Bridgit Infocenter

Winning bids at a high rate is critical to a contractor's success. On its surface, this may seem like a simple concept, but bidding successfully requires a contractor that is capable of juggling multiple variables, some of which are completely out of their control. Finding quality opportunities, selecting the best-fit projects to bid on, reviewing profitability, endless hours of due diligence, identifying and mitigating risks, calculating and trying to accurately predict material and labor costs, and finding the right subcontractors are just some of these variables.

Add to that the ever-present skilled labor shortage, unpredictable events that create uncertainty in the industry (like a global pandemic) and the pessimistic economic forecast for the next year. It’s downright impressive that operations leaders accomplish so much with so many processes in construction still relying on manual processes like spreadsheets. With the looming uncertainty though, it’s more important than ever that contractors upgrade their predictive power in as many facets of their business as possible.

One of the key variables in winning bids and delivering projects is having a strategically planned workforce. Strategically planning means that you can find, understand and fix the limitations that present themselves. In a survey done by Bridgit, 40% of contractors said they would win more bids if they were better equipped to predict workforce limitations and requirements. 

These limitations go beyond knowing if you have the available labor to take on a project, they could also be the skills and experience of your team for certain types of projects. Taking on projects that you have available people for, but not necessarily the right people, are likely the projects that will put a contractor's profitability at risk.


Stats on project bidding in construction

Highlighting the problem of poor workforce planning is important because it demonstrates the scale of the issue. In the same survey by Bridgit, 70% of contractors said they plan their workforce less than two months in advance. Additionally, almost half (46%) said they don’t have adequate time to bring on new staff when a project needs it, creating an incredibly reactive planning process that is hard for anyone to stay on top of. 

As the work continues to pile up over the year, contractors are often put in a position where they have to rush. Rushing anything can lead to mistakes – like hiring people that are a bad fit for your company, lack the required experience, or having to spend on experienced labor that costs more. You may also find that you have to pull people from other projects to provide additional support, which can cause delays in their current work, and hinders your ability to win jobs in the future.

 About 86% of those surveyed said they’ve bid on projects only to find they don’t have the proper availability or experience and skill sets to do the work. This statistic is alarming. It points to the difficulty of planning and predicting labor. It also tells us that contractors aren’t bidding on work in the most informed way possible. 

Project bids have an overhead cost, win or lose. These costs include expenses for sales, marketing, public relations, pre-construction services, and the costs of employing estimators. By going into negotiations without accurate information about something as significant as your labor, you might be losing opportunities at a high cost. 


What does this mean for contractors? 

There’s a slight asymmetry between the reality of the situation and the data contractors are using to draw their decisions. Of course, contractors aren’t just coming up with things out of thin air, their decisions are based on the information they have at their disposal, and that information is where the problem lies. 

Capturing and maintaining good-quality data is not as easy as it may seem, and it’s not the contractor's fault for not being able to do so. They’ve been tasked with solving some of the most complex problems today, and complexity only continues to increase. The tools contractors need to solve these problems have to be able to account for, predict, and model scenarios with dozens (if not hundreds) of moving parts that involve numerous stakeholders. Ideally, these stakeholders should have visibility across these scenarios and the ability to collaborate on solutions to problems proactively and as they appear. 

Since contractors use a lot of manual processes to plan their workforces, their decision-making data typically gets siloed off from the larger team. Either one person is spending endless hours maintaining the spreadsheet, it’s constantly out of date, or it breaks due to bad incoming data. The result of this process is a lack of visibility on your capacity to take on more work.


Fewer mistakes are just as important as more wins

For contractors, winning a large project is definitely worth getting excited about, but if your workforce is limited this may mean larger costs than you’re able to (or want to) handle. You may need to think about winning right instead of winning big.

What does winning right mean? It means taking on the projects that are right for your company and bidding on projects you have a higher chance of winning and completing successfully. Tracking your bid-hit ratio can help point to the fact you’re making fewer mistakes.

“Your bid-hit ratio is the winning rate at which you successfully bid or propose on construction projects”. For example, a 5:1 bid-hit ratio means for every five projects you bid on, you’re awarded one. Having a lower ratio is ideal, but this varies from company to company.

Is there a difference between having a bid ratio of 5:1 and 2:1? At the end of the day, the contractors have the same amount of work, but only one of them isn’t paying for the overhead cost of the additional lost bids. This can also mean that the contractor with the 2:1 bid-hit ratio has a better understanding of where they win, where they’re profitable, and where it’s not worth pursuing in the first place, whether it be from a lack of available workers or a lack of necessary skills and experience.

A large portion of the reactive planning in construction could be mitigated with increased visibility into a contractor’s workforce. Forecasting labor demands months or years in advance would provide a chance to deal with short-term problems on the site without worrying if you even have enough people to get started. 

Knowing if you have the capacity to take on a project and being confident in the data helps to strategically bid on projects that give you a higher chance of winning. As this data and collaboration improve, you would get more efficient at distributing resources where they need to be. 


How do I improve my workforce data? 

Contractors need to be able to switch between seeing their project pipeline holistically and specifically. Unfortunately, the manual processes used to plan people now don’t do a great job of achieving either. At this point, GCs should be looking to leverage technology to simplify workforce planning.

Leveraging technology for workforce planning is a two-step process: you want a tool that houses the information on your people and projects, and you want your tools to be integrated so that you can smoothly import and export data. Not only will the integrity of your data be better, but you’ll also save time by avoiding double data entry. This is called a “common data strategy”, it helps make informed staffing decisions and improves the predictability of your business. As predictability increases so do your chances of winning a bid since you’ll be bidding on projects that you have the highest chance of winning. Winning means growth, and growth means bigger wins over time.