitable. All of the time and effort made toward keeping the doors open also needs to be accounted for, and your margins must be sufficient enough to absorb these costs, such as your nonbillable labor (i.e., accountants, salesmen, etc), insurance, rent, supplies, etc. Understanding what it costs you to keep your business operating will help you to bid responsibly, and as competitively as possible, without hindering your profit margin. This calculation should be done frequently (at least once a year) as inflation, increased purchases, and business growth or shrinkage occur.
Include Line Items & Extra Charges:
Be sure your quotation and subsequent contract have clauses in them identify ing any areas of concern. Though you may have a wonderful rapport with the GC and the flatwork installers, it will never fail that once the actual polishing begins, you will come across something unexpected. Be sure to include line items for any expenses that may arise, such as multiple mobilizations, additional patchwork required, repair after project completion due to damage from other contractors, etc. Going the extra step to document any of these line items could save you down the line!
Natural variations in the floor that are unavoidable and commonly considered part of the character of the polished floor can become seen as imperfections by the perfectionist client, and can cause much more labor to meet that client’s expectations. Throughout the entire bidding process, from initial meeting, to the assessment phase, to the actual polish, be sure to take the time to speak with your client and educate them on the polishing process. Do not be afraid to point out problem areas and discuss your customers expectations. When you present a mock-up sample to the client, do they understand the overall aggregate may have a charming, mottled appearance, or are they expecting only small aggregate throughout the slab?
IPCI Journal
Quarter 1, 2008
View this article published in the IPCI Journal (pdf).
