It’s a tricky process – how do you come in low enough to win the bid but also high enough to ensure profitability in the job? We all love what we do, but let’s not kid ourselves – we’re in this to make money.
What follows are a few tips that I’ve picked up in more than 30 years of working as a contractor and a few years now working as a product promotions specialist with CASE, where I work with contractors from all over the world at the world class Tomahawk Customer Center. It may be as simple as moving dirt, but it’s the attention to detail that will keep you ahead of the competition.
Understand the full scope of the project
It’s critical to have a full understanding of what your proposed tasks on the jobsite will be, from what it looks like when you arrive to the expected condition of the site when you hand it over to the owner or the next contractor. Are there other contractors on site that have already been selected to do work and how will you be expected to work with them? How will their work affect your ability to perform your work, and vice versa?
Know and understand the soil types and features
At first glance, you can look at a jobsite and see tall grass and think that there’s good topsoil underneath it. Yet just underneath the surface could be shale or limestone. If you don’t know and understand the full composition of the site, and suddenly you hit bedrock, you could lose a lot of money if you didn’t plan that into your bid.
I always looked for signs of groundwater at or near the surface – you’ve got to take that into consideration. If there is a lot of clay on site, how will that affect mobility and productivity when it rains or other water sources are present? Are there any odd or out-of-place depressions on the site – if so, what was previously done or buried there? What is hidden underneath the surface that is going to add time and cost to the job? The bottom line is that I want to be able to work five to six days each week. As a contractor, you need to know how the soils will affect you, and with the machines that you own, are you going to be able to do the work or will you need to supplement through rental – for instance, will a Low Ground Pressure dozer be more efficient and afford you more uptime and productivity than a standard dozer? Do you need to attack this with a compact track loader instead of a skid steer?
Typically, when you’re bidding on a job, the person who is relying on you to give them an accurate and fair bid is going to have no problem with you going in and digging a few test holes to cover all the bases. The contractor that doesn’t know the full lay of the land – and what’s underneath it – could be in for a surprise.
Plan to move the material once
The days of eyeballing a site and using a transit are all but over. Contractors who rely on lasers and receivers, a GPS base station and a rover to establish elevations will bid work with greater accuracy – which will make them more competitive and ensure their own profitability. It also gives the contractor a better idea of where the material has to go in relation to what engineers have designed for the final topography of the jobsite. What needs to be removed and how much will that cost in trucking, storing, disposing? What can I reuse on site to save on trucking fees – both for trucking out that material and then bringing in new material?
Contractors with machine control technologies on their equipment can also ensure that they’re only going to move that material once by achieving great accuracy. Having to move a yard of dirt a second time essentially doubles the cost of moving that yard of dirt from your original estimate and eats away at the profitability of the job.
Understand how the age of your fleet affects your cost factors
Factoring in fuel and maintenance costs, as well as potential downtime, is an important part of the bidding/estimating process – as is the quantity of machines required to the do the job.
Older equipment – even in the best-maintained fleets – will require more fuel, more frequent maintenance, and provide a greater opportunity for downtime over the course of a job. That time and cost should be factored into the bid.
Newer equipment has the advantages of greater fuel efficiency, extended service intervals and a lower likelihood of downtime. Newer equipment may also provide advantages in terms of productivity and capabilities that will allow you to bid the job with fewer pieces of equipment. It’s also easier – either at the time of purchase or afterwards – to incorporate productivity enhancing technologies such as machine control on newer equipment that is designed with its use in mind.
The job and the work that needs to be performed is a constant in each bid. The speed and cost with which you can perform it based on the type of equipment you have is the variable that could either make you more competitive or put you at a disadvantage.
Right-size your fleet, and supplement as needed
At CASE, we often refer to a piece of equipment as a contractor’s platform that allows them to bid on and perform work. It’s table stakes. Depending on the type and size of equipment a contractor has, it determines if they have the ability to perform the job, let alone bid on it. The contractor with the most and the greatest variety of equipment doesn’t always have to win, however. Be open to partnerships. It may pay to contract out some of the work to another contractor and be partners on the job. They may have bigger equipment that gets the job done right, gets it done faster, and you’ll both make money.
Contractors should also be open to incorporating new equipment into their fleets that will allow them to bid on larger and more varied work, and develop that skillset for future jobs as well. OEMs and dealers now offer a variety of acquisition options that make it easy to get into new equipment without breaking the bank.
Bottom line: understand the total flow of the job and how your actions and performance may affect other contractors both upstream and downstream of your work – bid appropriately and with the right equipment, and be honest and direct about your capabilities with the equipment you have access to.
Understand past performance through telematics
Telematics – now offered in many initial purchase and lease packages from OEMs and dealers on heavy equipment – is an almost turnkey system built into today’s machines that can give contractors perspective into the day-to-day operation of the machine. It also provides historical perspective that can be extremely valuable in bidding projects.
A contractor can review comparable past jobs and calculate labor and equipment hours. Similarly, they can examine utilization to determine if all of the equipment staged at the site was necessary, or if they can get by with fewer machines on this project based on past experiences, which may allow them to lower their bid. Telematics is also a great billing tool that shows incontrovertible data pertaining to the time and location worked.
Another advantage of telematics that can improve profitability is the visibility it provides both internal and dealer service staffs. Having eyes on performance parameters and engine hours allows those service staffs to be proactive and potentially identify operating conditions that could later lead to downtime. It’s a potential money saver based on almost zero investment because much of today’s heavy equipment has it built right in, and the initial subscription is covered in the purchase.
Be happy with your final bid
You’ve done this before. You have a wealth of background and experience to pull from. Use it to inform how you bid that next project. And if you do get a feeling in your gut when it’s time to submit the bid telling you to go over it again – do it. Walk the site and go over everything one more time. Be happy and confident in your final bid, and the rest should fall in line.