Does your electrical contracting business have an effective tendering strategy?
A common mistake that is made by companies is when they bid on everything that comes up, whether or not it’s going to be a good fit. This is time-consuming and tends to be a waste of your talents, and the time of the person reading the tender at the other end.
Most companies would prefer to have a better rate of success in the tenders they bid on. This means thinking carefully before, during and after the process, and having a good strategy in place.
It’s usually better to bid selectively, to be able to allocate dedicated resources to the bid and to avoid a scattergun-type approach.
How will you weigh up whether to go for the bid or not?
Develop some criteria
One of the first steps to ensuring you don’t spend too much time looking at tenders that won’t be a good fit is to have some clear criteria about what is. Obviously, every electrical contracting business is different, but here are some basic criteria that may be included:
- The project size. Assess your company, looking at what you will be best suited to. For example, perhaps you prefer to stick with single-storey buildings rather than multi-level.
- The industry type. Many companies prefer to work with a set range of industries or project types.
- Companies that are a good match for your own company values. If you value sustainability and green practices, for example, perhaps a contract to wire the offices of a mining company might not suit your values.
- Projects that put you on track toward a larger goal. For example, if you’d love to work your way up to large, multi-site government contracts, perhaps you map out the pathway to get there and look for projects that will help your case. It might mean taking smaller, one-off projects for local government, for example.
- Project clarity. Some projects are put up for tender based upon an undefined or very loose set of criteria. These can still be great to bid on for companies that are comfortable with defining parameters themselves and managing any changes, but if you prefer to see an exact breakdown, they’re probably not for you.
- Project type. Identify the categories of work that are a good fit for your business. If you’re not experienced with wiring for the Internet of Things, perhaps that sort of project is not a good fit.
- Project location. Sometimes lengthy travel will be costly and add too much to your bid, making you less competitive.
Know your capabilities
It’s not just the type of project, but size, scope and required time frame too. If you know you need a certain amount of time to be able to put together an accurate, thoughtful bid, then it’s probably not worth trying to rush for a short deadline.
You also need to consider the resources you have available. If your team is already tied up with other projects that are likely to eat into the new project’s timeline, then you need to look at whether it’s reasonable to bid.
Perhaps you can easily take on some contractors for projects, or perhaps you can partner up with a trusted company in order to bring needed experience with certain parts of the job. Whatever the case, it’s good to have an idea of when you’re going to rule a project as out of the question, when you might jump on it, and when you might say “yes, provided that …”
Have a qualified estimator
Every electrical estimator can probably point to a time when they made some kind of horrendous mistake in the past. The key is that good estimators learn from the experience and move on to be great estimators. Usually, these things have such an impact that you’re not going to repeat them again!
Who does the estimating work for your company? This is something that many businesses struggle with, especially if they’re not using the services of a qualified estimator. We would strongly suggest that using an estimator to create accurate bids is part of your tendering strategy.
Have basic minimums
For most companies, there is some kind of project “sweet spot.” Some may be too big, and others may be too small to justify your time, effort and expense. This is why it’s a good idea to have basic minimums as part of your tendering strategy.
A key question to ask is, “will the amount of work I win justify the costs of carrying it out?” After all, you would tend to put just as much effort into bidding for smaller jobs as you do for bigger ones. If a job is too small to be worth it, you could have been focusing your efforts on bidding for bigger projects.
Research the procurer
The best bids tend to come from companies that have done their homework. They do research into the buyer, perhaps even speaking with them about their preferences, if possible. They might talk to other suppliers or clients who have worked with the procurer before.
Importantly, it’s about understanding what the client’s core needs are and what their preferences are in terms of getting work done. The more you understand, the more you can demonstrate how you will meet their needs. Definitely build client research time into your tendering strategy!
Have a unique selling point
What makes your company the best fit for the job? How are you better than competitors? Rather than firing off a laundry list of all your capabilities, think about focusing your proposition so that it matches up clearly with the buyer’s needs.
This means it’s also important to understand your competitors and their capabilities too. What are their relative strengths and weaknesses? Why do you stand out from them? Developing an effective strategy means understanding where your company fits and what makes you compelling to buyers.
Use feedback from previous bids
Firstly, if you do lose a tender, this can be disappointing but still may be an opportunity for your company to learn something. It’s good practice to ask for feedback when you do lose a tender as to why your application wasn’t successful. Admittedly, you don’t always get it, but you almost definitely won’t get feedback if you don’t ask.
That feedback becomes valuable data to consider for future bidding opportunities. Was there something you did that you shouldn’t ever repeat? Was there something you didn’t do that you need to ensure you do next time?
Consider the feedback from previous bids, successful or unsuccessful and build those tips into your tender strategy.
Electrical contractors that do well with bidding on tenders usually have a very well thought-out tendering strategy. Rather than throwing a bid together or bidding on anything that comes along, they are considered in how they approach the process.
It makes no sense to be bidding on jobs that are miles out of your wheelhouse or too small to turn an acceptable minimum profit for your company. Develop clear criteria for a “bid or no bid” decision and clearly understand your own capabilities.
Be adept at researching the needs of the buyer and crafting a proposal that clearly answers to their particular needs. Ask for feedback on bids you have submitted and use that information to better inform future bids. This is how you can carve a healthy niche for your business.