Tracking your Bid-to-Win ratio.

In the commercial construction sub-contracting business, most owners, sales associates, estimators, and project managers are unaware of how many projects they bid or win within the month or year. They have a vague idea but are rarely certain about the actual number. We find this peculiar since the business relies on awarded projects as its primary revenue. Likewise, we would have thought that a Bid-to-Win ratio would be known by every associate as part of the company-wide goals.

On such an important topic, we are not surprised to find an article about tracking your bid-to-win ratio written by 1st Source Bank, titled Is Your 'Bid-Hit' Winning Ratio OK? Financial institutions rely on data to determine how much risk to take when they manage money. So to evaluate a sub-contracting business, part of the evaluation is determined by how successful the company is to the financial plan, the plan details, and if everyone is bought into the business plan to meet company goals. The question is asked, “How many projects do you bid each year?”, followed by “How many projects are you awarded?”, and finally “Is this what you planned?”

We also find it interesting that some owners exclude negotiated projects as "bids". Indeed, negotiated work often brings in higher profits per project, however, it also has higher expenses to secure that work. Owners and GC's may negotiate a project, but they consider the final number from the subcontractor as a bid. 

Tracking

You should track your bid and win ratio monthly, quarterly, and yearly. Track by job type: 

• Large versus small

• Local versus out of town

• Market segment (education, multi-family housing, etc.)

• Hard bid versus negotiated

• Plans and specifications versus design-build

• New construction versus remodel

What’s Your Number?

Negotiated projects have a lower win ratio but require additional overhead expenses, marketing, pre-construction services, customer development, and public relations. According to the 1st Source Bank article, “Companies which obtain most of their work from public works or bid against a long list of competitors, tend to have higher Bid-Hit ratios. But, they usually have more estimators which offset the fewer marketing dollars needed. The trade-offs usually balance out at the bottom line.”

Most Spec-ID customers we surveyed reported a 5 : 1 bid-to-win ratio and those that pride themselves on negotiated work reported a 3 : 1 ratio.

Industry Numbers

1st Source Bank surveyed over 5,000 construction and subcontractor companies and concluded that the smart contractors used their “bid-hit” ratio tracking system to make good decisions and move out of the too competitive marketplace into less competitive areas where they could maintain a reasonable “bid-hit” win ratio.

Range of Subcontractors Bid-Hit Ratio

- Public Works 7 : 1 to 11 : 1

- Private Bid Work 4 : 1 to 6 : 1

- Negotiated Work 3 : 1 to 4 : 1

- Design-Build 3 : 1 to 4 : 1

You may want to compare your business to these national numbers.

The Plan

A Bid-to-Win business plan targets the right customers, the right markets, and helps determine the resources and expenses required to achieve your financial goals. Armed with the right Bid-to-Win ratio, all your associates will know their role to help the team exceed your financial goal.

Spec-ID recently launched Estimator Assistant. This new (Bid) feature with unlimited projects streamlines your workflow, reduces product errors, and eliminates re-work. Awarded (Win) projects instantly convert to Project Management Assistant with automated sampling, label making, and job-specific, branded technical submittals & closeouts packages. 

“This software is without a doubt one the best if not the best software investments we have ever made. 

This software benefits so many people/companies that are tied to a job.”

- Chad Mohr, Director of Commercial Flooring Star Lumber

Find out more at contact@spec-intel.com or call 312.578.0881.