- Features | February 17, 2016
Don't Just Bid: Plan to Bid!
Life’s on the up at the moment…all of your electricians are fully employed and your forward pipeline of work is stretching out ahead of you further than you’ve seen for years. Things just couldn’t be better, but then a bid inquiry lands from a general contractor that you just can’t ignore. It’s a company that’s given you a lot of work in the past and you want to do more work with them in the future. You just can’t afford to upset them, so what do you do?
Of course, the easy solution is to just submit a high-priced bid so they won’t choose you. But wait…if you do that, then they might not ask you to bid in the future if they think that is your normal price range. They’re also likely to know the procurement managers with other general contractors, and if rumors start to circulate it could seriously damage your reputation. You could always decline to bid, but surely that will annoy them and they might not ask you to bid again. This is turning into a nightmare!
Relax, it’s all hypothetical, so there’s no need to panic just yet! Let’s take some time to think about what you can do to ease the pain.
For years, electrical contracting has operated on low profit margins driven down by competitive bidding that uses price as the determining factor rather than value. I’ve heard lots of contractors tell me that there isn’t any real opportunity to sell their services on value, and of course this is true if you’re connected with general contractors or clients that only want the cheapest price. However, continuing to accept this as the norm means you’re in danger of attracting this kind of bid and the inevitable downward spiral of tightening margins and having to cut corners just to survive.
To change this we need to learn more about the general contractor and align your proposals to meet their objectives…WE NEED A PLAN!
Before we look at that, here’s an example from when I first started bidding over 12 years ago. My client was a large national house builder bidding for sites that the government was bringing to market. Known as the ‘redundant hospitals site program,’ there were around 196 named sites that were being slowly released to the market and the expectant bidders. Every so often, my client called and off we went again bidding on the next opportunity. But there was no plan and the whole process seemed very haphazard, so I asked a simple question, “Do you want to win every site that comes to market?” The answer was, of course, “No.”
To develop more structure and order, we ranked the projects according to their preferred location, the available resources in those areas, the skills needed to deliver each project, and their financial capacity, amongst other considerations. This enabled us to apply our full resources to the ‘must win’ bids, be less diligent to the others, and formally decline to bid for work that didn’t align with our Work Winning Plan (WWP).
As a general contractor, my client could call on a long list of contractors to work on sites that weren’t planned, but this will be different for you. Like most electrical contractors, you’ll have a list of regular clients, those who give you work less frequently, and target clients you want to work with. And if you’re worried that there isn’t enough work to start turning bid inquiries away, just consider that the value of the electrical contracting industry in the United States is estimated to be over $130 billion a year.
You can develop your own WWP to map your approach by following a simple three-step process. Using the steps, you can better rank the electrical contracts in the order you want to win or the general contractors you want to work with. The bonus is that through the meetings and discussions you’ll need to have, you’ll get more sales opportunities when you can build and you’ll strengthen your relationships.