December 2009

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Those guys always have the wrong price!
But what if the Competition really knows what they’re doing?

 Al De Wachter, President
 
Independent Control Specialists Inc. ICS

On bid day all across North America, contractors are routinely confronted with having to compete with bids that are significantly lower than their own. Odds are this has happened to you and your sales team.

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These low bids can always be rationalized. ‘They’ are ‘buying the business’. ‘They’ have made a costly mistake. ‘They’ have cheap labor. ‘They’ get a better materials multiplier.

Here’s a sobering alternative to consider: what if that low bid really is solid and the competition has actually submitted a reasonable and profitable price that represents quality work? How can that be possible?

As difficult as it can be to admit, the competition may be operating more efficiently and therefore carrying less cost in their bid.

The following are 9 common business processes where inefficiencies, extra costs, and repetitive tasks can exist and therefore are prime opportunities for time and cost savings.

- Bid qualification – do you have an effective method in place to differentiate early and ruthlessly between projects that represent real opportunities and those that are likely to drain your limited resources?

- Estimating process – are your sales people using proven and defined standards to quickly and consistently submit profitable bids? Or is every new bid a new adventure?

- Tapping Experience – are your designers, project managers and installers given a framework to provide constructive input during the estimating and bid cycle? Or is it assumed that they’ll just “add cost” and destroy every chance at earning new business?

- Sales to Ops turnover – does this process leverage work performed during the bid stage? Does the sales team have a structure to provide meaningful input to what will eventually be delivered? Or are the two teams at odds with each other?

- Re-Estimate process – after the design, does a reliable and clearly defined process for re-estimating a bid exist? Is this process easy enough to implement so that it is actually performed to catch costly mistakes before they happen and avoid repeating them in the future? Or do you wait for job completion to have the forensic accountants tell you where it all went wrong?

- Materials selection – do you have a well defined standard product selection process in place? Do poor purchase practices result in a storeroom full of returned and unusable products? Are your designers experimenting with yet another new gadget without getting project manager input?

- Operational process – are your design teams finding ways to leverage past work? Or are they “starting from scratch” with each new project? Are they manually typing parts list for every job?

PlantPROCORE - Submittal creation process – do you have a streamlined assembly process in place? Or are you manually collating documents, repeatedly searching for files on servers and computers and spending countless hours assembling and organizing a submittal document?

- Material Purchasing Process – are your purchasing personnel cutting and pasting BOM lists and manually typing in part numbers and quantities which is prone to costly errors? How much time is spent separating BOM lists, verifying part numbers, entering data on multiple websites and loading the information into your accounting software?

When you add up all of these preventable costs, you’ll see that they will erode your margins and ultimately deprive you of work.

The good news is that there are proven tools and methods available to you to achieve the time and cost savings you want and need.

So the next time you are facing a competitor with a low bid, ask yourself: “What if they do know what they are doing and what can we do to make sure we earn the business next time?”


About The Author

Al De Wachter has been active in the Building Automation industry for over 38 years. He has held senior positions with leading companies in the field and is currently the president of Independent Control Specialists Inc. Al has directed the development of advanced productivity software for Building Automation Contractors since 1990.

For tools and methods to help your company become more competitive visit: www.ics-controls.com

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